Some notes, excerpted from an email exchange with Kevin Wassong of Minyanville:
Sun Microsystems:
When I worked at HP (NYSE:HPQ), we always joked that Sun (NasdaqNM:SUNW) had great technology and that if they were still around in a decade, when the world was finally ready for them, they would do really well with it. That was a decade ago. Despite our snarkiness back then, they're still around. And the world is finally on the verge of being ready. (Long position in SUNW. Rockin' today!)
Media:
Nobody should ever expect the world to unfold without many, many fights along the way and some caution is necessary before you plunk down a large chunk of money betting on the future, because there'll be big bumps in the road.. Already, the "pipe" owners are suggesting that they should be able to pick and choose who gets to distribute broadband content. They're trying to maintain the old cable TV model in which their earnings power was derived from two sources: making content companies pay them for the right to be part of the limited channel lineup, and making consumers pay for whatever lineup they came up with. Ultimately they will fail in being the "filter" of what gets to the consumer, because the sources of broadband connectivity will be too varied, including competing wired providers and various wireless schemes. In the meantime, they'll try to make life miserable for anybody other than their own preferred providers, which in some cases are divisions of the same company.
[Note, this was in response to Kevin's comment that in the future, "there is no internet, there are no cable channels. There are digital networks--input, output. That's it."]
Broadband Fees:
On that note, I do expect that the flat-fee residential broadband connection will become a thing of the past. Most likely, it'll evolve towards some type of pay-for-use scheme, not dissimilar to the pricing scheme for my cellphone, which charges me a flat fee for all "in network" connections and additional fees for the use connecting to other providers, and some discounts if that use is outside of peak hours. I don't get worse service when I go out of network, but I do have to pay by the minute or megabyte. And the rates might be cheaper if I time my downloads to off-peak hours. (Expect a version of iTunes that allows you to program your desired download schedule to match your broadband provider's "off peak" hours.)
Media Device and Computer Convergence:
The battle of the output devices has just started. Microsoft's Windows Media Edition is a disaster from a user perspective. This brief exchange is just a small datapoint. (My comments are posted indirectly by a friend in the business, alias "Workman.") Apple will probably do a better job on this, but it'll still most likely be a device for techies that will require customization and personalization like any other PC before it can really work well as a media center. And when you're done with that, it probably won't be an optimal PC.
A lot of thought and redesign will have to take place before these new devices end up as fixtures in the typical living room. My own belief is that the living room device is going to be much more akin to a souped up, internet and video game-enabled TIVO device than to a current day desktop PC. The one thing we found over and over again in my HP days was that people didn't want PC-style complexity and confusion in their living rooms. And really, they didn't want to do spreadsheets on the sofa anyway. Microsoft didn't get this when I worked with them at HP, and I don't think they get it today.
Sun and Google:
The above favors a Sun/Google (NasdaqNM:GOOG) model of simpler "thin" computing devices. Imagine a cross between an XBox and a Tivo, with built-in Internet browser, mail client and simple controls that even my mother could use without calling me twice a week for help. Probably won't be the place for me to to do high-end Photoshop work or build complex financial models, but that's not what it's for and it'll be priced appropriately.
Advertising in Digital Media:
The ability of consumers to block unwanted advertising streams from this new media world is going to be much greater than it ever has been. The various ad-blockers and sitelists I currently use are just the beginning of this. And they're getting easier and easier to use. To the point where even my mom now has one up and running. The advertising business is going to have to completely rethink how they get through to people. Hollywood has been notoriously anti-consumer when it comes to inserting annoying stuff into their content in a manner that makes it unavoidable. (Don't you love those DVDs where you can't skip or fast-forward through the "coming attractions?") The same is true for some websites -- most commonly by spreading even short articles across multiple pages with dozens of ads on each. They're all going to have to get a lot smarter about this. I think this little Israeli company, whose CEO I met recently, is on the right track. The opportunities go well beyond just video games, which is just one form of digital content.
