If the battle royale between Google and Apple for dominance in smartphones feels vaguely familiar, then you’re probably as old as I am.  Back in the 1980s, Apple and Microsoft fought for dominance of computer operating systems. As today, they took opposite approaches: Apple maintained tight control over its operating system and hardware, forcing would-be partners through a tight licensing regime. Microsoft let any computer hardware license MS-DOS and later Windows…for a price.

Apple ended up selling superior, easy-to-use products. Microsoft ended up dominating the PC market and almost driving Apple out of business, despite its infinitely more buggy product.

In mobile, Apple again has complete control of a leading hardware platform (the iPhone) and is setting tough standards for anyone who wants to build apps. It’s restricting the iPhone to just one cellular network, AT&T. Google is giving its Android software away to all comers on any cellular network for free, betting that increased mobile Internet usage will give it the same dominance in the nascent mobile advertising market it has on the Web.

It puts in a new perspective NPD’s recent report that Androids outsold iPhones in the first quarter (28% to 21% of the smartphone market, with BlackBerry at 36%). You can dispute NPD’s figures, as Apple did. But you can’t dispute that Google’s made huge inroads in a very short time. 

No doubt, Steve Jobs (who’s even older than me) remembers all too well how he was almost done in by Microsoft. Since he surely won’t start licensing iPhone software, he only has two ways to maintain or grow marketshare in the U.S.: constantly introduce new products (such as this summer’s iPhone upgrade); and expand beyond AT&T’s creaky network to Verizon and the other carriers. Google, meanwhile, just needs to tweak its software and sign deals. 

It’s tempting to give Google the upper hand in this battle. But then, it would have been tempting to anticipate Apple’s demise in the 1980s, too.

Posted under Michael's Blog

To most entertainment executives, Google’s introduction of “Chrome” this week probably seems too inside baseball to care about. But actually, it’s all related to something that keeps studio heads up at night:  control  of distribution.

That’s one way to look at all the consolidation in Hollywood over the last 20 years: Sony       bought Columbia and TriStar because it wanted “content” for its electronics. Disney bought ABC because Michael Eisner worried the TV networks could squeeze any fees they wanted for his TV shows and movies. Winning Paramount gave Sumner Redstone films to fill his National Amusements theater chain and pipe to Viacom’s cable channels.

Google is clearly concerned that Microsoft could make Internet Explorer unfriendly to Google applications. This is not paranoia. Much of Microsoft’s explosive growth came from its leveraging its monopoly in computer operating systems to decimate smaller rivals. Netscape was done away with by making IE the first thing that showed up on every new computer desktop. Microsoft Word worked better with Windows than Wordperfect.

So Google wants to make sure it has secured its own route from the consumer’s desktop to the Internet. And from the mobile phone to the Internet as well, when Android is introduced toward the end of this year.

An interesting twist: Google is making the code for Chrome available to anybody, including its competitors. Not exactly akin to giving away the copyrights to all your movies, but its certainly a shift from the monopolistic ways of Microsoft.

Posted under Michael's Blog

Analysts are already pontificating about the prospects for Microsoft launching a new Yahoo bid if the search giant’s stock continues to plunge.

But I wonder if history will judge the real story of the failed bid to be the end of Microsoft’s last, best attempt to remain the dominant force in modern computing.

Google as clearly donned that mantle, as the Internet — not the operating system — becomes the central feature of most people’s computing experience.

Yahoo’s cozying up to Google reminds me of a kid hiding behind his Dad and telling the neighborhood bully, "Back off or he’ll whup you!"

I was struck by software pioneer Mitchell Kapor’s comparison today of Microsoft to IBM, weakened in the 1980s and early 1990s by its antitrust woes and the shift of the mainframe to personal computers.

“I.B.M. came out of those years still large and enormously important to its customers, but I.B.M. was displaced by Microsoft,” Kapor told New York Times reporter Steve Lohr. “I.B.M. was no longer the defining company.” 

Microsoft is far too important a company to be driven out of business — at least in the forseeable future. But is Microsoft the 21st century’s IBM?

See Also

• Microsoft’s Failed Yahoo Bid Risks Online Growth

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While it’s easy to see what AOL gets out of a potential merger with Yahoo!, it’s harder to see what Yahoo! gets.

Digital Cities/AOL’s own former managing editor, after all, recently called the challenge of reviving AOL — 20 million of whose users have fled since 2002 — akin to "making a Marc Jacobs purse out of a sow’s ear."

AOL seems sadly lost in the broadband age. The very thing that powered its initial rise to prominence — its $9.99 dial-up service — has now become a liability in negotiations with potential suitors. Its own search capabilities are touted as "enhanced by Google".

Were Yahoo! to combine with AOL, it may choose to grab AOL’s remaining 10 million members and its workable sub-brands,

and, taking its cue from Time Warner’s Life Magazine, allow AOL to gently fade into the history books.

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The Playstation 3’s late entry into the game console wars seriously hampered Sony’s ability to take on Microsoft’s well-established X-Box. Amid all the me-too features, its one distinguishing characteristic: a Blu-ray high-definition drive, against Microsoft’s HD-DVD.

Now that Toshiba’s exit from HD-DVD leaves the format officially dead, PS3 is reaping the benefits. The 40GB, $399 PS3 SKU, which comes packed with Spider-Man 3 in Blu-ray, has jumped from No. 10 to No. 6 among Amazon’s most popular videogame products, according to Punch Jump, an interactive news website.

Meanwhile, retailers like Amazon, Best Buy and Target are slashing prices on HD-DVD players to get the dead weight off their shelves.

Now consider that 83% of PS3 owners already watch Blu-ray movies on their consoles, according to Punch Jump.

If you were a consumer contemplating buying a Blu-ray player, would you be more likely to pay $749 for a Panasonic player, or $399 for a PS3, packaged with movies and games?

Sony has a rare opportunity to finally cash in on the long-promised synergy between its film division and its hardware division. It now can choose between dozens of Blu-ray films and games to package with its PS3s.

Now its Microsoft’s turn to play catchup. If consumers start demanding consoles that play DVDs, X-boxes will start looking like yesterday’s game.

See Also

• Toshiba Throws in the Towel in DVD-Format War
• Blu-ray titles see sales gains at Amazon

Posted under Uncategorized

Microsoft’s $44.6 billion bid for Yahoo! is as much about its software business as its Internet business.

Microsoft is ill-prepared to counteract Google’s assault on its Office monopoly.. Instead of fighting Microsoft in the PC software market, Google has taken word processing, spreadsheets and calendars to the web – creating a free, ad-supported, collaborative service-as-software  business that threatens Microsoft’s  bread-and-butter.

At the same time, Google’s search strategy has essentially made it the Internet’s operating system. You go to Google to search. But you stay for the other cool applications. Just like you get all kinds of great extras like Internet Explorer and Media Player when you install Windows.

Google’s software-as-service approach – nascent as it is – bears an ironic similarity to Microsoft’s own clandestine assault on IBM, DEC and other big iron companies in the 1980s.  The giants were slow to retool their seemingly dominant  mainframe businesses to account for the rising profile of PCs. IBM virtually handed Microsoft a monopoly for MS-DOS and paved the way for cheap PC clones that threatened its survival.

Now Microsoft is watching from the sidelines while Google pulls a similar ploy.  As broadband penetrates everywhere, Google is betting that consumers will favor options that reflect the  ethos of the Web – free and community-based. Why install Office if you can get the same functionality from an always-on, super-fast connection that lets you collaborate with your friends and colleagues?

Microsoft’s own attempts to cash in on the Internet have been relatively feeble thus far. Its search business only commands a roughly 6% market share, compared  with about 77% for Google and 17% for Yahoo. Small wonder that it’s bidding for Yahoo!  It has little choice.

The software-as-service  business model has interesting implications for the entertainment business. What are DVDs , CDs and games if not software?  As consumers become more comfortable with low or no-cost server-based applications, might they become more open to video-on-demand and streaming music? It’s a question that has important implications for Time Warner, which which faces the specter of growing irrelevance for AOL in a search universe dominated by Google and Microsoft.

Microsoft  still has plenty of life. Profits are bountiful. No software competitors seriously threaten Office’s dominance. But then, IBM dominated computers in the 1980s, too.

See Also

• Ballmer Makes Big Bet to Get to ‘Next Level’

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Hollywood execs blame the videogame for bad weekend box office

According to some measures, the October 5 weekend box office was the worst for this month since 1999. And Hollywood had come to bat with Ben Stiller, the Farrelly brothers and more advance buzz than Al Gore’s Nobel Peace Prize. So what is to blame for this debacle? Some studio executives aimed their lasers at the recent release of Halo 3, the Xbox 360 game that scored boffo box office itself with over $170 million in its first day on sale.

Ad Age reports that conventional wisdom holds that movie audiences were home playing the addictive game. Microsoft says that 2.7 million players have logged into the Xbox Live service to play the multiplayer game. Apparently, the Xbox 360 beat Hollywood at its own game. "Halo 3 was marketed as an event film in terms of its partnerships, with beverage, automotive, fast feeders and mobile-phone companies all joining up," says Ad Age. 

Did Halo 3 keep us away from a film that had poor reviews along with an unimpressive menu of theater alternatives? Maybe, but I think TV networks and cable have a lot more to worry about than theatrical film. In my house, my darling daighter and her friends pretty much owned the TV for the last two weekends, all playing Halo 3 with one another, with opponents as far away as South Africa, and solo. I know I didn’t see a minute of broadcast or cable all weekend. If anything I was more inclined to catch a movie just to escape the virtual bloodshed in my living room.

Perhaps we should be theorizing less about Halo 3 hurting box office and start counting the hours that game consoles are on and cable is off in most American homes. In this generation of consoles especially, there is a premium on HD playback. These consoles are most likely to occupy the main monitor in most homes. When gaming is on, everything else is off, at least in the living room.

There is a real issue of media mindshare lurking beneath this little dust up of speculation. There is only so much time in the day, even when you do figure in multi-tasking. The real effect of video gaming on the rest of the media eco-system is only beginning to be felt. Unfortunately, too few companies in the media and advertising value chain are measuring this effect and giving all of us a firm idea of how powerful gaming is in consuemr lives, if not in ad budgets and media coverage.

See Also

• Bad Box Office? Blame ‘Halo’
• RipTen
• Portfolio: Is Halo 3 Putting film Features in the Shadows?

Posted under Michael's Blog

Tuesday will be a defining day in video gaming history

With 1 million pre-orders in the can, Microsoft’s Halo 3 release tomorrow is already guaranteed to break first day sales records and rival Hollywood box office in terms of revenues around a blockbuster release. Who in Hollywood would sniff at a $60 million minimum opening day gross? Indeed, the early reviews are are as stellar as the game setting itself.

The launch of what is arguably the most anticipated game since, well, Halo 2, is a cause for reflection about why video gaming really has not gained the stature of the Hollywood box office even if it does have the revenues.

First, video gaming generally is still about a fairly limited demographic. Sure, sure, the various game organizations like to talk about the average age of the gamer being 30 and how the male-dominated gender split has shifted as women embrace casual gaming online and on phones. But let’s not kid ourselves here. Women and oldsters may be contributing to the games industry at the margins, but financially, the young male remains the cash cow of this industry. Female and older gamers do play, to be sure, but they aren’t fans in the same way these groups are fans of TV shows or celebrities. The kind of broad audience and devotion that fuels other kinds of music and filmed entertainment is not present in gaming.

Second, this is a tough entertainment form to report on. Take it from a seasoned gaming journalist, making video gaming interesting to the uninitiated is not easy. Look at all the gyrations the G4 cable channel goes through to make its game footage as entertaining as, well clips from this weekend’s blockbuster. Both music and film have eco-systems of media coverage around them that popularize and proliferate the properties. The gaming press continues to speak to and about the core gamers. Watch the Halo 3 coverage in the press over the next few days. Most of it will focus on the fans themselves, because they are easier to cover. There may be a clip or two from Halo 3 itself, but first-person game play does not convey excitement or entertainment to most viewers. Gaming is the kind of thing that is exciting to do, not to watch.

Which also explains why this medium still has failed to generate compelling stories and characters. Halo 3 has a hero, for instance, but who is Master Chief? Master Chief is you, and so as a character he must be an empty vessel, faceless, voice-less, character-less. Intricate compelling storyline only get in the way of interactive gameplay, or they get forgotten. As a form of entertainment, gaming has built-in a set of limitations that make it wonderful fun but bad mass media.  

Posted under Michael's Blog