Friday, March 11, 2011

About Making Money

On Monday night, I watched my to start with, The Previous Word host Lawrence O’Donnell.
Though O’Donnell laudably experimented with to target the audience’s consideration onand hopefully final, Charlie Sheen trainwreck interview, courtesy of the tragic undertow that threatens to pull Sheen beneath for good, I was overtaken, not through the pulling around the thread, as well as the voracious audience he serves. It did not make me depressing, it developed me angry.

In relation to celebrities, we can be a heartless nation, basking within their misfortunes like nude sunbathers at Schadenfreude Beach. The impulse is understandable, to some diploma. It might be grating to listen to complaints from many people who appreciate privileges that most of us can not even contemplate. Once you can not muster up some compassion for Charlie Sheen, who can make a great deal more dough to get a day’s operate than many of us will make inside a decade’s time, I guess I cannot blame you.



With the quick speed of occasions on the web along with the information and facts revolution sparked by the World wide web, it’s incredibly simple for your know-how industry to imagine it is unique: perpetually breaking new ground and performing factors that nobody has ever finished ahead of.

But one can find other types of company which have currently undergone some of the same exact radical shifts, and have just as wonderful a stake during the long run.

Get healthcare, for instance.

We frequently imagine of it like a significant, lumbering beast, but in fact, medication has undergone a sequence of revolutions from the past 200 a long time which are no less than equal to those we see in solutions and information.

Much less understandable, but even now within just the norms of human nature, will be the impulse to rubberneck, to slow down and look into the carnage of Charlie spectacle of Sheen’s unraveling, but from the blithe interviewer Sheen’s everyday living as we pass it with the most suitable lane of our every day lives. To be sincere, it could be difficult for many people to discern the difference involving a run-of-the-mill awareness whore, and an honest-to-goodness, circling the drain tragedy-to-be. On its very own merits, a quote like “I Am On a Drug. It is Known as Charlie Sheen” is sheer genius, and we can not all be anticipated to get the full measure of someone’s existence each time we listen to a thing funny.

Fast ahead to 2011 and I'm seeking to examine will mean of currently being a bit more business-like about my hobbies (for the most part audio). Through the finish of January I had manned up and began to promote my weblogs. I had put together plenty of distinct weblogs, which had been contributed to by associates and colleagues. I promoted these actions by way of Facebook and Twitter.


Second: the very little abomination that the Gang of Five on the Supream Court gave us a yr or so in the past (Citizens Inebriated) in reality includes a bit bouncing betty of its personal that may pretty nicely go off within the faces of Govs Wanker, Sacitch, Krysty, and J.O. Daniels. Considering this ruling prolonged the notion of “personhood” to the two businesses and unions, to strive to deny them any proper to operate within the legal framework that they were organized below deprives these “persons” for the freedoms of speech, association and motion. Which means (the moment once more, quoting law school trained spouse and children) that possibly the courts should uphold these rights for that unions (as individual “persons” as guaranteed by the Federal (and most state) constitutions, or they've to declare that these attempts at stripping or limiting union rights ought to utilize to main businesses, also.






The biggest names in the tech industry seem to have collectively decided it's time to make the billions. Sure Facebook, YouTube, and Twitter have sold some ads and Foursquare brokered some promotional deals. But with the second wave of IPOs on the horizon and investors' eyeballs getting as round as the tech bubble, the time is nigh for tech demigods to show that they can make money off all those users they've spent years accumulating. And hopefully not alienate them in the process. Today, Mark Zuckerberg inched closer to that dream of a trillion dollars by offering streaming movies — and tanking Netflix's stock. Meanwhile, YouTube closed a deal on a production company presumably to make its very own content. Intel cast a wide net to examine tech companies' latest money-making ventures. Then we looked into our CrystalBall app to see what they might try next.



Facebook

Moneymaker: Warner Bros. just became the first Hollywood studio to stream movies directly on the social network. Facebook has been making a big move toward e-commerce lately, and the fact that you have to use Facebook Credits to buy movies and TV shows could be the tipping point to get users to hand their credit card info over to Mark Zuckerberg. Plus, studios looking for a way to stop Netflix's growth might not make Facebook suffer the same 28-day waiting period for new content.

Downside: At 30 credits (or $3) for a 48-hour rental for The Dark Knight, it will cost you. Plus, you have to "like" the movie or the director to get the privilege. Do you really want hundreds of your Facebook friends to see you "liked" and watched Valentine's Day on Valentine's Day?

What's next: Why should you use a credit card to buy Facebook Credits when you can use Zuckerbills (coming to a U.S. Treasury in 2020)?



Twitter

Moneymaker: In order to make money off its free iPhone app, this weekend Twitter introduced a number of new features, including Quickbar, a "forced trending topics bar" that includes promoted tweets — negating the idea of a service that quickly shows you what's actually trending.

Downside: Pundit John Gruber quickly dubbed the feature "Dickbar" after Twitter CEO Dick Costolo, but Gruber issued the unfortunate nickname on Twitter and it was widely retweeted. Advantage Costolo.

What's next: Can we pay someone to monitor our Twitter feed for us? It's getting overwhelming. Either that or design personalized lists of the best people to follow based on what's important to us, like updates on Libya and breaking bear-cub news.



Foursquare

Moneymaker: At SXSW this week, Foursquare is set to announce a partnership with American Express that will link users' credit cards with their Foursquare accounts. The incentive to consumers? Deals like "spend $5, save $5" at participating merchants. Although Foursquare said its motivation is to increase membership and loyalty and that it won't charge Amex for the privilege, it's hard to believe that will stay the case if it catches on.

Downside: We don't have an Amex card. And (confession) although we use the app for recommendations, we've never actually checked in anywhere. Sorry, Dennis and Naveen! But if they add other credit cards, we would.

What's next: How about a service that warns you beforehand if you're about to friend one of those compulsive people who check in with handfuls of people at name-dropping locales?



YouTube

Moneymaker: YouTube just closed a deal to buy Internet video company Next New Networks, the producers behind Auto-Tune the News, for less than $50 million. Although rumor had it that Google was trying to get into the video-production business, Business Insider reports that the move is actually designed to help existing YouTube partners make "more and better content." Which then leads to more users and, subsequently, more expensive ads.

Downside: Isn't YouTube's strength either grainy weird viral videos or pirated television, movie, and music content? The second could definitely use better quality, but does it even matter for the former?

What's next: How about veering into Hulu territory?



Skype

Moneymaker: Just regular old advertising on the Windows version of its paid video communications service.

Downside: Although Skype says it won't show ads during the video conferencing yet, this could devolve into a Minority Report-style advertising assault.

What's next: Would it be possible to embed microphone/receiver in our brain so we don't have to use the special headset? Just curious.



Update: TechCrunch makes an important clarification. Facebook hasn't announced its own streaming movie service. Rather the movie offering comes from Warner Brothers app that uses Facebook Credits' payment system. But if it proves successful and other studios follow suit, Zuckberg can still count on more personal credit card info coming his way. Someone better go tell Netflix's shareholders.





How is Elop going to address this by
using Windows OS? He has to do more than just charge more, he has
to produce better product at competitive prices, which keep getting
lower. Elop will have to license the Widows OS, which is an
expense, one that he would bear to nowhere near the same extent if
he used Android. I feel he mistakenly looks at this as Google
commoditizing the Android platform, in lieu of the more reasonable
perspective of Google commoditizing the entire portable computer
space.


Well, the answer has arrived. Microsoft is buying Xx% of Nokia for paying Nokia over $1 billion to product Windows Phone 7 hardware.
Nearly all of this money is undoubtedly going into R&D and
marketing. Nokia and Microsoft (their new defacto owners) invariably see
Google as the pre-eminent trheat and are pulling out all of the stops
to nullify said threat. This also answers the question of how Elop, the
Nokia CEO will be able to deal with the reduced margins of having to
buy OS licenses while competing with vendors who get Android for free –
Microsoft is not only footing the bill, but investing in the business
as well. You see, the drop in Nokia’s share price is highly unwarranted
and their is visible synergy in this deal. Nokia gets to remove the
costs of OS R&D from its line times, sunk costs that have apparently
had negative incremental returns as they have had their asses handed to
them by Apple and most definitely Google – who knocked them off of
their number one market share perch in just over a year.


Microsoft gets the economic benefits of an existing hardware platform
that happens to have the number one marketshare metric in the world,
and gets it for just over a billion dollars. This is a win-win
situation. The question is,  will it win againt Google. Both companies
will still fail if they don’t execute on Google-time, who has compressed
development cycle years into months – literally!


From the Bloomberg article linked above:


Shrinking Margins (yeah, you’ve hear thist from me often enough)


Espoo, Finland-based Nokia needs to cut
costs to keep operating margins from narrowing further, after they
shrank to 4.9 percent last year from 19 percent a decade earlier. For
2011 and 2012, Nokia may cut its budget for research and development in
devices and services by about a third from last year’s spending of about
3 billion euros, said Sami Sarkamies, a Helsinki-based analyst with
Nordea Bank.


Microsoft spokeswoman Melissa Havel
declined to comment on the specifics of the agreement. Laurie Armstrong,
a spokeswoman for Nokia, said the final contract hasn’t been signed and
the company will share further details when they are complete.


Nokia’s royalty payments will help
Redmond, Washington- based Microsoft make a profit on the accord even
after the payments to Nokia, one person said. Some of the payment to
Nokia would be made before the company starts selling the phones,
meaning Microsoft bears some upfront cost in the partnership.



Microsoft shareholders want the company
to salvage its mobile-software business while also reining in costs. The
company doesn’t break out results for its mobile-software unit, and
instead groups them with the profitable Xbox video-game business, making it difficult to evaluate the financial performance of phone software.


Chief Executive Officer Steve Ballmer
has come under pressure from investors and his own board to improve
sales of mobile software after the company lost market share to Google
and Apple. Microsoft stock has declined 7.8 percent so far this year.


The agreement for the more than
billion-dollar payment was part of a campaign by Microsoft to keep Nokia
from choosing Google’s Android operating system, one of the people
said. Nokia also opted for Microsoft because Windows Phone software,
which is newer than Android and has a smaller number of handsets for
sale, gives Nokia a better chance to stand out, one of the people said.


The agreement also has Microsoft paying Nokia for the right to use its patent portfolio, one of the people said.


As part of the deal, Microsoft will use
Nokia’s Navteq mapping products for functions such as geolocation
services and selling local advertising and coupons tied to a user’s
position. If successful, that also could generate additional revenue for
Nokia, which will share in the sales. The two companies will also
divide revenue from services like search and advertising, Microsoft
President Andy Lees said last month.


I’ve been warning my subscribers about margin compression in this
space, and its about to get much uglier – to the extreme benefit of
consumers of personal and enterprise tech. Previous (and prescient)
posts from last year on this topic…


  • Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet
  • After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play
  • As
    I Warned in June, DO NOT DISCOUNT Microsoft in This Mobile Computing
    War! Their Marketing Campaign is PURE GENIUS! and it Appears as if
    the Phone Ain’t Bad Either
  • Apple on the Margin
  • How
    Google is Looking to Cut Apple’s Margin and How the
    Sell Side of Wall Street Will Enable This Without
    Sheeple Investor’s Having a Clue

Monetizing the Mobile Computing Race


We have a pretty firm idea of who is in the pole position as of now,
but that position is both risky and volatile, not to mention medium to
long term in nature – see Navigating BoomBustBlog Subscription Material To Find The Google Valuation Drilldown.


A more risk averse strategy is to go long on the component vendors
who supply those battling for pole position. Last week we released the
document Long candidate #1 – Hardware: The Mobile Computing Wars
to subscribers that outlined who our number one pick was after an
initial scan. This is not necessarily the absolute final say on the
matter since we have yet to perform a full forensic analysis, but the
company does look good in comparison to over 120 peers. Non-subscribers
should reference The Potential Equity Investments Most Likely To Prosper From the Google/Apple/Microsoft Mobile Computing Battle.


I am releasing the draft of the full shortlist of prospective long
candidates as of now (17 pages, 5 companies) to subscribers. Please be
aware that is a draft document and work in progress, but it is quite
informative nonetheless.  See Mobile Computing Vendor Long List Note WIP. Those who wish to subscribe should click here.


Click here to read up on all of Reggie Middleton’s Mobile Computing War opinion, analysis, and research.



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