Digital Diversion

I heard about Lala.com on the local news a few weeks ago where they were touted as a breakthrough in the business model for online music.  So what’s different about Lala?

1. You can listen to any of their 6 million songs in their entirety – but only once. Compare this to the 30 second clips with no listening restrictions that you get from iTunes
2. You can purchase a song for online listening for $.10
3. MP3 downloads are $.89 (cheaper than iTunes but the same price as Amazon)
4. Lala allows you to upload your entire music collection so that you can listen to it online from anywhere for free
5. They’ve included community features and the ability to ‘follow’ someone like you would on Twitter

From my perspective, the real twist on the business model was the ability to have your entire library online. I figured I’d give it a shot and tried to upload my music.  I have over well over 30,000 songs in my digital music library and unfortunately Lala was ill-equipped to handle the upload so I eventually gave up.  After what amounted to several days of uploading, I was only able to get about half of my library online.   (continue reading…)

I had the opportunity to hear Shane Kim, Corporate VP at Xbox, speak this past weekend at the >play Digital Media conference.  Reporter Dean Takahashi did a nice job of covering the features of the Next Xbox Experience (NXE) to be delivered as an update to users today.  NXE adds a new user interface, community features and, in an obvious nod to Wii’s success, avatars.  You can read Dean’s article here.  I download the NXE update today and, despite some intermittent issues accessing the Xbox server (probably due to the number of upgrades going on), the UI looks nice but will take some getting used to.

What this upgrade really highlights is the power and flexibility of the Xbox 360.  When I was at Intel, I was the lead business development guy trying to win the Xbox 360 business.  It wasn’t a good business for us and we ended up walking from the deal but in the process I did get an appreciation for what Microsoft was trying to accomplish.  After what some have estimated to be a $1B investment in advance of selling their first unit, their goal was to maximize revenue from the platform by:

1. cramming in as much horsepower into the box as possible so the up-front investment lasts as long as possible
2. selling as many Xbox’s as possible by pricing them at or below cost 
3. delivering more and better content over the platform’s life
4. getting a cut of every piece of content that gets delivered through the Xbox

From Intel’s perspective, our worst nightmare was (continue reading…)

I got an email the other day from Movielink notifying me that due to their acquisition by Blockbuster in August, they would be closing their website in December.  I tried out Movielink about 3 or 4 years ago but never used it because I had no interest in watching movies on my PC.  I have historically been one to run down to the local video store (Hollywood Video was only I mile from my house when I lived in Portland) and pick up a few new releases for the weekend.  But when I moved to California early last year, the closest video store was a Blockbuster and inconvenient 6 miles away from my house, had limited parking and a lousy movie selection.  After walking out of Blockbuster several times empty-handed, I finally broke down and signed up for Netflix. 

While I was initially reticent about Netflix, I got into the groove of managing my movie queue and ensuring there was always something on-hand to watch.  Things started to get interesting for me when Netflix started offering movies streamed for free to my PC.  Only a fraction of their catalog was available, there were originally some limits on the number of movies you could stream, and I couldn’t use it on my Mac (click here to enter the Mac beta) but I found the quality of the video stream surprisingly good.  I used the feature on occasion and was intrigued when in May they announced the ability to stream movies directly to your TV by way of a $99 device from Roku Labs.  I was a bit dubious about the video quality on my 50″ plasma but figured that I would take the leap as a low-cost alternative for those cases when I had not timed my Netfix delivery queue well enough.   Installation was easy and the video quality is way better than I expected using the integrated wireless networking.  Still, the content library was pretty thin, consisting mainly of older content, B-movies and documentaries.  Netflix has subsequently announced the integration of the video streaming into Blu-Ray players from Samsung and LG, TiVo Series 3 DVRs and Xbox 360. 

Having most recently come from a company that delivers a subscription-based service offering, I’m intimately familiar with the business metrics and challenges of the subscription business model.  (continue reading…)

Having spent over 12 years with Intel, the last 4.5 of them spent working on consumer platforms and digital media, I figured what better place to kick off my blog than with the role of the PC as an entertainment platform in the home. My involvement for Intel in expanding the role of the PC into home entertainment goes back to 2001-2002 when we foresaw an opportunity driven by the convergence of four major trends:

1. the penetration of broadband into the home,
2. the proliferation of home networking,
3. the increased availability of content being offered online, and
4. the power and flexibility of the PC to manage and distribute diverse forms of media.

The ultimate vision was for any content to be shared seamlessly on any device within the home – a simple statement that belies the complexities of establishing industry standards between the PC and CE industries through collaborating with behemoths with competing interests in the home, namely Microsoft and Sony. As with any standards activity, the concept is that by all parties contributing to a greater good, the market develops faster and the market opportunity is bigger for everyone (the recent Blu-Ray vs. HD-DVD battle is a great case study in how a lack of standards can stymie growth). I’ll save the politics of this undertaking for another day and jump straight to Intel’s motivations.

Very simply, Intel makes money by selling chips. In its vision of the Digital Home, Intel wanted to drive computer density (more PCs per home), drive the need for higher-end/more expensive microprocessors into PCs, expand the types of devices that would require the power of an Intel microprocessor (e.g. networked consumer electronic devices), and ideally get a share of the content revenue much like Steve Jobs was able to achieve with Apple’s iPod and iTunes. We would never say this to our partners, but Intel’s vision was for the PC to be the center of the digital home; the device to which all other devices must connect and through which would all content and services must pass. In order to achieve this, Intel defined and drove three models for how the PC would be used within its view of the digital home: (continue reading…)