Sprint Moves into Homes

Sprint just rolled out a new device that let’s current subscribers free themselves from a land line. The device, (horribly) named Airave, allows a customer to use a broadband connection to enable VoIP functionality for their Sprint cellular phone.

The idea is that when you are outdoors, you use your regular Sprint plan. However, when you are at home, the phone switches to use the Airave, which also comes with unlimited call time. This means you have full reception no matter where you live (a common complaint, I am sure). Priced at a very competitive $50 for the device and $15/mo for the VoIP service, this bundle has a lot of potential. If it took an extra step to integrate with existing VoIP phones, it would be a home run. But given enough time, I am sure such products will evolve into exactly that.

Aside from the guaranteed awesome indoor reception and the flat rate calling, I like this product because it successfully merges VoIP phones with cell phones in a behind-the-scenes way. From Sprint’s perspective, it is genius: offload the network bandwidth of calls and dump them on the Internet provider — and charge a monthly fee for this privilege. Perhaps the most cunning point is that this service can convert virtually all Sprint customers who have land lines (i.e., steal customers from AT&T) thanks to the price that is very competitive to land line services (I pay $22 a month for my useless landline).

iPhones Drop to $400, iPod Touch is Real, Apple Invents new Revenue Sharing Trick

Yesterday, it was revealed that the iPhone was the top selling smart phone in July. It beat ALL of its competitors.

Today, Apple announced they are dropping the 8GB iPhone price to $399 — a full $200 price drop! They’ve also completely phased out the 4GB model. Seeing as the iPhone is already destroying competitors, this price drop should have RIM, Motorola, and friends all soiling their pants. The new, lower price point will further expand the iPhone market closer to the general consumer, placing it – finally – in a reasonable price range that makes it directly competitive with other smart phones. AT&T must be popping champaign bottles as we speak. Just think: a 4GB Chocolate phone $200 or an 8GB iPhone for $400 — but the iPhone also has wifi, a full featured video player, a higher resolution screen, a non-crippled browser, and calendar syncing functionality. Pretty competitive, no?

Related to this development, the iPod Touch is a reality. This iPod will have wifi capabilities and will cost $299 and $399 for the 8GB and 16GB versions respectively. The new wifi capabilities means people will be able to purchase music without being on their home computer. Even more ground breaking: the iPod touch has Safari in it! Every single iPod user out there will become a Safari using, mobile Internet loving Apple drone. Microsoft is pissed. Web standards are going to explode. And this means mobile browsing will finally hit a full-fledged mainstream audience. Oh, and it has calendar and contact syncing with your computer. It’s a shame it didn’t come with a camera too — I suppose Apple didn’t want to complete too much with its own iPhone.

Lastly, Apple and Starbucks partnered up. This partnership is not too interesting on its own. Whenever you hear a song in Starbucks, you’ll be able to buy that song on your iPod/iPhone. While the integration itself isn’t that interesting, the application of wifi sharing is. Just imagine a year or two from now when Apple has partnered up with major groceries, restaurants, and department stores. How many times have you heard a song and thought, “Wow, I want that song, what is it?” Now, the location you hear that at might have an incentive to give you free Internet in exchange for revenue sharing. It means more wifi access for consumers, and more iTunes purchases for Apple. It’s genius.

AllOfMP3 Executive Cleared of Charges

A Russian court ruled that a former executive at AllOfMP3 was not guilty of copyright infringement. After this verdict, it seems the site is ready to re-launch. This puts Russia’s bid into the WTO into murky waters again and will likely cause a whole new media circus.

In the meantime, you can use AllOfMP3’s reincarnate.

I’m always torn on this particular issue. I think AllOfMP3 fills a void that current exists in digital music: DRM free, cheap music. While labels are starting to finally see the light, so long as DRM is the standard, sites like AllOfMP3 will prosper. As for its *really* low prices, that’s another point. Music tends to be very expensive when you buy it in CD form, and a per track price that is dependant on the file size (quality) is very fair.

That said, selling music without paying royalties to the labels is clearly wrong, but I think the issue has always been how much royalties the labels deserve, since AllOfMP3 has always offered to pay (small) royalties. Lastly, while it’s clearly a little shady, it was also legal by Russian copyright law.

What do you think of AllOfMP3’s business practices?

Social Network Screening on the Rise

A new report indicates that one in ten employers are looking at an applicant’s social networking profile.

More than 60 percent said the information they see on these profiles will influence what they think about the job candidate, and more importantly, who gets hired and who doesn’t… Employers have a lot of leeway when deciding who they should and should not hire. Unless an applicant is being discriminated against because of race, age, gender, or ethnicity, there is very little the applicant can complain about later on.

I’ve been trying to warn people about this for a long time now. This all goes back to controlling your online image. Everybody goes out once in a while and gets a little plastered, but not everybody proudly displays photographic proof on their profiles.

With social networking becoming increasingly pervasive, it is becoming harder and harder to stay off the grid. That said, whatever part of you is on sites such as Myspace or Facebook needs to be tempered. This raises some scary questions about the future since I think social networks will eventually use an open directory system that centralizes the data in a decentralized distributed grid. When that happens, it will be very hard protecting your identity and image between different sites while still keeping it an accurate reflection of you.

Still, I can’t wait for elections in 2020 when the first of the Myspace kids begin running for president. I just know there will be a scandal around something they posted when they were 18. Accountability for lasts a life time now that the Internet caches everything.

YouTube Eats up "Funny Videos" Searches

While there is very little visibility into the searches performed on YouTube, Hitwise noticed some things can be inferred about its traffic. For example, they found that searches for “Funny Videos” dropped steadily as searches for “YouTube” grew.

As in, people figured out that funny videos always ended up on You Tube, and thus, there was little purpose in searching on Google for them.

I think this is one of the first real pieces of evidence that shows how YouTube was a good buy for Google. If You Tube was owned by Yahoo, that would be a lot of searches that got gobbled up by a competitor’s site. YouTube is becoming an actual video search engine, at times completely bypassing Google. In short, Google saw an emerging search market on YouTube — now that is some good foresight.

YouTube Funny Videos

Class Action Suit Against RIAA Brewing

About time. It seems a class action suit is now brewing against the RIAA. I’m not so sure they can win on all of their claims, but they’ve got the main one in there (malicious prosecution).

The development, first reported by p2pnet, hopes to make a class out of those “who were sued or were threatened with sued by Defendants for file-sharing, downloading or other similar activities, who have not actually engaged in actual copyright infringement.”

SCO Loses to Novell: UNIX Code Belongs to Novell

Many of you may not read about this until Monday (it’s Friday now), but in the case between Novell and SCO regarding the copyright of some UNIX code, the court ruled in favor of Novell. The ruling also (explicitly) destroys SCO’s case against IBM. The court denied SCO’s motions regarding slander, breach of contract, and other bogus claims. Lastly, SCO owes Novell a ton of money for the cross licensing deal they made with Microsoft (to be worked out later).

For those of you who don’t know, SCO started threatening companies and even sued Novell and IBM over it’s supposed mystical ownership of key UNIX source code, the foundation of the now-popular Linux. Had SCO won here, it could have been major legal black eye for the open source community, probably eliminating any major corporation from wanting to take up UNIX out of fear of being sued.

But, Novell won, and buried SCO in the process, shattering any lingering doubts that open source code is safe. I was looking forward to IBM firing its cannons too (that would have been fun). 🙁

Proof of a Bubble: Success of Myspace is Pretty Overrated

How much yearly profit would you expect from a $500 million purchase? How about a profit of just $10 million equating to a profit margin just under 2%. That’s right, the world’s largest social networking site, constantly in the top 10 web sites in the world, managed to make only $10 million on $550 million in revenue!

I’m not an expert, but a 1.9% margin is pretty low. For example, the average profit margin for a company in the technology sector is currently 14%. It’s insane to think Myspace is worth “20 billion.” Even at a billion dollar valuation and revenue increased five fold, it would take 20 years to repay the purchase price while assuming social networking stays hot the entire time!

The most important distinction to make is that Myspace is in the notoriously fickle and very untested social networking market. It must recruit a completely fresh batch of users every few years as people grow older and move on. It must fight against social stigmas that come from the younger generations that might sound something like, “Ew, Myspace? My mom is on there.” For all we know, social networking as we know it may fade out of prominence in the next three years. Or even more likely is that another new competitor will eat into Myspace and take away its page views.

I have been observing signs of a significant bubble re-emerging, and this is the straw the breaks the camel’s back. Worse yet, when professional analysts throw out insane multi-billion dollar valuations on Myspace without sound financial reasoning, it’s time to be scared. Valuations are always relative, but I disagree with this valuation without having access to some more impressive metrics. Myspace is already at the top of the web — it doesn’t have opportunities to grow 1000% in the next few years.

Let me frame this in a more understandable way, if I told you this blog makes $200 a year in profit, would you be willing to buy it for $10,000? That’s the same ratios used assuming Myspace’s original valuation ($580M). But if Myspace is worth a little more than $5 billion as some people seem to believe, it would be like selling this blog for $100,000 on the $200 a year profit. Granted, maybe you could improve the profit margins by a factor of ten to $2000 a year (20% margins) — good luck.

Doesn’t seem like such a sound investment now, does it? The top social networking site in the world is barely profitable and there’s talks of it being worth 20x its purchase price. There’s a bubble, folks.

Google’s New Mobile Empire – The Beginnings

I guess I was wrong… Google really is going to release a phone in the coming year.

This news comes only days after Google tried to get the FCC to change how the wireless spectrum could be used by would-be bidders in the upcoming spectrum auction. Google accomplished some of its goals when it managed to get half of its proposals approved.

Anybody with half a brain can see that the next phase of the Internet will live on our phones. Google finally beat down Microsoft during the Internet Explorer era only to be introduced to a new competitor: cell phone carriers. Google sees this and is doing its best to ensure that round won’t be another David vs. Goliath.

It’s actually rather surprising, in this context, that Microsoft isn’t doing more to fight for its share in the mobile age. If everybody begins to use the phone to browse the Internet, where exactly is Microsoft’s “MSN is IE’s homepage” edge? It seems as if Microsoft might end up becoming less relevant in the coming years.

All this still irks me since Google’s CEO is on Apple’s board of directors. I guess they see it as pals fighting together against the carriers rather than real competitors (for now).

While the article (stupidly) focuses on the ad supported nature of the Google phone, if the execution is done right, it could be a godsend. The idea of “free” goes a long way, and perhaps Google’s market is the direct opposite of Apple’s iPhone: go after everybody and anybody who can’t otherwise afford a phone.