Some things Apple could do to dramatically redefine TV.
- Buy EchoStar - current market cap $1.8B - Apple could possibly buy it for $2.5B + debt. With EchoStar, they get nationwide Satellite Network, as well as IP to Sling Media. Convert Apple TV to be the Set-Top box for Dish Network. This is likely to be the easiest option for Apple, rather than negotiate with cable networks.
- Change to iPhone OS4 - opens up entire App Store.
- iPodTouch with IR Transceiver as Universal Remote. Should be usable as Remote, Keyboard, Microphone (for Video Conference) etc. EPG should be displayed on the iPodTouch.
- Multi-player gaming - AppleTV should be capable of creating an ad-hoc network with multiple iPodTouch units, for multi-player gaming.
- Offer an optional iControl unit for $99 - basically, iPodTouch with minimal flash, minimal RAM, lower end processor, 480x320 multi-touch OLED display.
- Open up USB port, with support for Web Cam and external storage. Video Conferencing would be a great application. External storage only for Personal Media - cannot be used for DVR.
- Offer an optional motor-panning 1080P iSight camera for $199 (panning and zoom controllable using the iControl remote).
- Instead of using low power A4, use full power chips, or even dual A4 chips, to support 1080P seamlessly, including 1080P videoconferencing (if customer has adequate bandwidth).
- Local DVR Functionality. DVR to be controlled from EPG on iPodTouch. DVR requests, etc to be stored on MobileMe - so user can setup recording remotely. User can also delete shows from MobileMe remotely, to clear up space on the local disk.
- Cloud DVR Functionality - customer can pay $10 extra per month to have access to ANY SHOW he wants, available at anytime streamed from the cloud. Cloud DVR shows would be available only for 1 week. If user wants longer term recording, he can copy content from Cloud DVR to local DVR. If the user does not want Cable TV, he can just pay $30 per month and get all his programs from the Cloud DVR, along with targeted rich interactive ads using iAd. But he won't get any live content - like Sports, news, etc.
- Integrated support for PlaceShifting (SlingBox functionality) - using MobileMe. Moment user logs into MobileMe and wants to watch either Live or recorded content, the local stream is turned off. Any content that is also available on the cloud would be streamed from the cloud rather than the source AppleTV, for bandwidth efficiency.
- Sell 3rd party licenses for Game Controllers - Steering wheels, Joysticks, Tennis Rackets, etc.
- Sell 3rd party licenses to integrate AppleTV directly into consumer electronics.
- YouTube competitor - Create a free videos section within iTunes, where users can upload their own videos for sharing with others. Customers can optionally also charge for their uploaded videos, with the usual 70:30 revenue sharing. Apple already has massive library of copyright content, it would be easy to use technology like Shazam to see if any user uploaded content violates copyright of any other content. With such a check, studios would prefer iTunes over YouTube. Can be integrated with rich interactive iAds, for revenue.
- Package AppleTV with 2 iControl units and one iSight HD camera for $599 - or for $199 with 2 year Cable TV contract at $49 per month or $399 with 2 year Cloud DVR only contract.
The main idea is to make full use of the ecosystem that already exists - and create cross-selling opportunities for other parts of the ecosystem. For instance, if the user wants remote DVR functionality or place shifting functionality, he/she has to get MobileMe. For the remote, s/he has to get iPodTouch. Since the unit supports multi-player gaming, there is an incentive to get multiple iPodTouches for the entire family. Cloud DVR would use iTunes. Interactive targeted advertising using iAd would dramatically change the way people look at advertisements. Could even support features like instant feedback on ads - so that the marketer knows how the ad is being received, by which demographic.
Saturday, May 29, 2010
Friday, May 21, 2010
In other news, pot calls kettle black...
Just read an unintentionally hilarious article on AppleInsider - http://www.appleinsider.com/articles/10/05/21/google_compares_apple_to_big_brother_from_iconic_1984_ad.html
Some executive at Google reportedly called Apple "Big Brother" in a reference to the famous 1984 commercial that announced the Mac.
Hilarious, because I don't think he could have put his foot in his mouth more effectively, and more publicly. Considering all the news around Google's privacy violations, and all the attempts by Google to ingrain itself in pretty much every single aspect of our lives, it is quite obvious who Big Brother is. In fact, the surveillance society referred to in the 1984 book eerily resembles Google.
I guess he refers to Big Brother not in a surveillance kind of way, but more about the fact that Apple does not give any choice to the developer or to the user. Steve Jobs decides how things should be, and that is the way things will be. Like as if Google gives its users all the flexibility they want. I remember years back when I signed up for GMail, I did not like the conversational style of GMail - and wanted to revert to the regular email style that you see in Yahoo, Hotmail, etc. Guess what - Google decided for me that GMail would stay conversational - no option to use regular mails. I haven't checked lately, but I wouldn't be surprised if that is still the case!
At least, the choices Steve Jobs makes are acceptable to the vast majority of end-users. It is usually only the tech geeks who feel crippled by Apple's restrictions. There are things that I have wished were different with Apple, but for the most part, things just work. Of all the people complaining about a non-replaceable battery, I wonder how many of them ACTUALLY carry a spare battery? The dramatic success of the iPhone has showed that the "restrictions" in the iPhone haven't really affected demand for the product.
Google acts and operates as if they are champions of Open Source, and everything they do is open. However, even a cursory look at Google reveals that the only things that are Open at Google are things they don't expect to make money on - and all their crown jewels are safely locked inside a proprietary safe.
There is another interesting comment this guy made - "If Google did not act, we faced a Draconian future where one man, one company, one device, one carrier would be our only choice. That's a future we did not want." The thing is, Google bought Android in 2005, well before the public launch of the iPhone. Quite obviously, they knew about the iPhone by 2005, and *specifically* bought Android to combat the launch of the device. If this is not an act of corporate espionage by Eric Schmidt, I don't know what is.
In fact, I firmly believe that Apple is very close to launching a major change in plans for AppleTV - launching a subscription model for iTunes content, together with tie-ups for live News and Sports broadcasts. This would finally offer users a viable alternative to CableTV. Google, by virtue of Eric Schmidt's board seat, obviously knew this was coming, and this is the motivation behind yesterday's announcement of GoogleTV. We will see more such vaporware announcements from Google, over the next few months - but thankfully, will end soon, because Apple realized the folly of having Eric Schmidt on the board last year.
Point 6 of Google's charter says - it is possible to make money without doing evil - and their motto is "Do no evil". I think Google needs to look at the mirror and see if they are living up to their ideals. They have clearly shown that they are OK with evil if it serves their interests - see their actions in China, and how they changed their minds only when they got bitten. Their track record of IP/copyright violations, is also indicative of the same malaise.
Some executive at Google reportedly called Apple "Big Brother" in a reference to the famous 1984 commercial that announced the Mac.
Hilarious, because I don't think he could have put his foot in his mouth more effectively, and more publicly. Considering all the news around Google's privacy violations, and all the attempts by Google to ingrain itself in pretty much every single aspect of our lives, it is quite obvious who Big Brother is. In fact, the surveillance society referred to in the 1984 book eerily resembles Google.
I guess he refers to Big Brother not in a surveillance kind of way, but more about the fact that Apple does not give any choice to the developer or to the user. Steve Jobs decides how things should be, and that is the way things will be. Like as if Google gives its users all the flexibility they want. I remember years back when I signed up for GMail, I did not like the conversational style of GMail - and wanted to revert to the regular email style that you see in Yahoo, Hotmail, etc. Guess what - Google decided for me that GMail would stay conversational - no option to use regular mails. I haven't checked lately, but I wouldn't be surprised if that is still the case!
At least, the choices Steve Jobs makes are acceptable to the vast majority of end-users. It is usually only the tech geeks who feel crippled by Apple's restrictions. There are things that I have wished were different with Apple, but for the most part, things just work. Of all the people complaining about a non-replaceable battery, I wonder how many of them ACTUALLY carry a spare battery? The dramatic success of the iPhone has showed that the "restrictions" in the iPhone haven't really affected demand for the product.
Google acts and operates as if they are champions of Open Source, and everything they do is open. However, even a cursory look at Google reveals that the only things that are Open at Google are things they don't expect to make money on - and all their crown jewels are safely locked inside a proprietary safe.
There is another interesting comment this guy made - "If Google did not act, we faced a Draconian future where one man, one company, one device, one carrier would be our only choice. That's a future we did not want." The thing is, Google bought Android in 2005, well before the public launch of the iPhone. Quite obviously, they knew about the iPhone by 2005, and *specifically* bought Android to combat the launch of the device. If this is not an act of corporate espionage by Eric Schmidt, I don't know what is.
In fact, I firmly believe that Apple is very close to launching a major change in plans for AppleTV - launching a subscription model for iTunes content, together with tie-ups for live News and Sports broadcasts. This would finally offer users a viable alternative to CableTV. Google, by virtue of Eric Schmidt's board seat, obviously knew this was coming, and this is the motivation behind yesterday's announcement of GoogleTV. We will see more such vaporware announcements from Google, over the next few months - but thankfully, will end soon, because Apple realized the folly of having Eric Schmidt on the board last year.
Point 6 of Google's charter says - it is possible to make money without doing evil - and their motto is "Do no evil". I think Google needs to look at the mirror and see if they are living up to their ideals. They have clearly shown that they are OK with evil if it serves their interests - see their actions in China, and how they changed their minds only when they got bitten. Their track record of IP/copyright violations, is also indicative of the same malaise.
Wednesday, May 12, 2010
For a few dollars more...
Right in the middle of the 3G auction, the government announced that 2G operators having more than 6.2MHz of spectrum will have to pay spectrum fees decided based on 3G auction prices. This announcement makes absolutely no sense - it will spell the end of the mobile revolution in India - because 2G operators would be forced to jack up prices. And if prices are jacked up, then we wont see 20M mobile users per month being added.
The reason why Indian operators are able to succeed at such low costs, is because they dont care about ARPU - they just care for overall revenues to be high, which they acheive by increasing penetration. In the current scheme of things, license costs are a percentage of revenue - 10%, 8% and 6% of revenues depending on the circle. So as long as the fixed costs are covered by the revenue, operators are profitable. But the moment they are forced to pay massive costs for spectrum, this model will not be viable - the amount of revenue they have to make to get profitable would go up dramatically. This means they can no longer be ambivalent about falling ARPU - they would be forced to increase ARPU. At higher ARPUs, significant number of customers would be priced out of the market.
Quite obviously, this is a bad policy for the government to adopt - so the only reason they are doing this, is because this will make 3G spectrum more valuable. If 2G operators ANYWAY have to pay for the spectrum at the same rates as the 3G spectrum, they might as well bid for 3G spectrum - so operators who chickened out of bidding at the higher levels would now consider bidding for 3G.
I expect that soon after the auction concludes, we will see a rethink by the government, and they will leave 2G spectrum pricing untouched. But the winners of the 3G spectrum would be in trouble, because they would have already bid extremely high for 3G spectrum, and cant back out just because 2G spectrum is not being charged for!
At these high prices, the 3G winners would find that they have to price 3G data access prohibitively high - and will not be able to attract large number of customers for 3G, and so they are stuck in a very unprofitable situation. If they price it low, they can attract a lot of customers, but they might still find it difficult to service the debt that they took on to bid for the 3G spectrum.
In a lot of ways, this is similar to killing the goose that lays the golden eggs.
The reason why Indian operators are able to succeed at such low costs, is because they dont care about ARPU - they just care for overall revenues to be high, which they acheive by increasing penetration. In the current scheme of things, license costs are a percentage of revenue - 10%, 8% and 6% of revenues depending on the circle. So as long as the fixed costs are covered by the revenue, operators are profitable. But the moment they are forced to pay massive costs for spectrum, this model will not be viable - the amount of revenue they have to make to get profitable would go up dramatically. This means they can no longer be ambivalent about falling ARPU - they would be forced to increase ARPU. At higher ARPUs, significant number of customers would be priced out of the market.
Quite obviously, this is a bad policy for the government to adopt - so the only reason they are doing this, is because this will make 3G spectrum more valuable. If 2G operators ANYWAY have to pay for the spectrum at the same rates as the 3G spectrum, they might as well bid for 3G spectrum - so operators who chickened out of bidding at the higher levels would now consider bidding for 3G.
I expect that soon after the auction concludes, we will see a rethink by the government, and they will leave 2G spectrum pricing untouched. But the winners of the 3G spectrum would be in trouble, because they would have already bid extremely high for 3G spectrum, and cant back out just because 2G spectrum is not being charged for!
At these high prices, the 3G winners would find that they have to price 3G data access prohibitively high - and will not be able to attract large number of customers for 3G, and so they are stuck in a very unprofitable situation. If they price it low, they can attract a lot of customers, but they might still find it difficult to service the debt that they took on to bid for the 3G spectrum.
In a lot of ways, this is similar to killing the goose that lays the golden eggs.
Tuesday, May 11, 2010
Barking up the wrong tree!
Last week, the Indian government announced a ban on Chinese Telecom equipment. While this has been discussed for quite some time now, the news of the ban still came as a surprise, because it takes a lot of guts by the government to come up with such a confrontational move.
The rationale for this ban is that Chinese Telecom imports could jeopardize India's security - while no one bothered to explain how security could be jeopardized, I guess the main worry is about things like sabotaging equipment, using a timebomb that is already present in the software, or sending instructions to disrupt functioning of the equipment as part of a regular software update. In the event of a war between India and China, it will be extremely foolish for India to rely on Chinese telecom equipment - even for civilian use.
However, what is the guarantee that American equipment has no security issues? Or for that matter Swedish equipment? Or Israeli equipment? While it is unlikely that India will fight a war with the US, Sweden or Israel, security considerations are not just about wars. What about spying, corporate espionage, etc?
Indian telecom market has grown to be one of the most significant markets in the industry. We add over 20 Million mobile users each "month" - this is the population of Australia! We spend tens of billions of dollars every year on telecom equipment. In fact the amount of money India pays for telecom equipment each year to foreigners dwarfs how much we pay foreigners for defence equipment. When it comes to defence, we have technology transfer clauses, we have requirements for domestic manufacturing, etc - because we realize that we have to be in control of the equipment eventually, and cannot afford to depend on outside help forever. When it comes to telecom equipment, why are we not insisting on such clauses? Telecom equipment is as important for our national security as defence equipment is.
Most telecom equipment is purchased by private sector telecom companies - but the government can atleast set the agenda when it comes to purchases by BSNL. What if BSNL insists that 10% of any contract has to be locally fulfilled by Indian partners. Or gives incentives for local procurement of the equipment? In fact if TRAI can step in and ban Chinese Telecom equipment purchases even by private telecom operators, why not mandate that private telecom operators have to procure 10% of their requirements locally? And mandate that this 10% should not be passive equipment like cables, towers, etc - but active equipment like Switches, base stations, etc. Because this industry does not even exist in India, they can start small, and slowly scale up the local content over time.
If we really care about security, it is in our long term interest to set up a thriving domestic telecom infrastructure industry. Initiatives like banning the Chinese will not work in long term - India is a big enough market, and Chinese equipment has a big enough price advantage, that it becomes attractive to setup dummy entities in some other jurisdictions to bypass these artificial restrictions. Do you expect Indian customs officials to pore through base station components and firmware to determine the origin of the product?
There is another important reason for India to encourage a domestic telecom industry. The Nano project by Tatas has shown that Indian engineering is second to none, and is best suited to create products specifically targetting Indian markets. Indian requirements are dramatically different from requirements in Sweden, US, etc. Nokia has done a great job customizing their product for the Indian market when it comes to handsets, but when it comes to infrastructure equipment, India uses pretty much same equipment as the rest of the world. One problem caused by this one-size fits all approach is the power situation. Power is not reliable in India - so towers need to have power backup solutions, generators, etc. Also because of extreme heat and dust in India, airconditioning requirements are also higher. The power backup needs to be capable of handling airconditioning requirements as well - so it adds very significantly to the cost of the deployment.
Maybe a solution engineering specifically for Indian conditions would do away with the requirement for Air-Conditioning. Maybe someone can create a solution that uses much lesser power. These solutions would be much better suited for Indian conditions, and would reduce the cost of deployment. The best part of this example, is that it is not a hypothetical example. Sloka Telecom - an Indian startup has created WiMAX base stations that do not require any air-conditioning, and use very little power, so that power backup requirements are lowered quite significantly. This makes the cost of deployment lower, and allows the operator to recover his investment at much lower ARPU.
Whether the ban on Chinese equipment stays or goes, it is high time India put policies in place to promote domestic companies to create telecom infrastructure. We should ensure that at least some of the billions of dollars that we spend on telecom each year comes back to us.
The rationale for this ban is that Chinese Telecom imports could jeopardize India's security - while no one bothered to explain how security could be jeopardized, I guess the main worry is about things like sabotaging equipment, using a timebomb that is already present in the software, or sending instructions to disrupt functioning of the equipment as part of a regular software update. In the event of a war between India and China, it will be extremely foolish for India to rely on Chinese telecom equipment - even for civilian use.
However, what is the guarantee that American equipment has no security issues? Or for that matter Swedish equipment? Or Israeli equipment? While it is unlikely that India will fight a war with the US, Sweden or Israel, security considerations are not just about wars. What about spying, corporate espionage, etc?
Indian telecom market has grown to be one of the most significant markets in the industry. We add over 20 Million mobile users each "month" - this is the population of Australia! We spend tens of billions of dollars every year on telecom equipment. In fact the amount of money India pays for telecom equipment each year to foreigners dwarfs how much we pay foreigners for defence equipment. When it comes to defence, we have technology transfer clauses, we have requirements for domestic manufacturing, etc - because we realize that we have to be in control of the equipment eventually, and cannot afford to depend on outside help forever. When it comes to telecom equipment, why are we not insisting on such clauses? Telecom equipment is as important for our national security as defence equipment is.
Most telecom equipment is purchased by private sector telecom companies - but the government can atleast set the agenda when it comes to purchases by BSNL. What if BSNL insists that 10% of any contract has to be locally fulfilled by Indian partners. Or gives incentives for local procurement of the equipment? In fact if TRAI can step in and ban Chinese Telecom equipment purchases even by private telecom operators, why not mandate that private telecom operators have to procure 10% of their requirements locally? And mandate that this 10% should not be passive equipment like cables, towers, etc - but active equipment like Switches, base stations, etc. Because this industry does not even exist in India, they can start small, and slowly scale up the local content over time.
If we really care about security, it is in our long term interest to set up a thriving domestic telecom infrastructure industry. Initiatives like banning the Chinese will not work in long term - India is a big enough market, and Chinese equipment has a big enough price advantage, that it becomes attractive to setup dummy entities in some other jurisdictions to bypass these artificial restrictions. Do you expect Indian customs officials to pore through base station components and firmware to determine the origin of the product?
There is another important reason for India to encourage a domestic telecom industry. The Nano project by Tatas has shown that Indian engineering is second to none, and is best suited to create products specifically targetting Indian markets. Indian requirements are dramatically different from requirements in Sweden, US, etc. Nokia has done a great job customizing their product for the Indian market when it comes to handsets, but when it comes to infrastructure equipment, India uses pretty much same equipment as the rest of the world. One problem caused by this one-size fits all approach is the power situation. Power is not reliable in India - so towers need to have power backup solutions, generators, etc. Also because of extreme heat and dust in India, airconditioning requirements are also higher. The power backup needs to be capable of handling airconditioning requirements as well - so it adds very significantly to the cost of the deployment.
Maybe a solution engineering specifically for Indian conditions would do away with the requirement for Air-Conditioning. Maybe someone can create a solution that uses much lesser power. These solutions would be much better suited for Indian conditions, and would reduce the cost of deployment. The best part of this example, is that it is not a hypothetical example. Sloka Telecom - an Indian startup has created WiMAX base stations that do not require any air-conditioning, and use very little power, so that power backup requirements are lowered quite significantly. This makes the cost of deployment lower, and allows the operator to recover his investment at much lower ARPU.
Whether the ban on Chinese equipment stays or goes, it is high time India put policies in place to promote domestic companies to create telecom infrastructure. We should ensure that at least some of the billions of dollars that we spend on telecom each year comes back to us.
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