Anyone who has spent more than ten minutes with me knows how highly I prize my Malcolm Gladwell Outliers-like developed grasp of the obvious. But living in my very myopic, self centered, cloistered world it is hard to identify things that are obvious to the entire world and not me from those obvious only to me. This weekend I installed an auto mated garage door opener and stumbled upon the value of doing things in the physical world. After spending more hours than it should take and skinning more knuckles than reasonable, I achieved great satisfaction in pushing the remote and watching the door open and close. In fact, I achieved so much satisfaction, one day later I am still pushing the button to admire the physical manifestation of a day's work. At the top of this post you see a video from Mike Rowe from a talk actually given at the E.G conference, not TED, highlighting the value of the lost art of "real" work. I deeply, deeply believe what he said and having wasted four years of college because I was filling out a check list rather than striving for a goal I proselytize his message on a regular basis - with words. Now I did it with deeds.
It made me feel really good to invest a full day working with tools into a garage door that will go up and down with a push of various buttons, but I am not advocating garage opener installation training. There is a whole physical world we ignore through our work and more importantly through our ascription of value. When my grandfather was fourteen years old he was provided with a variety of options. College was available, but pharmacy as a trade was presented as an equal viable option. He chose pharmacy and entered a trade school in junior high. As a parent of a sixteen year old boy staring to consider the college path I am hypercritical of where we, the big "we," ascribe value. We, the imperial one, highly value those folks living in the rarified air how create the disruptive technologies that change our world. The Zuckerbergs, Gates, Jobs, Brins and Pages who show up on the cover of Time Magazine and make billions. However, as a parent I have to consider the percentage of these relative the rest of the world and realize the irresponsibility of supporting disruption over contribution.
In the pre rock concert days of the TED conference - when reporters were not allowed and speakers wrote their own presentations about their passions - Dean Kamen used to talk about the value of exercising your brain. He started his talk by addressing the financial and social value we placed on athletics. Athletes are adored by, and paid, millions. But there are only three hundred and fifty places in the NBA and the realization of the dream to achieve one those places is reserved to relative few. He further explained the limitations of advancing athletic skill relative to the infinite ability to expand our brain. He put actions behind his words and created US First. Within a few years he had high school children in schools across the country prizing engineering skills over athletics. This is a wonderful thing but as a whole we still focus the lion's share of our attention on the breakouts rather than the contributors. There is a reason the hourly rate of plumbers is climbing faster than the hourly rate of attorneys. It is simple supply and demand - and it is our fault. We are minimizing the value of the careers that lubricate the friction of everyday life in favor of the extraordinary. By definition, the extraordinary is small in number. As a society - and I a may be speaking very US centric here so excuse me if you are reading this outside the US and feel it does not apply - we are creating college as a goal rather than a means to a goal and prizing the financial rewards of the relatively few successful entrepreneurs over the passion which drove them to their product in the first place.
I am a very simple guy with a very limited world view. But in my professional world view - the game one not the lawyer one - I see a myriad of opportunities which do not require college. The perspective of the actual consumer is under represented and highly useful in the industry. What would happen if one of these kids starts to hone their skills in their formative years. They, like those of us who started in the eighties, start to use the tools available to them and learn to use Unity, or build an app. Or maybe even being a tester. They will find themselves developing marketable skills that may displace the current need for a liberal arts degree. They may leave high school and join a developer or a publisher. They may be content for the rest of their lives. Or maybe, one day, they will look over at a guy with more skills, who's walls go all the way to the ceiling and drives a Porsche and ask him how he got there. The guy will explain he got a degree. Now that kid will go to college with a purpose other than watching cartoons and smoking pot until they move back in with their parents. Or, something may burn so strong in their belly they have to leave it all behind to pursue their idea. A pursuit born of a compelling need to build it and get into the world, not the need to be a billionaire.
Don't get me wrong. I am still riding my son' ass to go to college, because I am deeply afraid of him living in my home forever and he is not training a plumber's apprentice, but I hope I afford him the breathing room, understanding and support to allow him to determine his own goals provide the platform for him to achieve them - regardless of how much Mark Zuckerberg is worth after the IPO.
I read this article about the trade off for privacy and this quote from Ron Conway really stood out "For that value tradeoff, they're willing to provide information." I completely agree with him and not just because his support of his iconic investments is legendary. But his statement is not really relevant to most of what is going on at companies giving rise to the concern. We really do not know and cannot imagine what is being done. The government is not allowed to access the same information without a warrant, but the fiction of "consent through EULA" finds permission buried deep inside what consumers call a "click through agreement" and the drafters call a license grant.
Rather than go into a whole new rant, I am just reposting something I wrote about a year and a half ago. Sadly, even though we are becoming more aware from great editorials like this one by Lori Andrews in the New York Times, other than attempts by the powers that be to reframe the argument, not much has been done. Have a look at the video at the top of the page for Mitchell Baker's simple and logical solution, but in the mean time you can read my post from June 2010 to see what set me off. . . .
Sure E3 is going on and you might click through to this post to read something I had to say about it. Do you really think there is anything left to say? It is back and the whole LA Convention center is full of unicorns shitting rainbows while puppies dance on their backs. If you cannot make it down there, you may be better off. You do not want to step in a rainbow pile. There is so much E3 news I went ahead and wrote about something that is bugging me. But if you would rather see E3 stuff, here to go ahead.
I purchase a bunch of random things through itunes and because there is no real correlation between the timing of the purchase and the timing of the confirmation receipt, I often do not even open the purchase confirmation emails. But last week I got a few emails in a row and opened them to find out I purchased:
ViKey - Bộ gõ tiếng Việt - TELEX, VNI, VIQR, v2.0, Seller: Dinh Ba Thanh,
MyFlickr, v1.0, Seller: Do Tuan Anh ,
VnExpress 2010, v3.1, Seller: Do Viet Tuy,
VietnamCar 2010, v1.0, Seller: Do Viet Tuy,
DTCK 2010, v1.0, Seller: Do Viet Tuy, and
CafeF (Special Edition), v1.0, Seller: Pham Cao Phuc.
Another email told me I purchased VietStock 2010, v1.0, Seller: Do Viet Tuy. Curiously, I did not remember buying any of these things. I went to call the iTunes store, but I could not, there is no number. I looked on line and I noticed hundreds of posts on the official Apple discussion boards and across the web about people who had their accounts hacked and found no assistance from Apple. They all said the only recourse was through the credit card company, so I called my credit card company and they without any questions, they voided out the charges. They said it happens all the time.
After hanging up I realized I could not upgrade my iPad apps. iPad apps and related upgrades are tied to the user account at the time of purchase. My cunning grasp of the obvious connected the two issues. I called iPad support and devoted the next hour of my life speaking with a series of very helpful and happy Apple cult members who were very sorry I was having issues. Apparently they can call iTunes help, but consumers may only reach it by email. While they were genuinely kind and helpful, was somewhat disheartened by their responses. Apple gathers a bunch of data and asks for permission to use it. They tell me their genius will suggests interesting songs and movies if I let it track what I buy. Apps will be better if they can track location and if I lose my device, they can even tell me where my iPhone or iPad is if I just give them permission. When my credit card numbers were stolen Amex was able to identify aberrant usage within one charge. I’ve used the card all over the world with multiple purchases in multiple cities in a week and they never asked a question, but one charge in one grocery store in Los Angeles, and they nailed it. They called and asked if I made the charge, I told them I did not, and I had a new card in my hands within twenty four hours. So again, applying my highly regarded grasp of the obvious right around minute 46 of our getting to know you call I asked the very kind Apple person
I’ve had the account for about four years. Wouldn’t the store identify a sudden burst of purchases in Vietnamese and at least ask if it was me?”
“Oh no Keith” we are on a first name basis now, they are nice, they are Apple and they care about me ”that would be an invasion of your privacy and we would not do that. We would never look at what you buy.”
“BULLSHIT” I wanted to yell, but I didn’t. This NPC is too far gone. Far be it for me to embark on the deprogramming.
Contrary to what my Applebot told me Apple does take our data. Even though we don’t read the scrolling EULA, which was handed down through generations of very clever, albeit wordy, legal monks in the purest pursuit of full disclosure, we see their recommendations. Unless we believe in the recommendation fairy, the continued improvements points to their watching us. They tell us so. They promise provision of better service by parsing, analyzing and searching for correlations. What we may not know - because no one really reads the EULA - is Apple’s interaction with you does not end with the purchase. The company better serves you by tracking what you are playing in your library, how often it is played and when you last played it. We would be pissed if a little sister did this to you, even worse if it was a parent, but we let Apple do this and use it. I am not coming down on Apple here, Amazon has been doing this for years, as has TiVo, your credit company and Google. When it comes to our privacy, this is just one of the many aspects we give up without thought. Probably because it is too hard to wrap our heads around the value and amount of meta data flowing from the real data we provide and we really do not think any will do anything with it. We could not be any more wrong.
In the old days if you told someone you bought an album or a book it did not mean anything. But our data no longer exists in a vacuum. Now, the cloud around that data seamlessly blends with other clouds of data, exponentially growing with each merger. The cloud grows as the amount of data grows. We only see the data pile, whole new branches of science are looking at the invisible cloud and this stuff, is being used against us.
The press is going nuts over Facebook privacy policies, but the discussion of access to, and spread of, data we never intended to share is much quieter - bordering on nonexistent. In addition to what we disseminate by putting something up on Facebook or purchasing through iTunes or Amazon, we build vast silos of data just by using a browser. We have a personal silo on Facebook full of pictures, thoughts and connections,
a web activity silo stored on our ISP, a financial silo held in credit reporting agencies and banks built through our purchases and credit requests, a personal interest silo when we click on an ad, and more we can not even conceive. It is hard enough to imagine what companies are doing with the data we provide – Facebook can predict future hookups between members with 33% accuracy – we cannot even begin to wrap our heads around what will happen once the silos connect and network effect kicks in.
The Financial Silo.
Almost all of us are comfortable using credit cards. Aside from the risk of the waiter or store clerk stealing your number, we really don’t think about the individual purchase. Some people even feel comfortable enough to register with Blippy.com, making a game of broadcasting everything they buy. Why should we be concerned about individual purchases? Who could possibly care about your buying a 12 pack of Diet Coke and a game at Wal Mart? No one ever thinks these purchases speak to who we are, but credit card companies and banks build psychological profiles based on what we purchase and where we buy it.
The exploration into cardholders’ minds hit a breakthrough in 2002, when J. P. Martin, a math-loving executive at Canadian Tire, decided to analyze almost every piece of information his company had collected from credit-card transactions the previous year. Canadian Tire’s stores sold electronics, sporting equipment, kitchen supplies and automotive goods and issued a credit card that could be used almost anywhere. Martin could often see precisely what cardholders were purchasing, and he discovered that the brands we buy are the windows into our souls — or at least into our willingness to make good on our debts. His data indicated, for instance, that people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff. People who bought carbon-monoxide monitors for their homes or those little felt pads that stop chair legs from scratching the floor almost never missed payments. Anyone who purchased a chrome-skull car accessory or a “Mega Thruster Exhaust System” was pretty likely to miss paying his bill eventually.
Martin’s measurements were so precise that he could tell you the “riskiest” drinking establishment in Canada — Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the “safest” products — premium birdseed and a device called a “snow roof rake” that homeowners use to remove high-up snowdrifts so they don’t fall on pedestrians.
These profiles are then used by credit card companies and banks to determine when to offer home loans, lower existing credit lines, or deny new credit, Without even thinking about it, we are building a profile of ourselves which is available to all who review our credit. With the passage of the new federal banking bill, the US Government will also have access to these records.
Web Surfing Silo
While credit card companies, and the US Government are building profiles of us, we are building profiles of ourselves. Our surfing habits create a unique “Clickprint” that can empower those reviewing the data to anticipate our behavior. Reams and reams of data are gathered and despite the statements contained in privacy policies, distributed. In 2006, AOL fired its CTO over the releases of stored and anonymized search data. AOL found the supposed anonymous data could be used to identify individuals making the searches. Balaji Pdmanabhan and Catherine Yang of Wharton and UC Davis, respectively, identified the reason for the concern in their paper “Clickprints on the Web: Are There Signatures in Web Browsing Data?” They found retailers can distinguish between different users in as little as three sessions and behavior can be identified in anywhere from 3 to 16 sessions. Imagine the profile we build when all of our surfing habits are taken into account. Four years later the situation is even worse.
In a more recent paper, Balachander Krishnamurthy and Craig Wills of AT&T Labs and Worcester Polytechnic Institute showed how advertisers can identify users by simply looking to the referral page for the click through.
A key question that has not been examined to our knowledge is whether Personally Identifiable Information (“PII”) belonging to any user is being leaked to third party servers via Online Social Networks (“OSN”). Such leakage would imply that third parties would not just know the viewing habits of some user but would be able to associate these viewing habits with a specific person.
In this work we have found such leakage to occur and show how it happens via a combination of HTTP header information and cookies being sent to third-party aggregators. We show that most users on OSNs are vulnerable to having their OSN identify information linked with tracking cookies. Unless an OSN user I aware of this leakage and has taken preventive measures, it is currently trivial to access the OSN page using the ID information. The two immediate consequences of such leakage: First, since tracking cookies have been gathered for several years from non-OSN sites as well, it is not possible for third party aggregators to associate identify with those past accesses. Second, since users on OSNs will continue to visit OSN and non-OSN sites, such actions in the future are also liable to be linked with their OSN identify.
Tracking cookies are often opaque strings with hidden semantics known only to the party setting the cookie. As we also discovered, they may include visible identity information and if the same cookie is sent to aggregator, it would constitute another vector of leakage. Due to the longer life-time tracking of cookies, if the identity of the person is established even once, then aggregators could internally associate the cookie with the identity. As the same tracking cookie is sent form different Websites to the aggregator, the user’s movements around the Internet can now be tracked not just as an IP address, but as associated with the unique identifier used to store information about users on an OSN. This OSN identifier is a pointer to PII about the user.
The leakage through sale of data was not only found on Facebook, but Myspace, LiveJournal, Hi5, Xanga and Digg as well as Google through DoubleClick and Yahoo through Right Media. While this may cause us to shake, there is more to be concerned with than teh leaks we can identify and stop. Facebook and Linkedin have actually created data science teams to analyze data and look for behavioral correlations to clickprints. According to a book critical of Facebook, Mark Zuckerberg used to play with the data to entertain himself.
As the service's engineers built more and more tools that could uncover such insights, Zuckerberg sometimes amused himself by conducting experiments. For instance, he concluded that by examining friend relationships and communications patterns he could determine with about 33 percent accuracy who a user was going to be in a relationship with a week from now. To deduce this he studied who was looking which profiles, who your friends were friends with, and who was newly single, among other indicators.
The threat is not ephemeral. Just to make sure, the FBI wants your ISP to keep all of your data for two years
Merging The Data
Ok, so the banking and credit side of the world knows about financial situation and the retail side of the world may know about our interests and peccadillos, but I am just being overly sensitive. Relative Loss of privacy is simply a cost of living in a faster, more fluid world. Right? Not really. What happens when the silos merge? Banks, credit card companies retailers and others can all merge the silos. Each has access to both silos by virtue of advertising programs and voluntarily provided data. We opt into the financial solo, but no one realizes a click through
on a credit card or refinance offer potentially merges silos. But if I am not doing anything wrong, there is nothing to worry about. Sure, you are not doing anything wrong in the present, but how does it look through behavioral prediction – a science, by the practitioners own admission is inaccurate at best. In a Minority Report kind of way and erring on the side of caution, companies wanting to protect investment will reduce your credit , and the TSA may put you on the no fly list on the basis of information taken completely out of context. Analysis of these vast data and metadata libraries is done by computers, not humans. Computers, sifting through reams and reams of data, spitting out tinier but still vast reams of data for application of algorithms for conversion into measures within a “acceptable” margin of error. Anyone whose credit rating has been dinged by a mistaken attribution knows the hell of being caught in a “guilty until proven innocent” cycle after falling within the margin of error. Imagine what happens when it gets into the hands of the government.
It gets even scarier when we consider Google not only has the search data, but Google desktop, creates metatags for every file on a computer, gmail indexes every email and its content, the proposed Google health service will provide access to medical data, and android phone provide communication and location data, google voice transcribes and indexes all voice mails and frequently called numbers, and the facial recognition could give access to comings and goings in public places. Google, and many others, will know everything about us, because we told them.
In the old days, when they were not being investigated, these companies would stand up for us. Google actually stood up to the US government and refused to offer certain services in China to avoid the risk of having to disclose data. Pre 9/11 the US Government did not have access to the data, post 9/11 through the Patriot Act and the new rules contained in the recently passed Federal Banking Bill, they get access to both silos. Even Google is not protecting data. The data accidentally gathered while mapping streets in Europe was recently handed over to authorities in Germany, France and Spain. Google admitted the collected data was in error, but they are handing over data which the governments may or may be actually be entitled to collect. The data ties IP addresses to the sites accessed.
In the even older days, we could live without footprints. When you wanted to see someone you would send a calling card. You could not get into someone’s house unless you were invited. No one knew where you went unless you told them. If a company wanted information about you, it asked for it. If the government was interested
in what you were doing, they investigated through formal requests to the courts and subpoenas were issued after a showing of cause. Today, in the interest of “helping companies to help us Each one of us has a Great Pacific Garbage Patch of data we never knew we built. It is time to clean up our garbage patches. Each data set we provide, wittingly and unwittingly, is part of a network, each connections grows the network, and therefore computing power, exponentially, until something much more powerful than us, is mixing, matching, dissecting, connecting, analyzing and organizing every piece of data about us. And the thing doing it, really doesn't care. The danger lies in what we do not know. The loss of privacy is increasing on an exponential rather than a linear course and when the last glimmer is extinguished, it will leave with a whimper, not with a shout.
I once again had the honor of being invited to the DLD conference. I guess no one read my post from last year. In case you are curious, my hotel was better. . . well, better is a complicated concept. There is no weather pattern over my bed, but of course there would not be as heat rises and tends to collect in the attic - or as they call it here, room 504. It may not really be the attic. I only call it that because the elevator stops on the fourth floor and I had to exit the warm portion of the building and walk up the wooden staircase to the fifth floor to get into a room with a slanted ceiling and a dormer window. My client picked the hotel and did warn me it was not the caliber of the one I stayed in last year. But with the frostbite wound earned in my five star hotel room last year still visible on the little toe of my left foot, I figured it could not be worse. The VC's behind this startup are certainly very proud of the selection, it reinforced my belief that I am too old to be a startup. It was not until I was here that I learned the English translation of the name of the hotel's street is probably "Street where women take their clothes off and dance on tables for money" or perhaps "place where people can display their ability to make arabic signs and hang them in between sex shops." This a stark contrast from last year which looked like it was designed by the level designers from Wolfenstein.
Like many other European hotels and gas station bathrooms along Route 66 in the United States, the room key has a very large attachment to remind me to leave it at the desk before I leave. Unlike other European hotels, the front door of the hotel is locked at 9 in the evening and because the key for the side door is also attached the brass and fringed fixture so I was instructed to carry the apparatus which was roughly the size of a small child, with me all day. So to answer those who were thinking it but afraid to ask, I was indeed excited to see you, but it was actually a key to room 504 at the Hotel Deutsches Theater in my pocket.
The conference itself is great. It is very much like going to TED or EG, if half of the people spoke a different language. The interesting part is that it is not always the same part. A healthy slice of Americans are thrown in for flavor with a smattering of Indians and people from other parts of the world, the conference is predominantly German and Isreali. So at any one time, a good chunk of the people milling about during the break choose to speak either German or Hebrew. As a patriotic American, I chose to speak neither. The language differences afford a very effective brush off ability. Rather than the usual "Hey, I'll be here all three days, let's catch up later." Someone who does not want to talk to me can just give me a blank look with raised palms in an "I don't speak English" kind of way.
Fortunately, the panels remain entirely in English and most of them do not sound like an episode of Sprockets. Once again, there were big names and big ideas. There is not another place on earth where Jack Dorsey, Freeman Dyson and Yoko Ono would be on the same schedule. I am not going to go into it because you can read better coverage at sites like Wired, the WSJ, All Things D or by doing whatever it is you do with the hashtag DLD, or see it streaming by searching DLD 2012. But one panel stood out in my mind not for what was discussed, but for the elephant sitting in the room that was not discussed.
The panel was called "New Studios" and was made up of Danny Zapin of Maker Studios, Jesse Draper of The Valley Girl Show, Yoel Flan of The Shine Group
, and Mark Read of WPP. It was a mixup of old school money with new school content. Maker Studios built tens of millions of subscriptions on the web and Jesse Draper built a syndication network across the web and physical locations that reaches several million. The role of the industrialist was played by Yoel Flann who is aggregating shows and Mark Read played the role of status quo proponent. Mr. Read pointed out, quite correctly, that television is not going away. In fact the markets are growing dramatically in BRIC countries. He explained how CES was dominated by screens. Big screens, small screens, in between screens. My favorite line was in response to my question when he channeled Dr. Seuss with "in the future we will see four screens maybe more screens." What Mr. Read failed to address is how the content is going to get to the screens. Even though all those screens look the same from the front, they are very, very different from the back. They are all IP addressable. This means people who already use DVRs to allow them to care very little about which network is broadcasting a show, will soon care very little about whether there show is being broadcast by a network, cable operator or website. Great news for everybody sitting to the left of Mr. Read, but in a Darwinian way, not so good for him. According to WPP's last publicly available annual report the revenue for all of the advertising agencies within the group was right around one half the revenue of the media management group. The profit of the agency is driven by the high margin media buying business. A cynic would also point to the reduced accountability of buying a Super Bowl ad with Neilson reported numbers relative to seeing actual click through from a web campaign. Mr. Read cannot buy up inventory from the others on the stage because it is simply too expensive. The cheaper the ad buy the more expensive the dollar being spent. So what happens moving forward?
From the consumer side we know we will see one screen, and depending who you listen to, we will talk, gesture, dance or sing to find the show we want to see. From a personal perspective I can tell you my son really does not care whether the latest episode of Top Gear comes in from BBCA on our cable system or through the mac mini plugged into the television. The only thing he knows is he sees it six months sooner streaming on the web. But from a sponsor perspective things become very convoluted. Today, on buy goes into one box. If I want television I use television metrics and I buy from one party via one set of rules. Prices vary between network and basic cable (with some basic cable shows drawing more than network there is no logic, but it still works this way) but it is all basically the same. If I buy web I use a completely different set of metrics and a completely different rule set. But what will it look like when I have the choice between 1.5 million eyeballs I think are watching the Daily Show on Comedy Central at 11 p.m. and a guaranty of delivery 1.5 million eyeballs to my product in the same time period through the very same screen? Especially when the latter is significantly cheaper than the former. The decision becomes easy and the argument that "network will always be network" becomes even weaker than it is today relative to cable. The decision becomes easy and the argument that "network will always be network" becomes even weaker than it is today relative to cable. There is an old line attributed to everyone from Henry Ford to John Wannamaker that half of all advertising dollars are wasted, but we don't know which half. Well, now we do. The only question becomes "what happens to those companies who make the lion's share of their profit from selling both halves?"
By now I am sure Walter Isaacson's report of Steve Jobs feelings about Android is news to no one. At one point during the interviews leading up to the greatest retelling of the monomyth since Luke Skywalker, Jobs said:
I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40bn in the bank, to right this wrong," . . . . I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this.
The timing of that last breath relative to the life of Android is also news to no one. What I have not seen is the realization that Google may have stolen the frame, but Amazon stole the art. And while the media continues to report on the Amazon vs. Apple battle for the bedtime and reclining market, the real battle is Amazon vs. Google. The success of Amazon’s Android running Kindle Fire and focus on the Apple battle masks Amazon’s role as the new standard bearer in Steve Jobs’ war against Google which may well have cause Google to be hoist with its own petard.
Apple never hid its focus on what products can do, rather than providing tech specs. In fact, from the day he returned to Apple, Jobs talked about it to anyone who would listen. The message was clear in the first iMac commercial telling people they were two steps away from getting on the Internet,
At the same time, Dell, the world's largest computer maker, Dell, was running a commercial showing an astronaut floating in space. Twelve years later, Palm still didn’t get it when they launched an iPhone competitor by showing people dancing in a field,
and Motorola was no better with their iPhone killer introduction looking more like a teaser for a Michael Bay film than a phone.
Jobs vision for Apple was not at all curious, but it was certainly curious that no other technology company copied him - until now - and Amazon copied it all. Apple did a ton of things right to make the iPad work, but the most important was ensuring the quality of the user experience by building and guarding its own ecosystem. Unlike Google, Apple makes sure there was only one type of hardware, running one flavor OS. Then it built a wall around its beautiful garden.
Ensuring the user experience is so important, Apple takes great steps to protect its garden from the detritus left by foreign bodies. It entered into license agreements for distribution of broad swaths of content and committed to review and approve every single piece of software introduced into the garden and even acquired an ad service to make sure the commercials inside the products accepted into the garden would be up to Apple standards. The result, is the single largest homogenous technology base in the industry. Oh yeah - one more thing – Apple has everyone's credit card number.
Amazon was hitting its stride at the time Steve Jobs returned to Apple, and Jeff Bezos also knew success depends on customer service. The company started to provide customer service when it was easy. It only had to deliver the right product on time, and have a customer support phone number. Just like Apple’s simply providing a computer that worked, Bezos simply gave customers what they ordered. At the time, both concepts were revolutionary. Like Steve Jobs, Jeff Bezos did not stop after the easy parts. Just as Jobs famously made sure the parts of the products on the inside are as beautiful as the outside, Bezos invested vast amounts into building unseen technology to magically enhance the user experience – even in ways the consumer never noticed. By doing so, he built a massive user base into a massive company. Oh yeah- one more thing- Amazon has everyone’s credit card number.
Lots of tablets launched last year, but Amazon and Apple were the only ones to launch tablets with clear paths to doing things – and they are the only successful players in the market. It is also no coincidence both tablets are neutered relative to most of the others on the market. Techies think everyone wants to customize and program their shiny little noisemakers, but Apple was the first to identify that just like in video games, the perception of freedom is much more important than freedom itself. Steve Wozniak said it best when I asked him whether he thought the iPhone was a modern version of the Newton (little known bit of trivia – Jonathon Ive designed the Newton 110) and he said No, the Newton learned you, you learn the iPhone.
Any game designer will tell you that giving a player too much freedom will make them bored. Players must be led in a way they do not know they are being led. That is why Amazon and Apple would make great game designers. While the two companies pursued the same consumer, in the same manner, they attacked the market from completely different directions.
At its very core- no pun intended, - Apple is a hardware company and Amazon is a retailer. This is important because their decisions will be made to maximize revenue in their core businesses. Some may say Apple is more than hardware, but the company, like Sony used to do and Nike does with shoes, makes its money on selling hardware at higher margins than any other computer company. Jobs always said the software hardware relationship was critical to making the best products, but, for the most part, the software, is not sold on its own and most software businesses within Apple are small relative to hardware sales. In laying the groundwork to launch media devices Apple successfully commoditized music, television, film and game content and gave it to the consumer, so the company could make its profits on the hardware. Jobs compared the company to BMW and if you look at the product lives and update cycles, they are not dissimilar. “I am going to sell you the greatest thing the world has ever seen, and then I am going to show you why it is inferior to my new greatest thing the world has ever seen.”
Amazon is a software company and it is slowly but surely turning its retail products into software. Unlike Apple, hardware only exists to facilitate the software transactions. The company built more software than any other retailer on the planet, but like Apple they don’t sell it. All of the coding goes into an invisible infrastructure with a public appearance that is charitably described as "dated" – but in the case of Amazon this is its strength, not a weakness. With many, if not most of the same content relationships as Apple, the company sells streams as well as downloads. However, Amazon makes its money on the content sales. The company looked to its first hardware device years ago as a lost leader to enable increased engagement with consumers, and higher margins on content sales. In determining what people want in a device, Apple found people did not always need the power of a computer. So it looked at computers, pared them down to the most common uses, put them on a tablet and sold them at a great margin. Amazon realized people did not need all of the expensive stuff built into an iPad, so it pared its tablet down to the most common uses, and priced it slightly below cost. In doing so, Amazon commoditized the tablet. Amazon did not steal the concept of selling digital media into their own hardware, and the first Kindle actually launched well before the iPad. But it did steal, the concept of content over hardware. Every other company was trying to make a better table than Apple, and some did. Amazon was the first to realize they could launch a worse tablet, so long as consumers were able to easily do the things they like most. Choices are limited, but they are limited to what people want. They want this stuff so much, they bought a million Kindle Fires a week. This story plays out like John Woo directed it. Apple is underpricing Amazon on the content, while Amazon is underpricing Apple on the hardware – unless you look just out of frame at the bigger gun Amazon is pointing at Google.
If you are reading these words, you just spent a whole bunch of time reading gaseous belch about why content and access to content are more important than hardware in the tablet world but nothing about Amazon fighting Google. This is where it all comes together. The consumer only cares about content and the providers and creators of content care about getting paid for content. Payment depends on the size of the installed based and the ability to settle a transaction. Because there is no single source of content and Google is still asking nicely for people to put their credit card data into a Google Wallet, no one really gets paid for selling content on Android. The only money made, even on apps like Angry Birds, is through advertising – and for obvious reasons, Google is just fine with that. But before a content provider decides to release an application for free and support it long enough to grow a base large enough to generate significant revenue, it has to run on Android. Therein lies the rub.
Unlike Apple with its single OS and device, Android has a variety of flavors and devices and they are not all the same. Deployment on Android reminds many of the bad old days of PC development because applications must be tested across many platforms and configurations. Kindle Fire to the rescue. By building the Kindle Fire on a customized layer of Android version 2.3, (Gingerbread) and then selling it to 14 million people, Amazon created the second largest homogenous base of users in the tablet world and by far the largest homogenous base of Android users and the only one with a built in payment method. This should be a big win for Google. Just like IBM carried Microsoft's OS to the world like a virulent, pestilent disease, the Kindle Fire is spreading Android over iOS and finally making it worthwhile for developers to invest time in apps. Right? Not really. Amazon is giving consumers a better reason to shun the higher functioning, newer, pricier Google Android devices in favor of the neutered, smaller tablet running a two generation old OS. All in all, this turns into a big plus for Apple. Apple will continue to make BMW's and Amazon will make Chevy's. The market needs both. A Chevy does what a BMW does - gets you from home to work and back again with the occasional trip to see a movie - and for its real world uses, performance is identical. But people buy BMWs for a few added bells and whistles and all those things they will never do with the car, but can. And of course the prestige associated with telling the world you paid more for your car than a comparable Chevy.
I could argue Amazon is killing Android, but it is not. Google is killing Android. Even though Google is touting the virtues of Android 4.0 (Ice Cream Sandwich), it continues down the same path as earlier versions. Specifically, it will not run on all prior hardware devices, it is will not be universally deployed, and it will be operating on a number disparate hardware platforms. No matter how much Google says it is the same, the hardware will cause variation in performance that impacts the applications. The decision for content providers looking at developing for a disparate base with no payment method vs developing for a large homogenous Kindle Fire base with a built in payment method and promotional channel is very easy.
Begging the question, without the quality applications, can Google grow 4.0 as quickly or successfully as Amazon grows the Kindle Fire? With Kindle serving as a gateway drug to iPad's and slowing Google's march, I have to think Steve Jobs is smiling somewhere.
I am not one to argue Farmville is not a game. I love Zynga's ability to show over 100 million people they really like to play games on line. But what about people who play other games and quickly grow bored? This market has been rumbling for a while and they seem to have found one of the first games. After receiving great reviews and feedback at E3, Liquid Entertainment and Atari's D&D: Heroes of Neverwinter made it to Facebook.
Go ahead, jump in and play. Almost 300k other people did in the first week or so . . . . .
EA and Activision's back and forth banter is making a lot of press - and is certainly fun to watch - but it is sadly nothing new. Those of us enjoying our formative beer imprinting years during the rise of Corona may remember the workers are pissing in Corona rumors started by US Heineken distributors and there are many other similar stories over the years. While at a car show in Pebble Beach over the weekend I came across an old Cadillac ad providing the best way to address these campaigns. In those days they did not use the press, they did not use a whisper campaign, they just talked about themselves.
In 1915, when Cadillac was establishing its reputation as the "Cadillac" of cars, it was the first to market with a V8 Engine. Packard, the major competitor, did not like this and responded by spreading rumors about reliability. The lead copywriter was frustrated by all of the misinformation in the market and tried to figure out the root of the problem. After much thought, he identified it as "The Penalty of Leadership" and sat down and dictated what would become the "Cadillac of responses" for use in the Saturday Evening Post:
In every field of human endeavour, he that is first must perpetually live in the white light of publicity. Whether the leadership be vested in a man or in a manufactured product, emulation and envy are ever at work. In art, in literature, in music, in industry, the reward and the punishment are always the same. The reward is widespread recognition; the punishment, fierce denial and detraction. When a man’s work becomes a standard for the whole world, it also becomes a target for the shafts of the envious few. If his work be mediocre, he will be left severely alone - if he achieves a masterpiece, it will set a million tongues a-wagging. Jealousy does not protrude its forked tongue at the artist who produces a commonplace painting. Whatsoever you write, or paint, or play, or sing, or build, no one will strive to surpass or to slander you unless your work be stamped with the seal of genius. Long, long after a great work or a good work has been done, those who are disappointed or envious, continue to cry out that it cannot be done. Spiteful little voices in the domain of art were raised against our own Whistler as a mountback, long after the big would had acclaimed him its greatest artistic genius. Multitudes flocked to Bayreuth to worship at the musical shrine of Wagner, while the little group of those whom he had dethroned and displaced argued angrily that he was no musician at all. The little world continued to protest that Fulton could never build a steamboat, while the big world flocked to the river banks to see his boat steam by. The leader is assailed because he is a leader, and the effort to equal him is merely added proof of that leadership. Failing to equal or to excel, the follower seeks to depreciate and to destroy - but only confirms once more the superiority of that which he strives to supplant. There is nothing new in this. It is as old as the world and as old as human passions - envy, fear, greed, ambition, and the desire to surpass. And it all avails nothing. If the leader truly leads, he remains - the leader. Master-poet, master-painter, master-workman, each in his turn is assailed, and each holds his laurels through the ages. That which is good or great makes itself known, no matter how loud the clamor of denial. That which deserves to live - lives.
The ad was a huge success. When asked why it worked, Theodore MacManus, the author had a simple reason. “The real suggestion to convey is that the man manufacturing the product is an honest man, and that the product is an honest product, to be preferred above all others.”
I know we do not talk like this any more, but its sure gets to the heart of the matter. It is really the same message Steve Jobs conveyed years later in the Think Different campaign - but with teeth and venom. He is not weighing right or wrong, or high road or low road. It is a collection words assembled to completely and articulately deflate anyone who chooses to challenge them off the playing field. If you have a product to put against my product, have at it. Otherwise, keep your mouth shut.
How much cooler, and more effective, would either side have sounded if they read this before they responded. I realize you can not use such a large collection of words in our age of sound bytes and sub 140 character strings of characters. But translated in today's terms, they could have just said "The two games are releasing within weeks of each other. We are confident the market will prove us right."
After realizing my call for the destruction of Gamestop was for naught, I had to come to terms with the need to accept their business model as a fact of life - even though they are killing the geese who so lovingly innovate, fund, develop and so lovingly deliver golden eggs into their grubby, cold, clammy, unappreciative hands. I even moderated a panel with Gamestop's CEO, and kept my opinion to myself . . . mostly. But do I really have to accept their repeated efforts to persuade us their actions are good for the business. Does the crack dealer stand on the corner and say he is enhancing the junkie's lives, or does he just take their money? Gamestop senior executives do understand that if they have to keep repeating that their actions are good for the industry, they are probably not good and constant repetition will not make it so.
In a recent interview in Edge, Mike Mauler, EVP of Gamestop International said:
"I can understand the feelings," he tells us, "[but] we've sat down with developers and publishers and really gone through the data. I personally think there's a lot of benefit to the publisher.
"A great example is sequels, where there's a large percentage of people who are just not going to spend $60 every single year without being able to do something. They'll look at their shelf and see ten FIFAs, Pro Evos or Maddens.
"Being able to take the older one and do something with it in order to buy the next version is really important to consumers. That drives new sales quite a bit."
To say this is the stupidest thing I ever heard would be an insult to the memory of the pitch I heard for the sperm racing game. This whole new level of stupidity is inconsistent on it's face. He explained the data TO developers and publishers and HE personally thinks there is a benefit? He could not say the game makers see the benefit. He may as well have said he spoke with the plant in his office - or the other EVPs.
I understand they can no longer spew the used car analogy with a straight face, but couldn't they come up with something better than the rest of the argument? The sentence seems to be missing a few words "a large percentage of people who are just not going to spend $60 every single year IF WE GIVE THEM THE OPPORTUNITY TO SPEND MUCH LESS." Isn't this like saying, no one will pay to see Transformers 3 because they just saw Transformers 2 a couple years ago? If Gamestop was not reselling these games at 10% off the very same week they come out, and less every week thereafter, consumers would be pay the USD 60. Those who won't pay will go online and download the older version on XBL or PSN, where the publisher who funded the game and took the risk can be properly compensated. Gamestop, or should I say the Mother Theresa of the game industry, is really not helping anyone by taking the old games off their hands, or capturing all the money they generate. We still get back to the fundamental fact that publishers take risk to make and market games and only get paid on the one sale, while Gamestop profits from multiple sales of the game. Each downstream used sale is one less unit sold by the publisher and therefore less revenue on the game. This impacts initial sales as well as re orders. A healthy stock of used games means Gamestop will not reorder from a publisher.
If this was the whole picture, I could stop here, but you know my posts are never this short. It is time to for Gamestop to fess up and acknowledge their real business. Relative margins reveal Gamestop's actual business to be the collection and resale of used games. New game and accessory sales revenue may equal or exceed the used game revenue, but they do not come close to matching the profit. The stock of used games is financed by the very publishers who are being harmed by the market. They put up the risk capital to make and market the game and put the unit on the shelf. Publishers receive a one time, per unit fee for putting the game into the Gamestop system and are required to pay marketing development funds to Gamestop to have posters and other promotions in store. But Gamestop does not pay for the games, customers do. Gamestop only provides credit until the games are sold. The consumers' payment covers Gamestop's initial outlay, plus a profit. Because Gamestop pays on terms, the consumers' money is in the bank before Gamestop ever makes a payment on the new game units. If the consumers do not sufficiently cover the expense, Gamestop will call on the publishers for price adjustments and protection. While this business shows a profit with no downside risk, the entire retail side is merely a highly cost effective way of funding the used game inventory. To ensure return of the games, consumers who buy a games are bombarded with offers to turn them back in for credit. Each turned in game builds the used inventory, at no cost to Gamestop. When sold, the only person receiving the benefit, is Gamestop. When I put it this way . . . . I don't want to say it sounds like laundering, but . . . . . They take a game unit a publisher should get paid for, run it though a consumer, and turn into a game unit they can sell over, and over, and over, and over without compensation to the publisher.
A while back ago I wrote a big, long rant about the lack of privacy on line. I was, and continue to be, frustrated by the non-consensual insertion of Google and Facebook’s appendages into the most personal crevices of our lives. The growth engine of Web 2.0 - are we on 3.0 yet? - is the aggregation, analysis and leverage of personal information. Web sites are able to passively collect the very same information people used to have request in person. While this collection is the most significant invasion of our privacy since the Spanish Inquisition, We are not able to use the word “privacy” to describe the action because the major benefactors of our ignorant largesse co opted the word. Kind of like when liberals rebranded “progressives.” The current rebranding campaign was launched a while back and continued in earnest at panel discussion on social media sponsored by Marie Claire magazine. Ms. Zuckerberg, sitting with Eric Schmidt and Erin Andrews, victim of cyber harassment, told the audience:
People behave a lot better when they have their real names down. … I think people hide behind anonymity and they feel like they can say whatever they want behind closed doors.'
What kind of asshole could argue with this? Certainly not the one writing this post. But who said the privacy we are concerned about relates to our relationships with others on the web? Sure, the inner bully each one of us suppressed upon graduation from high school may be seduced by the anonymity afforded by the Web, but do Facebook and Google really have to be the Web police. Cyber bullying is a crime and when committed, offenders are prosecuted - Andrews offender is in prison. We do not need them to analyze the Web’s capture of our mental phenotype, but they need us. Facebook and Google were on stage with the victim of an egregious attack to steal the very relevant definition of the word “privacy” and create a new one more favorable to them. They cannot stop the public debate over privacy, but they can certainly change the meaning of the word. Change "privacy" from the ugly reuse of your communications and clickprints and turn it into the "we are here to help make sure no one hurts you."
I learned this one in Philosophy 1 at UCLA. If you frame the argument, you win. No one in the world would advocate anonymity as a shield for bad acts, but this is not the privacy we must demand. We should all be concerned with the access, use and sale of our data by Google and Facebook. Not only are they using the data in ways we cannot imagine to influence everything from loans to job applications, but our very worldview is being shaped by the targeted provision of the search results and newsfeeds we naively believe to be objective. As Eli Pariser outlines in his book The Filter Bubble: What the Internet is Hiding From You your Facebook news feeds and you search results arrive only after they have been filtered by algorithms to determine what “you will like best.” You are not seeing your most active friends lives on Facebook or benefiting from Google’s patented “Page Rank” algorithm. You are receiving what they “think” you will like based on your profile and their determination of how to maximize click through. The gap between our perception and reality is a cloud on our worldview and since Google holds the position of the number one search site in the world, the cloud is a breach of the public trust. Their excuse – “ we are only here to make things better for you” – kind of sounds like it should be coming from a disembodied voice while we sit in a clean white room eating Soylent Green.
Of course they cannot do all of this without our consent, and they say they have it. They hide behind a EULA to say we consented and the use of the information is explained in their privacy policy. They even send us emails every time the privacy policy is changed. But if they think we read the EULA, they are on crack. Some may say it is our own fault for not reading the agreement but the thing was not written as a disclosure document, it was written as a cover your ass document for lawyers forced to defend against zealous class action lawyers. The consent language in the document is incomprehensible to a non-lawyer and a big nebulous gob of ambiguity to lawyers. EULAs are the rufis of the contract world. Facebook and Google are not the only ones who use them.
Every piece of software we use takes advantage of this legal fiction. It is even the thing you did not read but clicked agree to be able to buy stuff on iTunes. Sure software is only rented and we cannot copy, blah, blah blah, but nobody was indexing and analyzing the words I typed after I clicked on the agree tab and started using Microsoft Word. This body of contract law, which was created to protect the creators of software after the fruits of their labor were released into the world somehow morphed into a tool to extract consent to data, capture from consumers.
Can we really consent to the use of our data if the consent was not knowingly granted and the party acting on the consent had reason to know the contract was never read?
How about getting rid of the EULAs and instead, use a nice, big, bold, cigarette pack statement:
WARNING: USE OF THIS PRODUCT MAY BE HARMFUL TO YOUR PERCEPTION OF THE WORLD, RELATIONSHIPS WITH FRIENDS, ABILITY TO SECURE CREDIT AND FUTURE EMPLOYMENT OPPORTUNITIES. WE WILL INDEX AND HOLD ONTO YOUR DATA FOREVER, CREATE A PROFILE OF YOU, AND USE IT FOR THINGS YOU CANNOT EVEN IMAGINE.
