It's hard to say these days

The Internet is Breaking

clock October 5, 2011 23:53 by author Tom

As I sit here and refresh Techmeme and Hacker News over and over again looking for more people to commiserate with I’m finding a lot of the links are going dead.  I have to admit it brought a smile to my face. 

Is there anyone who deserves such a send off more than Steve Jobs?

To The Ages…

clock October 5, 2011 23:16 by author Tom

I really hoped this wasn’t true


I have two thoughts on this. 

First, You can’t see this as anything but a tragedy and I want to say up front that I wish he’d lived to a ripe old age.

At the same time my first thought when I heard this news was to think of an old quote.  After the doctor declared Abraham Lincoln dead a silence fell over the room.  Then Lincoln’s War Secretary, Edwin Stanton, reportedly said “Now he belongs to the Ages”.  As tragic as the death of Steve Jobs is you have to also see the beauty of him always being remembered as the relatively young man with a twinkle in his eye and a magical device in his hand. 

Now that he’s passed it seems impossible to imagine him as a doddering old 80 year old sitting in retirement.  He truly did belong to the ages. 

The other thing that keeps going through my mind is a story that made the rounds a while back.  After it was clear MobileMe had become a disaster Jobs reportedly took the team aside and berated them.  He’s reported to have yelled “You should hate each other for having let each other down”

To be honest I don’t think you can learn much from Steve Jobs because he had such an extraordinary talent.  His instincts were better than the combined rational thought of an entire industry.  So in most things you can’t hope to emulate Steve Jobs.

But you can live passionately.  You can work so hard at doing something well that you hate yourself for failing.  That’s something we can all do and even if we’re not lucky enough the change the world like Steve Jobs we’ll certainly succeed in making the world a better place. 

That’s my take away tonight.

Addendum: I certainly didn't realize this but for the record Abraham Lincoln died at the very same age, 56.

False Hope for webOS

clock September 30, 2011 05:26 by author Tom

MobileBeat reports Amazon might be close to acquiring the remnants of Palm

Who will save what’s left of Palm from HP’s bumbling? It could be Amazon, as the online retailing giant is in serious negotiations to snap up Palm from HP, VentureBeat has learned.

A well-placed source tells us that HP is currently looking to rid itself of Palm as soon as possible, and that Amazon is the closest to finalizing the deal, among a handful of contenders.  Indeed, after yesterday’s announcement of Amazon’s Kindle Fire tablet, no other company seems as fitting a home for Palm and its webOS software.

I have no inside information but I doubt this has anything to do with the webOS software.

Amazon has put a significant amount of time and effort into building a business around an Android app store.  So it makes no sense for them to turn 180 degrees and adopt a new operating system.  More likely is they want Palm’s other assets. As this story from GDGT says…

As you might have heard from my man MG over at TechCrunch, Amazon's definitely got a Kindle tablet in the works, and supposedly looks a lot like RIM's failing (failed?) Playbook.  Well, there's a resemblance alright, and it's not just aesthetic. Here's how it went down

My sources tell me that RIM originally outsourced much of the hardware design and production of the PlayBook to mega-ODM Quanta -- a company that builds, and sometimes helps design, hardware for name brands. The time eventually came that Amazon's executives decided to do an Android tablet -- far likelier to respond to the dark-horse success of the Nook Color (AKA "NOOKcolor") than to the adjacent success of the iPad -- Amazon's own Kindle group (called Lab 126) apparently opted not to take on the project, in favor of continuing to work solely on next-gen E-Ink-based devices.

From there, Amazon's team determined they could build a tablet without the help and experience of Lab 126, so they turned to Quanta, which helped them "shortcut" the development process by using the PlayBook as their hardware template. Of course, it's never quite that simple, and as I'm told Amazon ran into trouble, and eventually sacrifices were made (like using a slower processor).

So basically Amazon is outsourcing the Kindle Fire line because their Kindle Group has no interest in building a tablet.  Meaning it would make sense for Amazon to acquire a team with experience in building tablet hardware.  Like….oh I don’t know…Palm.  Not to mention the Kindle Fire completely supplants the Android UI.   So an experienced UI team would certainly come in handy. 

But none of this means webOS is going to be resurrected.  In fact, I’d say it makes it less likely given how well Palm’s various teams sync up with Amazon’s current product.

Implementing Startup IT (or the Dichotomy of a Semi-Disgruntled Box Customer)

clock September 28, 2011 18:12 by author Tom

About a year ago I read a guest editorial written by the CEO of  At the time it connected with me.  It really echoed the way I felt about Enterprise IT.   So I decided to implement it in my organization. 

Understand that I love startups but I have a responsibility to my agency.  I don’t deploy startup technology.   I’ll mess around with it in my spare time but I don’t put untested companies into production.  So doing this with Box was a big exception for me. 

And I lived to regret it. 

It hasn’t been all bad.  I still like and believe in the technology.  But implementing Box Sync has largely been a disaster.  To the point where I had to backtrack and start pulling people off Box and putting them back on Sharepoint.  So I view this announcement with trepid excitement… had previously offered a Sync desktop client, which allowed users to sync folders with their PC desktops. But Box has totally rebuilt the sync engine and is debuting a new version of Box Sync for Windows and the first-ever Box Sync for Mac. This allows users to access Box files from their desktop, work offline in native applications, sync edits back to Box, and access synced content from any mobile device. Customers including Turner Construction, TaylorMade, Pandora and LinkedIn are early users of Box Sync.

Box Sync for Windows and Box Sync for Mac will available as free downloadable desktop clients for Business and Enterprise customers in October. Additionally, Box and HP has announced that they’re working together to distribute Box Sync on future PCs to HP’s business customers later in 2011.

Again let me stress this: I’m not a disgruntled customer.  20% of my users are on Box Sync and I’m fighting to make it work.  I believe in the technology.  So much so that I’ve written scripts and even a full fledged .Net Tray Application to compensate for its weaknesses. 

But having said that there’s no doubt implementing Box .Net is one of the worst decision I’ve made in my career.  I mean, I’ve had conflicts in my professional life that have threatened my job.  But putting people on Box is the only decision that’s ever made me feel like I deserved to be fired.

Yet I push on with it.

Which is the point of this post.  I’m very much split down the middle on Box and startup technology in general.  I wish I hadn’t implemented it but if given the same choice tomorrow I’d probably do it again.  Because I love what the technology can do.  I love the potential.  I love the thought of what I could do for the users on Box.  But thus far implementing the technology has clearly been a negative.  This very morning I lost 2 more hours of employee time dealing with something that would have never happened under Sharepoint (in fact it wouldn’t have happened in Windows peer-to-peer networking)

But that’s how it is with startup technology.  Believing in the future means making sacrifices.  It means pushing forward with technology because you know it will be worth it someday.   It’s a future play.   But it’s hard.  If you care about your users at all it’s very, very hard to have inconvenienced them today for features they may someday love.  But I do believe they’ll someday love it. 

So while I regret implementing Box right now I don’t think that will be the case in 3 years (or at least that’s my hope)

Addendum: Oh and they’ve raised another $50 million dollars.  That can’t be bad.

Netflix Down 7.73% … And This Time It’s Justified

clock September 19, 2011 23:13 by author Tom

If you haven’t heard Netflix has decided to split in two.  One half will be focused on Streaming (and keep the Netflix name) while the other will focus on Physical DVD rentals (under the name Qwikster).  This is a decision the market absolutely punished them for and I’d like to explain why I think that is. 

(For comparison the Dow was down 0.94% and the S&P 500 was down .98%)

First lets establish some ground rules.  In theory Netflix’s stock should have gone up.  Because this move is essentially a stock split for current investors and stock splits almost always deliver short term gains due to the psychological effect.  So it makes sense to jump on board and that’s what you saw at the beginning of the day…


But as the day went on and people discussed the move we saw a significant downturn.  I’ll admit I was one of the people who initially was in favor of the deal but turned against it.  I said this on Hacker News right after the story broke…

I think this is a good move simply because the two divisions have contradictory goals at this point.

For example, the Qwikster division should be looking at finding ways to deliver DVDs quicker (Kiosks for example). But that's not something that would ever occur to Netflix because they're focused on streaming as the future.

Which is where the contradiction comes in. It is hard to run a business unit when the goal of the company overall is to kill off your unit.

So what turned me?  There are a bunch of little issues but I think they all arise from one big issue which is the company has developed the tech media’s tunnel vision.   They are obsessed with streaming and it is having a negative impact.    Let me give you a historical example of why this is a problem. 

Remember Windows Everywhere?  In the late 1990s Microsoft had won raves for the Windows ‘95 interface and set out to put it everywhere.  TVs, Servers, and even PDAs…


Now look…I had a Cassiopeia E100, I loved that thing like a child but even I have to admit it was a ridiculous move on Microsoft’s part.  Cascading Menus on a 240 x 320 screen?  Come on!  But they were focused on branding everything Windows and giving those devices a similar appearance across the board.

Needless to say this strategy was a disaster.  So much so that Microsoft never gained a hold on the PDA market even after they corrected most of the flaws in their mobile strategy (see: The PocketPC).  It took the entire product category dying off in favor of Smartphones to give Microsoft some traction. 

But the above device, which looks ridiculous today, was a precursor to the future in many ways.  It had a color screen, high resolution graphics, a web browser, not to mention the ability to play audio and video.  All the things you see in a modern iPhone.  Compare  that to Palm who in the same time period had just introduced the gray scale, underpowered Palm V…

Yet we all know how this battle went.  The Palm V sold like hotcakes and Microsoft floundered. 

Now lets go back to Netflix.  As I said before Streaming media is almost certainly the future.  Just as color graphics, web browsing and multimedia were the future of mobile in 1999.  But Netflix is making the same mistake Microsoft did all those years ago.  Jumping too early with an immature solution.  Here are a few issues facing Netflix…

1.  Despite heroic efforts by Netflix their selection of streaming media is still sparse in comparison to their DVD business.  And it’s shrinking.

2.  Most people still don’t hook their TV up to their Internet Connection

3.  Broadband penetration is still not where it needs to be (even in the U.S. it was only at 60% as of last year)

In terms of the eventual future these issues are nothing.  In terms of growing in the next decade they’re very relevant.  Again Netflix has or will have major competition in the streaming arena.  Companies like Amazon and Walmart.   Yet they’ve decided to jettison a major strategic hedge and place an all or nothing bet on streaming.  That’s tunnel vision. 

One last point.  In his letter to customers Netflix CEO Reed Hastings said this…

Companies rarely die from moving too fast, and they frequently die from moving too slowly.

I’d like to see some statistics on that.  I’ll admit my opinion on the matter is as much conjecture as his is.  But in my experience plenty of companies die by moving too fast.  In fact what usually happens to those companies is they blaze a trail and then make it easier for their competitors to follow because they absorbed all the mistakes that would be spread across the industry. 

Futuristic Tunnel Vision

clock September 17, 2011 16:55 by author Tom

As a .Net developer I have a lot to say about Windows 8 and collating  those thoughts is taking a while.  So I thought I’d tackle an easier topic today.  Last week Netflix shares got hammered because they revised their estimates for physical DVD rentals down.  Dan Frommer thinks the share holders who sold are missing the point…

Here’s the thing, though. The future of Netflix is in its streaming business — not its business of mailing DVDs to people via the U.S. Postal Service. And Netflix only trimmed its forecast for streaming customers by 0.2 million, or 1%. The biggest cut, meanwhile, is 0.8 million DVD-only subscribers, or 27% of that customer base. But that’s Netflix’s old business, not its new one.

If anything, Netflix can take these numbers to Hollywood and say: Look, people don’t want DVDs anymore, either stream your best stuff on our site or good luck selling those DVDs at Borders. (And Netflix even says that its financial guidance for the quarter is unchanged.)


The problem is this.  Netflix is expected to have 21.8 Million streaming customers.  Only 9.8 Million of those are “streaming only” customers.  That’s out of a possible customer base of 345 million people (U.S. + Canada).  And I’d assume almost all of those people rent movies somewhere.  I don’t know about you but where I live there’s one of those Redbox DVD machines on practically every street corner.

THAT is the problem.

Yes, streaming is almost certainly the future.  But getting people to that point requires a journey.  First Netflix has to convert new customers from whatever local service they’re using.  That means duplicating the product their current service provides (namely DVDs).  Then Netflix needs those people to try streaming and hopefully move to streaming only.  But that process will take years.  People don’t change their habits that easily.

Beyond their current market Netflix is counting on its expansion into Latin America to provide future profits.  Just this month they expanded streaming service into Brazil, Argentina, Uruguay, Paraguay, Bolivia, Chile, Colombia, Peru, Venezuela and Mexico.  But broadband access is lacking in those countries.  Brazil recently announced 14 million fixed broadband access points out of a population of 193 million.   And they lead all other Latin American countries.

Do you know what percentage of the population has broadband in Mexico?

Try 6%.  In fact lets look at the listed countries by percentage of the population who are even on the Internet.  Not the percentage who have broadband but the percentage that have Internet at all.

Brazil: 37.4%

Argentina: 66%

Uruguay: 56%

Paraguay: 17%

Bolivia: 12%

Chile: 55%

Colombia: 50%

Peru: 31%

Venezuela: 38%

Mexico: 32%

Worse yet comScore estimates suggest not all of those people even watch video on internet (we’re not talking Netflix, we’re talking Youtube and other clip sites).  They found only 87% of Mexicans on the Internet watched video clips at all

One more point here.  What do you think is the fasted growing criminal enterprise in Mexico?  Try DVDs…

In this context, Mexico has one of the most competitive pirate DVD markets documented in our study, with widespread, small-scale cottage industry production and retail DVD prices routinely under a dollar. Criminals, as we’ve noted more than once, now have to compete with free.

The stock market over reacts.  I’d never deny that.  But stock price SHOULD depend on estimates of future revenue.  If Netflix vastly over estimated the amount they can charge for physical DVDs that SHOULD impact the stock.  And if the price hike is causing Americans to drop the service you can only imagine what will happen in Latin America.

Netflix’s goal right now is to lock in as many customers as possible.  Because once streaming takes hold everyone will be doing it.  The best strategy for doing that is using their established physical DVD infrastructure to pull customers in and convert them to streaming later.  That’s why weakness in that business is such a big deal to investors.

Topic Hijacking

clock September 6, 2011 08:22 by author Tom

MG Siegler has an almost touching post on TechCrunch.  Apparently the New York Times article on Michael Arrington’s new VC fund might have turned the tide against him inside AOL.  To the point where there’s a very real possibility he’ll be forced out of TechCrunch altogether. 

(for the record I’m not linking to the NY Times article because it’s so factually incorrect it would be irresponsible to do so)

TechCrunch is on the precipice. As soon as tomorrow, Mike may be thrown out of the company he founded. Or he may not. No one knows. And if he is, he will be replaced by — well, again, no one knows. No one knows much of anything. Certainly no one at TechCrunch. This site is about to change forever and we’re in the total fucking dark. I’ve been able to piece together little bits of information here and there, and it’s not looking good. Hence, this post.

I realize this is big news but there’s not much to comment on here. 

On one hand I know Mike Arrington has a lot of enemies (including many people I respect).  But I’d think even they would agree this VC fund is no different from other investments he’s made in the past and he doesn’t deserve to be tossed out altogether over it. 

At the same time while it would be sad to see Arrington leave under bad circumstances I can see some advantage from a purely selfish perspective.  As someone who has read TechCrunch from close to the beginning I’ve always felt the first 2 years were worth more than all the ones that followed. Even after TC got huge Arrington continued to post on a personal blog, CrunchNotes, and I always thought that was his best stuff.  I don’t think he’d be able to stop himself from writing so I can only see advantage in him being able to throw off the chains of running the #1 news site in the valley.

That’s really all I have to say on that.  The reason I’m posting is I wanted to comment on another part of Siegler’s post…

It has almost been exactly one year since AOL acquired us. At the time, they promised not to interfere with the way we do things. For 11+ months, they’ve kept their word, and things have run beautifully from our end. Our business is one of the few sterling ornaments on their mantel. Now they may break their promise to us. And if that promise is broken, it will break TechCrunch.

This is an important lesson to learn because I’ve watched the tech industry since I was little and this is the mistake that people make the most.  For some reason people continue to believe they can be acquired in a way that won’t interfere even though it has never, ever worked.  Let me put a finer point on that. 

Never believe a company acquiring you will leave you independent.  It is always Bulls###.  ALWAYS.  Always, Always, Always.  Always to Infinity. 

Any corporation is a collection of fiefdoms.  Because every corporation has a small group of powerful people and powerful people get where they are by doing everything they can to acquire more power.  Which means almost every corporation consists of a bunch of people in a mad dash to gain control over as many resources as possible.  This causes conflict and eventually leads to fiefdoms as each powerful person seeks to protect the power they have and focus those resources on gaining more. 

Once you are taken into a corporation you become a resource that belongs to that company and all those powerful people look to bring you under their control.  Regardless of whether it makes sense.

TechCrunch is the perfect example here because, as M.G. Siegler says, it pretty much runs itself.  The entire operation is built on hiring the right people and turning them loose.  So unless someone leaves there’s not much input needed from the corporate side.  AOL could (and should) have left it independent and raked in the cash (while getting the benefit of controlling the advertising on the site).

And that’s what AOL’s Tim Armstrong said they were going to do.    From the press release

TechCrunch and its associated properties and conferences will join the AOL Technology Network while retaining their editorial independence, further bolstering AOL’s position as one of the world’s leading providers of high-quality, tech-oriented content.

But that was never going to happen.  

Arianna Huffington is a very powerful person.  Which meant there was NO WAY she was going to let TechCrunch do its own thing.    Not only was it a resource she could have it was a resource she was entitled to given her title.   And even if she hadn’t taken control over it someone else would have because that’s how corporations work. 

So this is a lesson to any startup.  Before you sign your life’s work away come to terms with the fact that you’re losing it.  Maybe not the day you hand it over but eventually it will come under someone else’s control.  Either accept that or don’t cash out. 

Insights on Amazon’s Tablet

clock September 2, 2011 20:42 by author Tom

So M.G. Siegler has gotten his hands on Amazon’s new tablet.  It’s actually a pretty packed article with just about every sentence adding new information.  But here are the basics…

First of all, before every commenter asks, no, sadly, I don’t have any pictures to share. That was the one condition of me getting this information. So instead you’ll have to rely on my prose to draw a picture of the device in your head. Or you can just look at a BlackBerry PlayBook — because it looks very similar in terms of form-factor.

So here’s what I know and what I saw:

Again, the device is a 7-inch tablet with a capacitive touch screen. It is multi-touch, but from what I saw, I believe the reports that it relies on a two-finger multi-touch (instead of 10-finger, like the iPad uses) are accurate. This will be the first Kindle with a full-color screen. And yes, it is back-lit. There is no e-ink to be found anywhere on this device.

And here’s the part I find most interesting (and will focus on for this post)…

But the key for Amazon is just how deeply integrated all of their services are. Amazon’s content store is always just one click away. The book reader is a Kindle app (which looks similar to how it does on Android and iOS now). The music player is Amazon’s Cloud Player. The movie player is Amazon’s Instant Video player. The app store is Amazon’s Android Appstore.

Google’s Android Market is nowhere to be found. In fact, no Google app is anywhere to be found. This is Android fully forked. My understanding is that the Kindle OS was built on top of some version of Android prior to 2.2. And Amazon will keep building on top of that of that over time. In other words, this won’t be getting “Honeycomb” or “Ice Cream Sandwich” — or if it does, users will never know it because that will only be the underpinnings of the OS. Any visual changes will be all Amazon.

One  more quote…

the plan right now is to give buyers a free subscription to Amazon Prime.

The service, which Amazon currently sells for $79 a year, gives users access things like free unlimited two-day shipping, and no minimum purchases for free shipping. More importantly for this product, Prime users get access to Amazon’s Instant Video service. There will be more Kindle-related perks, I imagine.

I saw this coming from a mile away (or how ever far away you consider May 2011).  Not because I’m so smart but because this is what Amazon does.  Once we (pretty much) knew there would be an Amazon tablet this was the only move consistent with their past behavior.  Having seen this coming I’ve had more time to think on it and I think that’s given me two insights.

#1.  People are seeing this device in the wrong context. 

If you look an Hacker News you see responses like this (Credit: markgx)

Amazon could carve out the "sub-iPad" tablet market if their $250 price point holds and they release a usable tablet. Look at what happened with the HP firesale.

I think that’s the wrong mindset.  That continues to see the device as a “tablet” when in fact it is a media device.  Its competition isn’t the Galaxy Tab and the Xoom.  Its competition is the iPod Touch and the Portable DVD player. 

Think of it this way.  Most suburban families I know have a portable 3G/4G device that allows multiple connections.  So while they’re on a road trip all the kids can connect laptops and browse the web.  Beyond that we’re reaching a tipping point as far as cell phone tethering is considered.  I’ve even heard Ford is looking at building cars with WiFi built in (using the Bluetooth in your phone to provide the actual connection).  so the era of ubiquitous internet is almost upon us and it brings cloud based media with it. 

When that happens people will look for cheap media devices.   Cheap enough to buy for each family member.  Cheap enough that they can break without it being the end of the world. 

Amazon provides that and backs it with a first class media service. 

Think about it.  Amazon’s On-Demand Video Service is built into most high end TVs, blu ray players and surround sound systems these days.  It’s available on the Xbox 360, Playstation3 and Wii.  Plus you can get it on Tivo, Roku, and others.  So if you buy a Movie or TV show on Amazon you’ll probably have access to it on your TV already.   Which means you can buy media on your tablet and be confident it will be available wherever you want to consume it. 

Of course most Apple users will tell you they could already do that on their iPad/AppleTV/iPhone.  But that’s the point. 

#2.  It’s Amazon, not Google, that Apple should be afraid of. 

Amazon has built up the infrastructure they need to challenge Apple and they’ve used Google’s love of openness to co-opt Android (filling their hardware needs).  So while Google struggles with beta services that no one seems to use Amazon already has a music service, video service, book service and app store ready to go.   More to the point Amazon’s enlisted every Android tablet manufacturer whether they know it or not.  Right now I can use Amazon’s Video and MP3 service on my Xoom via Flash.  So if Mom or Dad in the family above wants to buy themself a higher end tablet they can do so without losing access to all their Amazon purchases.  

Of course Apple’s still in the lead.   People have invested heavily in their iTunes libraries and getting them to switch won’t be easy.  But Amazon definitely has a shot.  To give you just one idea imagine an iTunes Match like service where Amazon makes your iTunes library streamable from their servers.  That would change the game in an instant. 

Final Score: Dow (-1.51%), S&P 500(-1.56%), Apple (-0.65%)

clock August 25, 2011 19:10 by author Tom

This is my “Steve Jobs has resigned” post. It’s a little different.

Here’s the deal. This post was written on 8/24 at 9:08pm PST and will be posted at 1pm PST tomorrow. Right after the stock market closes. I will not edit the content in any way. The reason I’m doing this is to make a prediction.

I predict Apple will do better than the overall stock market tomorrow.

I make that prediction for one reason: I trust Steve Jobs.

The drama lovers want to make this about his health but I really don’t see it. At the beginning of the year I theorized Jobs’ absence was part of a strategy to install his chosen successor and I think this is the pay off to that strategy. The strategy was built on proving Tim Cook was the right man for the job and that he was entirely capable of running Apple. I think this strategy was executed so well that the stock market, a notoriously jumpy community, will not punish Apple at all for Steve Jobs stepping down.

As for Steve Jobs himself I’d only say I’m happy for him.

Again I don’t think this is about health. If he was seriously ill he wouldn’t still be the chairman of the board. The chairman still has to appear in public quite a bit. Bill Gates continued to give speeches on behalf of Microsoft even after stepping down as CEO. I could see Jobs doing the same. Even if he doesn’t there are still public appearances. Think about how many times you’ve seen Al Gore at an Apple event and you start to see what I mean. So Jobs will be around.

But the truth is people get older and their priorities shift.

I’ll give you one example of what I mean by this. I have no doubt Jobs has fun during his various presentations. But it’s also a lot of hard work. It’s a “show” in the same way a theatrical production is which means you have rehearsals, choreography, mic checks, lighting checks, and so on. It isn’t a “jump on stage and speak from the heart” sort of thing.

A 56 year old worth $9 billion dollars is eventually going to come to a point where he doesn’t think it is worth it to go through all that several times a year.

And that at least has a pleasant pay off. Think about things like negotiating contracts with record executives. Or going through financial audits. Or dealing with the press after a scandal. These are all things a CEO has to do and all things that aren’t really worth Jobs’ time anymore.

Then there’s Tim Cook.

You can’t expect a world class talent to stand in your shadow forever. Eventually they’ll want to run their own show. That creates a problem for someone like Steve Jobs. Does he hang around longer and risk losing his best choice for successor. Or does he step down knowing the company will be in good hands. I think we got the answer to that question yesterday.

That’s my final point.

The company is in good hands. Not just Cook but Schiller, Forstall, and all the rest. It’s a world class team and I have no doubt they’ll continue to produce world class products.

Some Stupidity Defies Title

clock August 22, 2011 23:20 by author Tom

Good God this is dumb

Netflix's current pricing model allows unlimited downloads for $7.99 per month. Netflix saves, with every download, approximately 40 cents that would otherwise be paid to the U.S. Postal Service. If the average customer downloads 10 movies and TV shows a month, Netflix will save $4 a month for each of its 23 million customers.

Obviously these massive transmissions over the Internet are not really free. Someone is paying for them. That "someone" is the millions of broadband subscribers, whether or not they are Netflix customers.

How is that fair?

The reality is that Netflix and similar services want a free ride on the networks built with more than $250 billion in design, engineering, manufacturing, construction and maintenance -- a system that now provides broadband services to 95 percent of American households.

Let me establish a few things first…

1.  What the authors think is fair doesn’t really matter to me.  In fact I’d wager it matters very little to anyone. 

2.  What matters is the agreement I have with my ISP.  I trust my ISP has made a deal with me that allows them to make a profit.  If they haven’t that’s their own fault. 

Having said that I pay Verizon for a 25 Mbps (bits not bytes) connection.  That means I’m entitled to run 3.1 Megabytes over that connection per second.  A quick look in my iTunes folder tells me an hour of HD content is about 2 Gigabytes.  So if I’m streaming that content I am, on average, consuming 555 Kilobytes per second. 

As a Netflix user I’m consuming 4.4 Mbps (bits not bytes) of a 25 Mbps connection (or around 18% of my capacity).  Also note I’m not streaming video or even using the Internet 24 hours a day.  U.S. Households average about 5 hours of TV per day.  If I were to watch 5 hours per day on Netflix my average bandwidth consumption would be 10 Gigabytes where as the capacity I’d be entitled to would be 267 Gigabytes (Meaning I use 3.7% of the capacity I’m entitled to)

So how exactly am I costing other Internet users for my massive transmissions? 

More to the point people who get very cheap connections (Verizon offers 1 Mbps for $24 a month) are bandwidth locked so they CAN’T stream HD Video.  So anyone streaming HD video is more than pulling their weight. 

Netflix isn’t getting “a free ride on the networks built with more than $250 billion”.  I am in fact paying their fare and the fare of 3 other people about their same size. 

(For the record the authors work for an organization which is backed by the Cable companies and this is a pretty obvious attempt to justify throttling other video services in favor of those services the cable companies provide)

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