When Networks Collide
November 30, 2007 on 12:01 am | In | Comments OffAT&T CEO Randall Stephenson this week said what I have been saying since last July -- that Apple and AT&T would soon introduce an iPhone that works with AT&T's faster 3G wireless data network. I said it because I had heard last summer that AT&T was already testing 3G iPhones in Florida, but the better question is why Stephenson said it and why now? For AT&T, his announcement looks, frankly, stupid.
Here's a guy who is head of the largest telephone company in America and its largest mobile phone company. He has a five-year iPhone exclusive giving AT&T the number one selling U.S. smart phone and a huge generator of primo subscribers mainly poached from other carriers. Christmas is a month away and 1-2 million Americans have been planning to give -- or hoping to get -- an iPhone. So what does the guy do? He lets it slip that next year Apple will release a faster iPhone that will make the existing model obsolete. The only impact this can have on current iPhone sales is to stop them in their tracks, unless Apple offers a free 3G upgrade, which believe me they never intended to offer and may not.
So what's up? Was it a simple slip? Or is the guy so out of touch with reality that he doesn't realize that with a few words he has probably deferred -- maybe forever -- at least a million new customers worth to Wall Street at least $1 billion in market cap for his company?
I don't think Stephenson's statement was by accident and I don't think he is out of touch with reality. I think, instead, he was sending a $1 billion message to Apple CEO Steve Jobs.
It is no coincidence that Stephenson made his remarks in Silicon Valley, rather than in San Antonio or New York. He came to the turf of his "partner" and delivered a message that will hurt Apple as much as AT&T, a message that says AT&T doesn't really need Apple despite the iPhone's success.
It's one thing to have a private disagreement between companies but quite another to take it public in a way that costs real money.
What I believe is troubling the relationship between AT&T and Apple is the upcoming auction for 700-MHz wireless spectrum and AT&T's discovery that -- as I have predicted for weeks -- Apple will be joining Google in bidding. AT&T thought its five-year "exclusive" iPhone agreement with Apple would have precluded such a bid, but that just shows how poorly Randall Stephenson understood Steve Jobs. Steve always hurts his friends to see how much they really love him, so AT&T probably should have expected this kind of corporate body blow.
To his credit, Stephenson took the dispute to the streets this way, showing he isn't intimidated by Jobs. It was a bold and rare response for big business and was definitely unexpected by Cupertino, which won't underestimate AT&T again.
I'm not privy to any inside details here, but there are two ways I can see Jobs rationalizing his auction position and they aren't necessarily exclusive. He could claim to intend the 700-MHz auction participation as a pure investment, just a good use for the $30+ billion Apple has squirreled away.
Nah.
Or Jobs could tell AT&T that Apple is investing solely in a DATA network for which it has no voice ambitions. Maybe all MacBooks will soon get 700-MHz access cards.
This excuse rings truer, but of course it would still be a scam on Steve's part.
It would not surprise me at all if this were the case and when the 700-MHz network is finally up and running Jobs claims astonishment that the most popular data application is Voice over IP, a direct competitor to AT&T Wireless. This may be part of the reason why Apple has been so slow approving third-party iPhone applications. Wouldn't your first application be a VoIP client?
Of course to this point Apple hasn't even said it will participate in the 700-MHz auction. Apple has said nothing at all on the subject. I said it and still believe it to be true. And I'd say Randall Stephenson's remarks this week pretty much confirm I was correct.
Now AT&T is going to have to decide whether it is worth $10+ billion to fight Apple, Google, and probable third and fourth partners by bidding, itself, for the spectrum, which it wouldn't otherwise have done.
A similar decision will have to be made by Verizon Wireless, which this week applied ITS reality distortion field to trying to make us believe the second-largest U.S. mobile operator actually intends to open its wireless network to non-Verizon devices and services.
Yeah, right.
Verizon's move is straight from the playbook of the old AT&T back in the 1970s, when that company was trying to keep third-party telephone handsets from being connected to its network. If you are old enough you may remember AT&T expressed great fear back then that telephones not from its Western Electric subsidiary (now Alcatel-Lucent) would somehow "damage" the telephone network. It was the same excuse used to keep old guys like me from wearing jeans in high school.
We will, no doubt, see similar behavior from Verizon as it slowly releases network interface specifications then embarks on a certification program that will surprisingly reject as incompatible a lot of perfectly fine mobile phones. But this is months or even years away. The company's intent right now is to show the appearance of motion.
The appearance of motion: it's sad, wouldn't you say, when this is what American business has come to.
Bursted Dreams
November 22, 2007 on 6:04 pm | In | Comments OffSometimes there is as much news in the timing of an announcement as there is in the announcement, itself. That is probably the case with this week's legal settlement between Burst.com and Apple, which was announced late Wednesday night on the eve of the Thanksgiving holiday. The minute I saw the news I sent a message to Burst CEO Richard Lang, but have yet to receive a reply. Reading the announcement on the Burst website (the announcement has since disappeared from Burst's site) only raised more questions about this peculiar deal. What's going on here? I don't know, but I have a few guesses.
On the face of it, this announcement seems to be a big win for Apple. Where the giant computer maker might have been on the hook for up to $1 billion in damages, they settled for $10 million, of which Burst will finally walk away with only $4.6 million after court costs and legal fees. But there has to be more to this. Take the timing, for example. Why would the two companies announce such a settlement right before a major holiday? It could be that they finally came to terms on Wednesday night and felt an obligation to get the word out immediately, but somehow I doubt that's the case. I think the timing was intended to bury the story, which will be five days old by the time the major news organizations are back to work. Representatives of both companies, of course, will be unavailable until then because of the holiday. The press hasn't done a very good job of understanding this story anyway, so it will probably be buried and never fully explained, which I would guess has to be intentional.
That leaves it up to me.
To review the case, Burst spent decades developing streaming media technology covered by more than 30 patents. Microsoft bought a license from Burst two years ago for $60 million. Apple preemptively sued Burst a year ago after months of license negotiations. Burst countersued claiming Apple's QuickTime and iTunes infringed Burst patents and sought damages that could easily have run into hundreds of millions of dollars. The case took a recent downturn for Burst when the judge threw out 14 patent claims, leaving more than 20 claims intact. A trial was scheduled for February but now won't be happening.
I have absolutely no inside knowledge here, but I have been following the case since it began and know many of the principals, so I am going to hazard a few guesses about what is really happening.
You can read a press release from Burst in this week's links. Apple has yet to issue a press release and may not.
Let's first look at the news from the perspective of Burst. Settling for $10 million has to be a huge disappointment to the company. $4.6 million is not a lot of money to return to shareholders who were expecting hundreds of millions. So why did Burst settle? They may well have feared losing at trial. $4.6 million is better than nothing. Burst's lawyers were all working on contingency, so they may well have pushed for a settlement if the trial was starting to look not so good. Apple probably saved $10 million in legal fees by not going to trial, so the settlement would appear to be a wash for them.
I was surprised, though, to see the Burst announcement carried no statement from company officers reacting to the event or giving any idea about what will happen next. Indeed, the Burst announcement clearly says they WON'T be commenting about the company's next moves.
Then there is the peculiar detail of the settlement that Apple's license specifically excludes one issued and three pending Burst patents on digital video recorder (DVR) technology, yet Burst promises not to sue Apple for infringing these patents for which it is specifically NOT giving Cupertino a license. How odd is that? Isn't saying you won't sue someone for infringing the same as giving a license?
This DVR detail has to be coming from Burst, not Apple. Given Burst's promise not to sue Apple for infringing, whether the DVR patents are part of the license or not probably wouldn't matter to Apple, so it must somehow matter to Burst. My guess (and remember it is only a guess) is that Burst wants to keep the DVR patents separate so they can claim that there isn't an implied value that can be derived from Apple's $10 million payment. Burst may well see its DVR patents as now comprising the greatest part of its portfolio value. And it wouldn't surprise me if this position were actually proposed by Apple.
This happens all the time in settlement negotiations. They are, after all, negotiations, with each side trying to convince the other to either accept less or pay more. Apple may well have suggested that Burst pursue others with the DVR patents with some tacit Apple support. Again, this is just a guess.
The elephant in the room here is TiVo. If Burst plans to vigorously pursue licensing these DVR patents and the company continues to follow its tendency to sue the strongest party in each market segment, then TiVo is next and the Apple settlement was adjusted a bit to make that potential litigation easier.
I doubt that Burst wants me speculating like this. When some of their patent claims were denied two weeks ago, Burst CEO Richard Lang called me twice from Hawaii, interrupting his vacation, to discuss the news. Now it looks like he won't return my call, so something has changed.
But Apple has as much reason for not wanting to talk to me as Burst does. That's because the size of the settlement and the "don't ask us" nature of the Burst press release tell me there are aspects of this settlement that may not have been disclosed. I wonder if it might actually be bigger than it looks.
What I would like to know from Apple is whether there is any circumstance under which Apple may owe more money to Burst?
Maybe we should look again at the DVR patents, three of which are yet to be issued. These patents were specifically withheld from the Apple license, yet Burst promises not to sue for infringement. I have speculated above about one reason why that may be. Thinking like Apple, I can come up with another possible explanation. I'm no lawyer, but I think it would be difficult to license an unissued patent. The Burst announcement says Apple will have access to all Burst patents other than the DVR patents without "further consideration" (no royalty stream). But this does not apply to the DVR patents, so perhaps there is some further consideration attached to those.
If I were Burst, the only circumstance under which I would promise not to sue someone for infringing was if there was already a license agreement in place. Perhaps there is a second Apple license for the DVR patents involving additional payments but tied to the three pending patents actually being issued. Until the patents are issued the license would have no material impact on Apple or Burst, yet the existence of such a provisional license could justify Burst's promise not to sue. So Apple may actually be on the hook for more money than it appears here, but structuring the deal this way allows the company to claim victory.
Of course this could all be wishful thinking on my part. But the settlement and Burst's announcement are so odd that I am sure something -- perhaps a great deal -- has been deliberately left unsaid.
The timing of this settlement makes no sense to me, either. Burst seemed still to be in a strong position and pressure for Apple to settle would only have increased as the February trial date approached. Settling now makes no sense to me unless there is a smoking gun of which I am unaware. We all deserve to know a lot more about what's happening here, but I suspect we won't learn anything more until the next license is announced or the next lawsuit is filed.
Squeezebox
November 22, 2007 on 3:20 am | In Electronics | Comments Off We have had a iPod in our kitchen for a while. The iHome IH36 keeps the iPod off the counter, while providing amplified speakers. Unfortunately, I haven't been completly happy with this solution. The problem is with the iPod it self, and not the iHome.The iPod only presents a static view of your music. In order to refresh it, you need to connect it to your computer. The staleness problem isn't the only issue that I have.
I don't have time to create playlists for the iPod, so most often, I just play all of the content in shuffled order. But this has the problem of playing music that I have no interest in (i.e. Holiday or Children's music). But even if I avoided that content the mixes are random, so it is hard to get into the music.
I have been looking at the Sqeezebox for a while as a way to solve this problem. In addition to playing our whole library of content, it can connect to the network for other sources of music. For example, through their SqueezeNetwork, it can play (and create) Pandora radio streams. Pandora stations are very good collections of music that relate to one of your songs or artists.
As a companion to the Pandora streams, the Sqeezebox can play a varity of Internet Radio streams. The other cool thing that I mentioned here, is that it can play your library of content from MP3Tunes. This would allow you to play your music, without having to leave a computer on.
Playing Pandora and Internet Radio streams work perfectly. You can even mark certain stations a favorites to make it easy to get to them.
There are several problems/annoyances with this solution:
One major problem with this solution involves MP3Tunes. There is a large delay when attempting to retrieve a list with a lot of items in it. For example, when attempting to retrieve the list of the artists in our colleciton, the results are not returned for a good 30 seconds. This should be a easy problem to solve. The Squeezebox only displays a single line at a time, so it should be possible for the MP3Tunes server to only return a small number of items in the list back to the device. In addition the MP3Tunes server could create the correct indexes on the data. These would make the Squeezebox more responsive when displaying this data.
Because of that problem, I have resynchronized my music collection back to my NAS at home, and I will just run SlimServer on our Mac mini.
The other problem is with how SlimServer handles compilations and albums with tracks that have guest artists. The MP3Tunes syncing software (as well as iTunes) creates directories for every artist. So if an album has tracks from multiple artists, the files for the tracks will be in seperate directories. SlimServer doesn't handle this well, and will create seperate albums for these situations. The solution is to either:
- Move all of the tracks to the same directory
- Make sure the compilation bit in the id3 tag is set correctly
- Make sure that the AlbumArtist tag is set correctly (I believe that this will work.)
The other minor annoyance is how they integrated local SlimSever and SqueezeNetwork on the Squeezebox. If you are browsing on the device while playing some content, and you transition from local browsing to SqueezeNetworks or vice versa, the Sqeezebox stops playing music. This is unfortunately as the only way to be able to play Pandora content is through SqeezeNetwork. It would be great if you create your own menu structure with menu items from either a local SlimServer or from SqueezeNetwork.
Even with those problems, I am very happy with the Squeezebox
Ragtime Call of Duty
November 20, 2007 on 10:34 pm | In Uncategorized | Comments OffThis is pretty funny. The developers of Call of Duty 4 added a cheat mode that lets you play the game like it were a ragtime movie.
[via Wired]
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