Brief Comments re: Technology, Society & Rowing

A few years ago, i was talking to somebody in Google and floated the idea of Google acquiring Apple. The reaction was something along the lines of “why should we?”. Well - it has been a few years since this conversation - and that is exactly the answer. While the merger between the giants might look good on paper - and can defintly excite a lot of reporters - in reality, the duo has been co-operating and reaping many of the mutual benefits that such a merger would bring them. Without having to go with all the monopolistic scrutiny, financial oversight and organization shock that a transaction would force them to go through. Or in other words - what else would you expect to see if the companies merged ?

As shown during the iPhone launch: “Apple introduced the iPhone today, and joining Steve Jobs onstage for about a minute was none other than Google CEO and Apple board member, Eric Schmidt.Schmidt was there to announce that Google Maps and Google search would be built into the iPhone”

Together, Google and Apple bring us the content we care about, on devices we care to have. This has huge impact for anybody thinking through the mobile or digital home space.

Last week, a Xoogler I know made some public comments about his fortunes… And how lucky he was to offload some of his stock when GOOG was at $600…

At the same week we made an announcement about Nokia intentions to acquire Trolltech - which as a result I received a few (funny?) emails assessing my interest in Ferraris. So for the record, no - I am not interested in one. Neither can I afford it.

Which reminded me of one of the most honest and insightful conversations I had on the topic

In 2001, while I was at OPWV, Chimene was still at Yale finishing her law degree. One of the executives I was close to @ OPWV was valued at the time in the few hundred $M range, and like many other execs had his own private jet. His family was in Boston, so to help the long distance relationship, I was sometimes invited to join him as he commuted back and forth to the East coast.

In one of those flights, as the two of seat happily seat in the jet @ 36K feet and sip wine he said … “you know Ram… I have made more money then I ever thought I will. And more then I probably deserved. Why? Luck. I was at the right place at the right time.”

If you dont realize that luck had a major part to the amount of money you made, you might mistakenly start attributing it to how smart you are. Which explains why there are so many over inflated egos around here. Or maybe how hard you have been working. Which might explain why there are so many workaholics here as well. But when you look deep down in it - yes, smartness and hard work play a role and are *required* elements - but most of the new Googlers, Facebookers, Youtuber, meSqlrs and the like should say thank you to Tyche

And if you wonder where the executive is today - he gave significant amounts of his fortune to orphanages in Easter Europe. Anonymously. And stepped out of high tech to spend in time helping others.

In response to a few emails I received at work. I needed to vent. So decided some image editing was the right outlet.

Enjoy.

I already hired the services of a sniper (A Belgium buddy of mine…)

Since moving to the valley we have done a bit of synagogue shopping. Not that we go very often - we do not. Pretty much its Yom Kipper services once a year. And in the last three years I think we finally settled on Hillel @ Stanford.

This year, Rabbi Patricia Karlin-Neumann [rabbipkn at stanford dot edu] which both me and Chimene have learned to appriciate (And she is the main reason we chose Stanford Hillel), gave quite a thoughtful sermon about hmm.. whales. And Emperors. An more then anything - Integrity.

I had Idan with me - so was hard to follow. As I learned later on, two years old is the worst age to take a child with you to service. Especially if you just landed a few hours before and the kid has not seen you for a week. So after Naeelah, we chatted and she kindly agreed to share the text with me. So Here it is. And a teaser below.

And no - reading it - and reflecting about it - does not require being Jewish. Human yes. Jewish or religious - no.

“ This past May, California was riveted by the travels of two wayward humpback whales. A mother whale and her calf exited the Pacific Ocean and swam 90 miles inland up the Sacramento River. For over a week, amidst crowds of onlookers, the Coast Guard and wildlife experts attempted to coax the whales back to the ocean…

And you thought all those jokes about St. Peter at the Pearly Gates originated in the Vatican? Oh No – we have our own version! Since Yom Kippur is our rehearsal for that heavenly moment, we need to ask the four questions now and every year on this holy day. What do you think the rabbis imagined God would ask us? Questions like: Did we pray every day? Did we keep kosher? Did we celebrate Shabbat every week? Curiously, the questions they recorded had nothing to do with ritual practice. They had everything to do with integrity.”

I have been thinking through “Semi autonomous” systems for a while now.

Two trends coming together:

Metro wide wireless networks: with affordable IP connectivity. We know this one is coming. Wimax, WiFi, 7000Mhz and even 3G might be properly priced and open at some point.

The second is more tricky. Webcams are evolving. Not only a one way device that send video automatically but slowly adding a speaker - so you can watch what is happening and at the same time talk to the webcam surrounding. And soon they might have a screen - so you can display information. And you get some processing power in the unit - and move beyond just compressing video into motion detection, face recognition and more. Power / Solar technology is improving too, so soon we will be able to have stand along units that we can leave in our front yard or the city can easily install in any city corner. And the devices can monitor and interact with the surrounding. And if needed connect to a human “call” center and have a live person connected.

Whats the implications? Zero crime society ? Never being alone again ? Big brother always watching ? All of the above ?

David Brin has written on this about a decade ago.

The solution he outlines to the big brother is an “open” big brother where everybody can watch everybody and all the webcams are always open to all. Not a central closed monitoring system which only the city police have access to the videos, but an open one where there are no secrets. Opening up and allowing everybody to watch any webcam in real time is the best guarantee that the system will not be abused - because the information is alway shared. If a policeman arrests somebody, he knows very well that the whole event is being monitored, recorded and media and individuals can access the information.

The technology is moving ahead. And we will soon either find ourselves in a closed monitored world (which is the trend today) or in an open one. The cardinal question is what can be done to bring to life Brin’s vision of a transparent society ? Is the solution regulatory ? Or is there a business that can be built around providing the transparent society ?

R

Have been quite for the last eight weeks as we went through the Trolltech acuiqistion. So now that I am officially a Troll (and growing long hair) its time to  blog again

From ZDNet
“The 270,000 iPhones only include units sold to AT&T for distribution in its stores, units sold by Apple through its network of retail stores, and some number of units that might have been in transit as the clock turned on the third quarter, Oppenheimer said. An Apple representative confirmed the number doesn’t include online sales of the iPhone during the 30 hours before the quarter ended on 30 June.

Oppenheimer confirmed that Apple is receiving payments from AT&T related to the sale of iPhones, but he didn’t want to discuss the specifics of the agreement between the two companies. Gene Munster, an analyst with Piper Jaffray, believes AT&T is paying Apple about $11 a month per new iPhone customer, or about $3 a month for existing AT&T customers who switched to the iPhone “

Lets do some math.

.25M units first few weeks. So I think 5M Units first year is very conservative.

Lets say half are new AT&T subs and half are existing. That is $7/Month. $84/year.  Or $126 per device for 18 month life.

These are $126 of 100% margin to the bottom line. The iPhone margins are amazing as is (~$500 retail with $250 BOM)  but if you count the additional $126 per device - this kind of margins are unheard of in the handset world.

What would it do to Apple bottom line? I am on pushing my accounting skills here - but lets say $84 per year, 5M devices spread over a year, we are looking at additional $210M dollars for Apple on the iPhone business.  I think I should buy some stock…

Wonder what is going through Nokia top execs as they do this math…

I was hoping to take a break from Carterfone. But then both me and Jason started reading the operators responses.

Hmm…

Stoppard has this line in ‘The Real Thing’ [Probably my favorite play] “Persuasive Nonsense. Sophistry in a phrase so neat that you can’t see the loose end that would unravel it. It’s flawless but wrong. A perfect dud. You can do that with words, bless ‘em.“

So we decided to unravel the crap the operators wrote. Full text is here

The argument is simple - the vigor and strength of the operators response (They even forced Motorola, Quallcomm and LG to support them) is the best indicator of how far the market is from being efficient and innovative. Otherwise - what are they afraid of ?

We outlined to remedies, which are easy tom implement and get the industry 90% of the way toward fixing the problems

1. The Commission should require each carrier to publish the existing CPE standards they use for certifying devices for use on their networks. Carriers must accept any CPE that meets those standards, and can reject any CPE that does not. Certifications will be handled by existing companies who specialize in handset certification.

1. The Commission should require each carrier to communicate to consumers what portion of their monthly bill is used to pay for service and what portion is used for the device. Furthermore, carriers should comply with Carterfone and offer a service-only plan.

Then we went on the address the specifc arguments the operators made - like protecting us from wireless viruses (Flesh eating?) or giving us free phones (Just pay us $50 for 48 month but its FREE) and more crap.

Next is to go in front of the FCC in person. Which should be fun

Ram

An 18 month old on a rowing machine ? Yes - after watching his daddy doing it, it was time to replicate the pattern…

R

As I was working on the FCC petition, and especially after thinking through Tim Wu’s subtle (or not so subtle) points around handset ‘Subsidy’ I got to realize that we are looking at a serious case of the misleading rhetoric shaping the discussion.

When you buy a car, you have two options: Put down the whole $10K upfront. Or lease it, pay $1000K and then monthly payments for 24 months of $500. Your car is not ’subsidized’ by the car dealership - you just pay for it over time rather then upfront. And there is full disclosure how the lease payments were calculated.

Now when it comes to cell phones, operators some how managed to get us to think they are ’subsidizing’ the handsets. And that we should be nice and say monthly “Thank you for being so kind and subsidizing my handset ” as we are writing a check for $50 for their great “wireless service”

Handset are not subsidized today. Consumers are paying an arm and a leg for their handsets. And we don’t even know how much we pay for the service and how much for handset. The remedy, as we discussed in petition, is to have operators comply with Carterfone and have a “service only” no handset bundled monthly plan. Then we will know how much we really pay for handsets…

Handsets can be subsidized - for example - through advertisements. “We will give you this handset for free, but we have our ad engine incorporated” - That is subsidy. What we have from cellular operators today is not subsidy, but rather handset leasing.

R

Together with Jason of Brash we just filed our comments on the Cellular Carterfone.

You can view the RF&JD comments on Skype petition- or if you want a brief summary

1. Cellular handsets have become handheld computers, used for accessing information and other methods of communication in addition to voice calls. Cellular handsets have become small and powerful computers & Handsets have become our link to society and information:

2. The current cellular market is tightly controlled and oligopolistic, which results in inferior consumer offerings. We listed four examples: (i) Limiting handset features (Bluetooth/VZW, WiFi-E62, Hardly any WiFi-GSM handsets in the market. Only one Nokia N series in the market) (ii) Example 2: Slowing adoption of new consumer services such as visual voice mail (iii) Bundling handsets with service: consumers pay the same monthly service fee if they bring their own handset or get an operator ‘free’ handset and (iv) the Verizon Brew service which allows VZW to control information services and charge for content.

3. Enforcing the FCC’s existing broadband guidelines in the cellular handset market will benefit consumers and create new business opportunities. Three examples we gave: Free handsets and richer consumer offering with lower monthly service fees, First responders can get new specialized equipment or (iii) New types of Medical monitoring devices that can be developed

4. Remedy: The FCC should insist on cellular operator compliance and remove any special treatment for the wireless indsurty. This is about LESS regulation and less protection. Its about enforcing existing FCC open communication guidelines. First Enforce Carterfone principles: Devices can be offered by third parties and can not be blocked, and (ii) Operators should offer “service only” plans that do not bundle a handset with the service. Second Apply wired & broadband Net neutrality principles to Wireles.

There is only one Internet and one public IP network. Some nodes might be wired, some nodes might be wireless through the cellular network, some might be wireless through WiFi and some might use both or different networks. Same open rules and principles should apply - regardless if and end point is connected through GSM, CDMA, 80211G, 802.3 of any other technology acronym we cant pronounce.

If you want to support the Skype petition – click here to file comments with the FCC directly (it is quite easy – would not take more then a minute. Put ‘RM-11361’ in field 1. Document type is ‘Comment’ and you can type your thoughts in the bottom. Pretty straight forward)

Clarification - I was not paid to file this by Skype, Nokia or anybody else. I believe it is very important for consumers and the industry. And yes - I might be involved in one of the opportunities that will be created if FCC follows through (that is if C will not ban me from doing another startup)