Monthly Archives: December 2008

Is Internet Creating or Destroying Value?

As usual in bad times, the debate on whether progress creates or destroys value comes back, as questioned in Martin Varsavsky blog, this time referring to how RSS destroys affects to blogs reducing the amount of displayed advertisement.

As Martin writes:

“I once debated Michael Porter at Davos on the overall value creation of the internet. I argued that the internet created valued and he argued that the internet destroyed value.”

Many examples come to mind, where Internet seem to be killing multi-billion industries:

– Skype is dropping the cost of voice to virtually zero. What before was a hefty business of international telephone calls, has been reduced by several orders of magnitude with VoIP.

– Instant Messaging killing SMS. We all know that SMS is terribly expensive in terms of price/byte. At a rate of 5 cents per SMS, considering 140 bytes per message, we are paying at $375 per Megabyte!! As you can imagine, with IM and unlimited data plans becoming popular, in the mid-term SMS will die.

Music Industry. Used to charge $20 for a CD with 8-12 songs, the labels are struggling as they see the  revenues from music downloads far too low to offset the reduction in revenues from CD sales. Music distribution in discs is likely to disappear in a few years, replaced by online distribution.

– Online Newspapers cannibalize sales from print editions, with online ads revenues not always compensating.

Are these examples really showing that Internet is destroying value? or is value simply shifting?

Looking back in history, it is not the first time there is a perception that technology progress destroys value. The Industrial Revolution saw workers protest as they lost their jobs to machines. Demand for unqualified workers doing repetitive activities dropped, forcing workers to get trained and qualified to build, operate and maintain machines. Those machines produced goods (and new machines) that were cheaper and in bigger volumes, deriving in more people benefiting from those goods. What initially seemed like job destruction, in fact it was wealth generation for the society by making goods affordable for more people.

History demonstrates that innovation simply removes inefficiencies, and in its way destroys industries if needed, shifting value to other parts of the economy, not necessarily within the same industry. And Internet is a fine example of that. Internet (and mobile) makes communications affordable to billions of people, and it is one of the engines behind Globalization, making knowledge and information available widespread.

So where is all this value (business) shifting to?

Let’s take the Music Industry. By removing inefficiencies (like physical distribution of information in discs or in print) the Digital Revolution is shifting the value from selling expensive disc copies to improving fan’s experience, by forcing artists to do more live concerts and spectacular shows as Madonna’s latest World Tour. Value is also shifting from the monopoly of recording labels to select the next star, to the most democratic system ever, with Internet empowering all sorts of musicians to publish their work. Labels and intermediaries are clearly losing business, but isn’t the Digital Revolution bringing more value to both fans and thousands of creators?

There are still many things to do to make this World a better place for our children and grandchildren. Let’s put the focus on improving it harnessing the power of innovation that Internet brings.

Obama made a wise address last weekend, reminding us that we need a strong purpose and that we still have a lot to do in green tech as well as in broadband.

Internet clearly creates huge value for the society. A different question is, are Internet start-ups with unclear business cases (other than getting funds from VC) sustainable? We got an answer to that question when the late 90s bubble burst. Now we are getting the same answer after Bubble 2.0 is bursting too.

The Ultimate Media Center from Asus

Taiwanese vendor Asus brought the Netbooks to mainstream with their popular Eee PC, leading the way for other manufacturers to jump into a now crowded category. Following that success, Asus introduced a small-form-factor desktop, the Eee Box, creating a new NetTop category, that so far has failed to take off.

But this could soon change with Asus recent announcement of the new Eee Box B204 and B206 models.  The new models are powered with an ATI HD graphics cards that delivers High Definition video through an HDMI port. Asus completes its box Media Center capabilities adding their Eee Cinema software controlled by a remote control, for a complete home theater experience.

The tiny Eee Box can be VESA mounted on the back of a display, it is quiet (26 dB) and consumes only 20 watts of power! An ideal box for a Media Center front-end, to play content from a media library on a back-end Home Media Server (NAS or Desktop), as well as being an ideal device to enjoy Internet TV (Hulu, YouTube, etc) and Amazon Unbox downloads in the living-room.

Asus has not unveiled the price of these new models yet, but if it is close to the $300 of previous Eee Box models, this could be the ultimate box for a PC2TV / HTPC / Media Center solution.

Still to be seen if the 1.6GHz Atom would be capable of any TV recording, but even it is not, the B204 and B206 boxes are still great lightweight front-end solutions.

Specifications from Asus website:

Model B204 B206
Operating System Microsoft Windows XP Home Microsoft Windows XP Home
CPU Intel Atom N270 (1.6GHz) Intel Atom N270 (1.6GHz)
Chipset Intel Chipset Intel Chipset
Graphics ATI Radeon HD 3400 series with 256MB DDR2 memory ATI Radeon HD 3400 series with 256MB DDR2 memory
Storage 160GB HDD SATA II 5,400rpm
10GB Eee Storage
160GB HDD SATA II 5,400rpm
10GB Eee Storage
Bluetooth Yes No
Wireless 802.11n 802.11n
LAN 10/100/1000Mbps 10/100/1000Mbps
Audio Chip Realtek ALC662 Azalia CODEC Realtek ALC662 Azalia CODEC
Rear I/O Giga LAN x 1, USB 2.0 x 4 Giga LAN x 1, USB 2.0 x 4
Video out: HDMI port x1 / DVI-D port (through adapter)
Audio ports x 1 (with S/PDIF out)
Video out: HDMI port x1 / DVI-D port (through adapter)
Audio ports x 1 (with S/PDIF out)
Other Built-in battery that performs a U.P.S. function N/A
Accessories Remote control, stylish stand and 36W adapter Remote control, stylish stand and 36W adapter

Modular Data Centers: Containers for Clouds

Mike Manos, Microsoft Data Center Chief, has unveiled in his blog the design of future “Generation 4” Microsoft data centers. With the mission to provide massive easy-to-scale computing infrastructure to power the Cloud, Microsoft envisions pre-assembled containers equipped with a few thousands of servers each and its associated cabling and cooling system.

Microsoft is already using the flexibility of “containerized servers” in their Generation 3 Data Center under construction in Chicago. Generation 4 pretends to take the concept of building block even further with a central spine infrastructure for mechanical, electrical and security components, to which the pre-assembled containers are connected in a plug-and-play mode. The containers are designed for high efficiency, minimizing both footprint and the use of water or air for cooling.

The target is to achieve an average power usage effectiveness (PUE)* of 1.125 by 2012. Taking into account that current average data centers have a PUE of almost 2, that would be a huge achievement in green IT, even though Google alreadly claims to be at a 1.21 PUE in some of their facilities.

Microsoft modular container-based design is ideal for a scalable cloud infrastructure that can adapt computing capacity to demand. On top of that, not only operation costs are reduced due to the optimized footprint and cooling, but also CAPEX is improved with server containers assembled in a single manufacturing plant for far less cost than deploying the servers on-site.

Watch Microsoft video illustrating the Generation 4 Data Centers. An interesting approach to counter attack Google’s thought leadership earned with their patent filing for floating, wave-powered data centers.

Microsoft is taking Cloud computing seriously, as Allan Leinwand of GigaOm writes today:

“… in conjunction with announcements of the Azure Services Platform and Office Live, there is no doubt that the giant in Redmond is aggressively focused on delivering enterprise cloud computing. ”

*Definition of PUE extracted from Google corporate site:

PUE is defined as the ratio of the total power consumed by a data center to the power consumed by the IT equipment that populate the facility:

Power Usage Effectiveness

For example, a PUE of 2.0 indicates that for every watt of IT power, an additional watt is consumed to cool and distribute power to the IT equipment.

N97: Too Little, Too Late?

Nokia has finally reacted and announces a device to compete with the iPhone. The N97 has a beautiful touchscreen and a sliding qwerty keyboard. From the video clip Nokia posted in YouTube you can notice that Nokia bets on widgets to make the interface even more touch-friendly. One surprising thing about the video is that apart from widgets it only shows how the N97 plays video and music controlled by a soft touch interface. No demo on web browsing experience, nor on Nokia Maps powered by A-GPS, nor on any other feature that outperforms iPhone.

The device has 32GB of internal memory, a micro SD slot, and features a mini-USB interface, which already signals how Nokia is giving up on forcing users to buy proprietary Nokia cables and chargers. This shows how good (and necessary) competition is to avoid market leaders to abuse their position, as Nokia has been doing with their accessories (and Apple still does).

All in all, a quite decent device compared to previous Nokia phones. But at the expected 550 EUR price, is it cooler than iPhone? Furthermore, what new iPhone and Android models will we have by the second half of 2009, when the N97 hits the market?

Market leaders tend to be slower to respond to disruptions, usually after wasting months downplaying the disruptive competitor. Has Nokia reacted soon enough to avoid losing its throne?

Nokia N97 Specs, extracted from CrunchGear:

  • Size: 117.2 x 55.3 x 15.9 mm* *18.25 mm at camera area
  • Weight: Approx. 150 g
  • Memory: Up to 48GB (32 GB on-board memory, plus 16GB expansion via microSD memory card slot)
  • Display: 3.5 inch TFT with up to 16 million colors nHD 16:9 widescreen (640×360 pixels)
  • Talk time: Up to 320 min (3G), 400 min (GSM)
  • Standby time: Up to 400 hrs (3G), 430 hrs (GSM)
  • Video playback: Up to 4.5 hours (offline mode)
  • Music playback: Up to 37 hours (offline mode)
  • Image capture: Up to 5 megapixels (2584 x 1938) JPEG/EXIF (16.7 million/24-bit color)