• Newsletter Issue #665

    August 27th, 2012

    THIS WEEK’S TECH NIGHT OWL RADIO UPDATE

    So did Apple’s 10.8.1 Mountain Lion update fix what ailed your Mac? One notable problem involved poor battery life reported by some early adopters, as confirmed by some reviewers. Although no such fix was mention in Apple’s 10.8.1 release notes, it does appear as if there has been some improvement, but not to the level of Lion; consider it half-way solution. So maybe there were some fixes of this sort included, but Apple didn’t want to go out on the limb and declare the problem resolved.

    There are also reports that a 10.8.2 is already being tested by Apple developers, although the major feature may be support for Face-book. But I suppose there are other fixes that will only become known when this update is actually released. Don’t forget that it took a couple of iOS updates to fix battery life problems with the iPhone 4 and iPhone 4s last year. Such problems are clearly not easily resolved.

    Meantime, on this week’s episode of The Tech Night Owl LIVE, the one and only “iTunes Guy,” Kirk McElhearn, joins us to explain the cloud. He’ll also compare Dropbox to Apple’s iCloud, and try to sort out those confusing sync problems with Apple’s cloud-based services. During the course of this session, you’ll learn about some of the problem’s I’ve encountered with syncing my contact list under iCloud.

    Kirk will also discuss Apple’s recent 10.8.1 update for Mountain Lion.

    Cutting-edge commentator Jim Dalrymple, Editor in Chief of The Loop, joins us to cover a variety of subjects. He’ll touch on the 10.8.1 update, the ongoing strategic problems at Dell and HP, how Twitter might be the new AOL, and Microsoft’s new corporate logo.

    On this week’s episode of our other radio show, The Paracast: Gene and Chris present Jerome Clark, author of “Unexplained!: Strange Sightings, Incredible Occurrences, and Puzzling Physical Phenomena.” You’ll hear about all sorts of unusual cases involving strange creatures and phenomena, and whether some of it might relate to UFOs. In addition, our guest will answer questions from our forum posters.

    Now Shipping! The Official Paracast T-Shirt — Now with New Design! We’re taking orders direct from our new Official Paracast Store, where you can place your order and pay with a major credit card or PayPal. The shirts come in white, 100% cotton, and feature The Paracast logo on the front. The rear emblem states: “Separating Signal From Noise.” We’ve also added a huge selection of additional special custom-imprinted merchandise for fans of our show, along with a redesigned storefront.

    SO DOES THE APPLE/SAMSUNG VERDICT HURT INNOVATION?

    It’s one for the books, to be sure, but Apple was awarded a huge victory Friday in their ongoing worldwide legal skirmishes against Samsung for patent infringement. In a San Jose courtroom, a nine-member jury found that Samsung was, for the most part, guilty as charged, and they awarded Apple over one billion dollars in penalties. In turn, Apple owes nothing to Samsung, whose counterclaims failed to connect with the jury.

    But the story doesn’t end there, because Samsung has already made it clear they plan to appeal, and that is to be expected. It is also possible for U.S. District Judge Lucy Koh to reject all or part of the jury’s verdict, and even to triple the damages on the theory that Samsung’s infringement was willful. In turn, Apple will demand that Samsung be enjoined from selling the infringing products in the U.S. To be sure, this case may take years to resolve, when you consider appeals. By that time, the alleged infringing products will be history.

    Both Apple and Samsung released statements that were in themselves predictable. Apple CEO Tim Cook said it all in the first sentence of an employee memo, that “Today was an important day for Apple and for innovators everywhere.” Samsung’s spin on the situation is that “Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer.”

    On the other hand, I do suppose it’s possible for Samsung to take the hint and sit down and make a cross-licensing deal with Apple. It’s not as if such agreements haven’t been made. Apple has them with Microsoft, Nokia, Creative Labs and other companies. It’s the price of doing business, although it hasn’t quite worked that way with Samsung.

    But that’s a peculiar situation, since Apple does billions of dollars of business buying components from Samsung, a sprawling company with many divisions. It’s very possible, for example, that the display on your Apple gadget was built by Samsung, although it is also reported that Apple is working more and more with other suppliers.

    On the other hand, maybe it’s time to look at Samsung’s core argument, which is that the Apple verdict hurts creativity in the industry. Samsung still believes that, based on their statement, “patent law can be manipulated to give one company a monopoly over rectangles with rounded corners,” as if the trial was only about shapes. Zoom to fit and bounce back, two key patents considered in the trial, are about neither.

    Perhaps part of Samsung’s problem, up until now, is that they believed there was nothing wrong in building a knock-off product. That way, customers get a choice of similar gear with different brand names. But the issue is also trade dress.

    Consider back in the 1990s, when the original Bondi Blue iMac came out. Such PC companies as eMachines came out with also-rans that looked very, very similar, but Apple managed to block them in the courts. You didn’t see products closely resembling the original iMac after that, but there’s certainly nothing wrong in building an all-in-one computer.

    What really did Samsung in was how their product direction for smartphones changed so radically after the iPhone arrived. Before then, a Samsung smartphone had a physical keyboard, resembling a BlackBerry. You wonder, in passing, whether Research In Motion ever considered going after Samsung and other companies who built products with a similar look and feel, although it may well be that these other products just didn’t resemble the BlackBerry close enough. Or maybe RIM didn’t protect their intellectual property quite as rigorously as Apple.

    As the jurors said in interviews after the trial, they couldn’t miss the fact that Samsung’s smartphones, after the iPhone arrived, began to closely resemble iPhones. That was an argument that Samsung’s legal team couldn’t satisfactorily explain, except as a blatant attempt to mimic Apple.

    Now, in the wake of this significant victory, it seems certain that Apple is prepared to double down on their efforts to secure similar victories from Samsung in other countries. Other manufacturers of Android smartphones are facing greater threats, and it’s always possible Apple will go right after Google in the very near future. Apple is already contesting patent rights with Motorola Mobility, which recently became part of the Google empire.

    Faced with this turn of events, Microsoft stands to profit. Smartphone companies may only be too happy to ditch Android, and its potential patent hassles, and pay a predictable amount of money to license Windows Phone. Assuming the looks of these new smartphones are changed accordingly, handset makers won’t have to worry about their stuff being considered iPhone knockoffs. Google may, in turn, work harder to change Android to avoid the wrath of Apple, or be forced to look elsewhere for  people to click on their targeted ad links.

    Sure, some analysts are suggesting that Apple’s victory means less choice for the consumer. But I look at the reverse result, that smartphone makers will be forced to discover something that has so far eluded them: real innovation and not imitation. There are lots of creative people working for Samsung, Motorola and other handset makers. Maybe they’ll be allowed, at last, to drive those companies to build products that are truly unique and not derivative.

    In the end, that could mean even stronger competition for Apple. But that will only result in better products, and more choice for customers.

    300 STATIONS AND NOTHING TO WATCH

    Cable and satellite providers, I suppose, just want to make it easy for you, or that’s what they think. Instead of going to the à la carte menu and choosing from among hundreds of stations, you get special packages. Each of those packages will contain, at the minimum, a few dozen stations that cover a variety of formats, such as entertainment, news, sports, and possibly local stations. Yes, you’d think it’s a given that your local channels would be part of the list, and they are for most U.S. cities. But not all. Wasn’t the original purpose of cable TV to make it possible for you to watch a decent selection of channels with good reception even if you were too far from the ones in your city or state?

    DirecTV, which is the service I currently use, has around 20 million subscribers. Their cheapest retail plan, Entertainment, offers “140+ digital channels” for $54.99 per month. But that’s not necessarily the price you’ll pay. If you opt for a 24-month contract, you’ll be entitled to all sorts of discounts that may, in the end, reduce that monthly charge to maybe $30 or so. If you can live without premium channels, such as HBO and Showtime, that should be sufficient for your entertainment needs.

    But what if you only watch a handful of stations? Why pay for the rest? Well, it appears the cable and satellite companies in the U.S. can pretty much do what they want. The FCC’s position on the subject is pretty much summed up in a single paragraph: “Per-channel or ‘à la carte’ programming means a channel is offered on an individual per-channel basis rather than as part of a package or tier of programming. Cable television operators are not required to offer channels on an à la carte or individual basis. However, cable operators are free to offer channels other than those required to be on the basic tier on an à la carte basis. For example, premium movie services are often offered on an individual basis rather than as part of a package.”

    What this means in the real world is that you have to buy a package from these companies, although separate premium channels may be available as extra cost options. A major part of the problem is that the entertainment companies license their networks to the cable and satellite providers on a package basis.

    So if the TV services want to license, say, USA Network and SyFy from Comcast and NBC Universal, they are forced to take others, possibly including E, Golf Channel, Bravo, Style Network, CNBC, and a number of others. So, in turn, the service offers them as part of one or more packages to subscribers.

    That may explain why more and more people are cutting the cable cord, or ditching their dishes. Instead of paying for loads of channels they will never watch, they would rather just get the shows they want, and perhaps use a traditional antenna to receive the local outlets.

    Such online services as Hulu, which is run by the same entertainment companies who own the cable networks, allows you to just watch the shows you want, when you want. The Hulu Plus service, for a modest monthly fee, gets you additional programming, with fewer ads, and it’s now available on the Apple TV.

    At the same time, Apple is trying to find a solution to clean up the TV mess. Some suggested Apple was negotiating directly with the entertainment companies to build a subscription service. In recent days, Apple was said to be talking to the cable and satellite providers — the very companies who force you to buy useless packages — so that you could use an Apple TV, or a modified version, instead of the standard cable or satellite set top box. If you wanted to record a show, it would be stored in the cloud for you. You wouldn’t have to worry about the old fashioned mechanical hard drive on your DVD, nor be limited to recording two or three shows at a time.

    But it’s by no means certain Apple will succeed in their quest to conquer the living room. Besides, there’s really no incentive for the cable and satellite companies to kill those packages, since part of that marketing scheme is controlled by the entertainment companies who force them to take bundles of channels. On the other hand, if more and more people say no and look for other alternatives, the market will have to change. But consider this: If a new channel is added to your existing package, you may sample it and like it. That provides an opportunity for new networks to succeed. If you only order a fixed diet of separate channels, you are less apt to look at anything else, and that hurts cable startups.

    Meantime, let me check DirecTV’s interactive guide and see if I can find something to watch, other than last year’s episodes of NCIS.

    THE FINAL WORD

    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: Sharon Jarvis



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    6 Responses to “Newsletter Issue #665”

    1. Yacko says:

      Because, even a la carte, it is gonna cost you about the same. A cable “channel” costs your cable provider anywhere from $5.00 to $.01, per month per subscriber. The top end is ESPN and Fox Sports and the bottom end is MTV Hits and Nick Too. 90+% of the channels “wholesdale” at or below a quarter. The next 20 after the top 2 are from a little over a buck to that 2-bit piece level.

      What’s gonna happen a la carte, is they will offer most channels at $1 and the top 20 at $2. You will pick maybe 10 – 12 channels and end up paying $25 + fees per month for a total just under $40. Is this a victory? Your obstinance just inflated the worth of a channel anywhere from 100 to nearly 10000%. Sports, of course, will be a separate territory. Sports lovers will pay through the nose far beyond anything they have had to do so far.

      I had figured this was the scheme Apple was trying with iTV. Go to the content providers, pitch an app. Say Nickelodeon. Nick Jr earns 20 cents per subscriber. A $1 app earns 70 cents after the 30 per cent haircut. No brainer, right? Go direct to the consumer, bypassing traditional cable. But maybe they don’t want to screw their partners or maybe contracts make it difficult.

      So kids what did we learn? A la carte through your cable company or a la carte through iTunes = same result. Whether there are positive benefits long term of the iTune-iTV solution I can’t say, but I do know the consumer will not benefit short term.

      • @Yacko, Good points. But a la carte may also change the price structure of the industry, where the content providers force the cable and satellite companies to take a dozen stations rather than just one or two. The advantage of bundling is that newly-added channels get a crack at building an audience. Under an a la carte system, those opportunities will largely vanish.

        Peace,
        Gene

      • Peter Blood says:

        @Yacko, That’s what I thought. They’ll figure out a way to do ala carte so it costs the same or in spite, more.

    2. […] Continue Reading… Related Posts: Newsletter Issue #665: So Does the Apple/Samsung Verdict Hurt Innovation? […]

    3. Steve W says:

      There are two kinds of innovation in the tech industry:
      1) Learning how to produce better widgets; and
      2) Learning how to better produce widgets.

      Apple was (is) famous for the first kind; while Dell was (is) famous for the second kind. I say “was” because Steve Jobs made Apple king of the first kind, while Tim Cook is making Apple a world class competitor in the second kind.

      Intel is famous for the two-generation innovation cycle, lovingly referred to as the “tick-tock”. The tick produces a better processor, while the tock improves the fabrication methods.

      Component makers looking to enter the whole widget game largely have experience with the second kind, while being new to the first kind. If they try to apply their experience in the second kind to the first kind; they do so buy starting with an existing design and “tweaking” it – aiming for cheaper, bigger or smaller, faster, etc.

      Patents are designed to reward innovators of the first kind by preventing competing innovators of the second kind from tweaking the designs of the patent holder. It’s that protection that allows Intel time to use its two generation strategy. It also allows Apple the luxury of years long development cycles.

      So the short answer to your question is: the Apple/Samsung verdict could hurt innovation of the second kind by forcing more innovators to devote more resources to innovation of the first kind. It is too early to tell if this will result in a net loss of innovation.

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