No big developments today.

• Well, more and more evidence that nobody trusts government. We all know that the Fed's machinations are designed to bail out multimillionaire bankers while destroying our purchasing power, and we don't trust them. Now there's plenty of evidence that we don't trust politically motivated pandering like the Clinton/McCain "gas tax holiday" which would only make more money for gas companies while not benefitting consumers at all.

  This, I think, is a positive development. We need to be thoroughly disgusted with all these guys before we toss them out. Sadly, we'll all be hurt by waiting so long.

  As I've noted before, I think it'll be the next generation -- the generation raised on interactivity rather than passive TV watching -- that will finally take control from the people in the middle who forget who they work for.

• One story I haven't seen mentioned in may places is the upcoming leadership transition in Saudi Arabia. (Thanks to Stratfor for pointing this one out.) If Crown Prince Mishal, the most powerful member of the royal family who is currently in Geneva for "medical tests" were to die, a lot of uncertainty would enter the system even though the nominal king still lives. That situation could make oil at $150 a barrel a reality very quickly even if the new and untested Saudi succession planning actually works. I would not be short oil right here. Not long it either, but this is just another reason you can't short.
• So, Warner Music Group (NYSE:WMG) is losing money and has to cut its dividend? I guess that says a lot about the strategy of suing your customers while simultaneously screwing virtually all the artists that you sign. I continue to be amazed at how self-serving the managements of these companies are. They will destroy their businesses rather than concede that their personal ego-gratifying empires are no longer sustainable.
• Does anybody still believe government numbers? If so, could somebody please let me know why?
• And more government lies. But a note at the end that I ultimately believe is positive, for the reasons specified above. A time is coming rapidly when people will be less inclined to believe any number that they can't touch, manipulate, react to and comment on. Imagine when the goverment has to simply publish the raw data in a framework that allows you to easily pull it apart yourself. Today the government can lie with impunity because the overall attitude is of the TV viewer: passive. But passivity is dying. By the time today's four year-olds can vote, it'll be dead completely. And so will the government's ability to lie to us.

-btc

It was a really nice end to the ski season, a great Sunday for the last tram at Snowbird. Now the tram is down for 40 days of major maintenance, a few chairs remain running on the weekends and my knees are ready to move on to something less damaging. It was the first time in many years that conditions were good enough for me to stick around until the last tram day and forgot the fun involved: Gaming the last tram boarding, the ride up, the "reception committee" with snowballs on the peak, the peak party, the party on "The Beach" above Lone Pine with Mt. Superior in the background, and the follow-on parties in the valley after finally making our way to the bottom.

The last tram of the season was received with a traditional fusillade of snowballs on the top of Hidden Peak at Snowbird

After everybody was kicked off the peak, the party continued out on "The Beach" at the end of the traverse. At least until the ski patrol kicked us out of there too. And somehow I missed my flight home

Now it's truly back to reality.

• I did get a call from the manager of the Walgreens (NYSE:WAG) store that I complained to on Sunday. She said the problem had been related to training and she went over things with the employee. Good enough for me, and a pretty good indication that this company does still care about their reputation. For better or worse, the labor market in Salt Lake is such that she probably doesn't have the greatest material to work with. More on that later
• I just got an invitation to the Anderson School's John Wooden Global Leadership Award ceremony (formerly known as the Exemplary Leadership in Management Award). I've commented on this one in the past, suggesting that this award tends to be really good at picking guys who are either peaking or past their peak. So it's no great surprise that this year's award goes to Howard Schultz of Starbucks (NasdaqGS:SBUX). His getting this award certainly would not give me the warm and fuzzies about owning the stock.

Just put in a wire request at Charles Schwab (NasdaqGS:SCHW), where I've had the bulk of my money. The request was to transfer out about half my cash, or a third of the account value. It's going to my E*Trade (NasdaqGS:ETFC)account, which has always been smaller and a place where I've tended to keep long-term investments that I don't look at much.

As a project manager, I tolerate a lot. Fuck ups are part of the territory.

But I don't tolerate incompetence, especially not in mission critical stuff.

So when Charles Schwab exhibited extreme incompetence this morning, it was the last straw. I've been increasingly uneasy for the past several weeks and with even money funds turning out to own all sorts of mortgage junk, I've felt like maybe splitting my money between institutions was a good idea. And Schwab's trading interface has gotten increasingly clunky compared to newer competition.

"The best place for Palm to hide a software glitch so it can't be found is in one of their wireless devices, because nobody's buying them..."

- Jeff Macke on CNBC, commenting on today's announcement by Palm
that it was again withdrawing firmware updates for Treo devices
because of real-world upgrade problems

Somebody is finally taking my advice.

About eight years ago I was working for a major PC manufacturer, doing analysis on customer support patterns and costs. The results I came up with were not surprising. 80% of our support costs were due to about 20% of our customers. And worst 1% were almost 30% of the total cost. For the most part, these were not people whose PCs were not working properly. Many of them were people who just did not want to be bothered with learning, who would call in to ask the same questions about basic operations day after day. Some of them felt that our customer service people were there to provide free tutorials for hours each week. A few of them -- like a priest in a remote parish who called us 3-4 times a day -- were clearly just lonely and looking for somebody to talk to.

At the time I had other suggestions too. It was pretty easy to identify that the biggest problem customers tended to have purchased their products from certain retailers, and usually at certain times of the year. So I recommendded, among other thing, that we reconsider doing things like day-after-Thanksgiving specials at Wal-Mart, or at the very least do some further analysis, to attempt to determine if the long-term value of the new customers acquired could ever justify the cost of getting them up to speed on their intitial purchases, and whether in fact they ever would come up to speed and be satisfied with the product.

For those people who were truly at the extreme -- the ones who were five or six standard deviations away from the norm -- my recommendation was simple: Repurchase their PCs and all accessories from them at the original MSRP (probably less than they paid at retail), and even provide them an extra $100 gift card which they could use to buy a competing product. Getting rid of that small number of people would be worth the money.

So yesterday's news about Sprint Wireless did not surprise me in the least.

Wrath of the RHIGF

I spent my day snaking hairballs out of my shower drain.

The drain has become progressively worse and worse since my Raven Haired Italian Girl Friend (RHITF) stayed here a while back.

I believe I have now completely cleaned out all the long strands of raven-colored hair from the drain, and I can shower without quickly standing in dirty water up to my ankles.

Still, sort of miss having her here, though a recent shorter-haired visitor of Czech origin has made up for the company. Too bad she's returned home too.

Israel Passport Update

Well, I got the document as discussed the other day. But apparently only good for one year. It seems that the US government has been concerned about foreign nationals arriving here, "losing" their passports, and then getting new ones in an effort to avoid anybody noticing that they stayed far longer than their tourist visas permitted. This avoids their being blacklisted for future travel. In most cases passports are not even renewed: the person is usually given a one-way transit document good for only a few months and allowing the holder to go home.

I was allowed to get an actual passport because my old one which was issued in 1973 was "lost" so long ago and because there's no question of my legal status in the US. Still, at the US government's insistence, I can only get a 1 year document after reporting a loss. In six months I can go back and request that it be extended out for an additional nine years, upon proof of being here legally, which I already provided.

Yet another example of our Department of Homeland Security generating lots of rules and "action" with no real results.

Weekend Cat Update

The RHIGF is the source of only one type of problem hair this week. With the recent increase in temps, shedding activity has increased significantly. Time for some serious grooming.

Panorama Photo Update

Got myself this neat little device from Really Right Stuff, who make some of the coolest camera-support equipment available. I've calibrated it and did some experiments, and it's pretty fantastic. Don't have any really worthy images, but look for some soon. My 20mm lens seems to be just about perfect for panoramas on the digital Nikon.

iPhone Mania

My own take on this is that it'll open up the smartphone market for consumers in a way that it has never been open before. That said, as Kevin Wassong notes, it's not a device for my mom, and in truth is overkill for my needs too.

But it's not going to displace the BlackBerries in the business market until things like integration with enterprise email servers are worked out, and possibly not even then. I have not had good results with touch-screen keyboards of any size in the past and am somewhat skeptical of the reviews claiming that it's not an issue. Maybe not for casual consumer web surfing, but has a real crackberry addict tried it and liked it?

The Death of Biotech and Pharma

David Miller of Biotech Stock Research points out in this month's newsletter that it is quite possible that biotech and pharma, along with much of health care, is likely to become uninvestible in the coming years. Copyrighted stuff, so can only give tidbits here. Justifications for this are mostly political: in addition to the liklihood of more regulation and price controls, the FDA has come under so much political pressure to avoid approving drugs with risks, that the liklihood of approval has been signficiantly reduced, the liklihood of approval subject to ongoing re-evaluation much increased, and thus the costs of bringing something to market increased signficantly. At this point a drug that experiences significant side-effects in only 1% of the people who take it is being questioned. That type of scrutiny would have kept lots of current drugs off the market. It is a big deal.

He forecasts that in coming years, we'll see a move away from drugs that work for everybody and towards solutions that integrate genetic testing of the potential patient, with a selection of drugs that are uniquely suited to that patient. From my perspective, the problems with this will continue to be political. What if you come up with a drug that works well only with people whose "genetic identifier" includes the gene for blue eyes or low-skin pigmentation? Think the polticians won't intervene against a "racist" cure, even if grounded in good science?

Summer Travel

It looks like this summer's travel will be mostly related to my mom's upcoming move. While my brother and I are happy to finally see this happen, an August move in Manhattan is not sounding like fun.

Perhaps I'll manage to squeeze in a quick birthday trip to the mountains.

-btc

Up in Utah where I spend as much of my winters as I can, I'm friendly with a dog named Midas. Midas is the senior avalanche dog on the Snowbird Ski Patrol, and also one of the most experienced dog/volunteers of Wasatch Backcountry Rescue. I've done some avalanche training at Snowbird and seen Midas in action. In his career he's been responsible for at least a couple of successful rescues that I know about. During the 2005-2006 ski season, which was the most deadly on record for the Utah backcountry, Midas was responsible for recovering many of the victims.

I was thinking about Midas last night as I watched MythBusters clumsily go about "busting" all sorts of myths about avalanches. I have been a fan of MythBusters since it started airing several years ago and have generally found it to be pretty well put together, if not always completely thorough.

Until last night, that is.

Last night's episode was so badly done that it makes me doubt I can ever take them seriously again. For me, it was one of those "jump the shark" moments, in which a show goes from being good, to being one that is coasting on its past glory, trying desperately to be as cool as it once was but unable to because it has exhausted all real possibilities.

There were so many things wrong with the experiment it's not even funny.

I'll admit it, I'm a pretty big fan of Kevin Kelly's stuff, so looking at things from the "out of control" perspective tends to appeal. Likewise, I tend to be a big fan of Michael Rothschild's "Bionomics" theories. Whether in my regular business (project management) or in the world of companies I invest in, I tend to avoid those situations where management still believes the world is predictable and controllable.

So I liked Cody's latest piece about the Cable and Satellite companies. That I am currently going through "cable hell" probably makes me more receptive than ever, but as much as I sometimes disagree with Cody's optimism about where technology is taking us, I can't disagree with this one.

Been busy this week and Jeff Matthews beat me to the punch in commenting on the latest election.

He said everything I would have, and then some. My comments are also on his blog.

This isn't a political blog, but I'll have some additional thoughts over the weekend, that tie into the overall theme here.

-btc

I haven't even had the chance to digest everything I was thinking about Randall Rothenberg's piece in the LA Times, when the Times came through and published two other pieces that both address the same point, but from different perspectives:

First, as part of a Current section special on the changes in Las Vegas, Hal Rothman headlined with a piece about Las Vegas, The Chameleon City. In it he outlines a simple explanation for the continuing allure of Las Vegas: "Las Vegas has grown into the most malleable tourist destination on the planet. It makes the visitor, however ordinary, the center of the story, holding up a figurative mirror and asking: "What do you want to be, and what will you pay to be it?" Who you were or what you were yesterday makes little difference."

Vegas, in short, has become "YOUcity." The willingness to change, often from day to day, and to allow the customers to define the experience is what makes it successful. And the huge corporate interests that run the place not only deal with it, but they encourage it. A recent visit demonstrated just how malleable the place is. We went up for 24 hours, primarily to see Don Rickles' last show at the Stardust, which is set to close on Wednesday. It turns out that we were also there on Mexican Independence Day weekend.

Every hotel on the strip had the red white and green motif going. In the casino at the Hilton, a wandering mariachi band played. Towards the end of the night, they ended up in the lounge area of a faux-Japanese oriental village where we shared Coronas and Margaritas with a few of the thousands of Mexican holiday-weekend visitors. (And why shouldn't they be there? Mexico city is closer than Washington, after all...)

Of course, it wasn't your stereotypical bunch of impoverished mariachis. It was led by a husband and wife team who were as fluent in English as they were in Spanish. They were well dressed and everything from their jewelery to their designer eyeglasses said "urban professional." More than likely, they were accountants, dentists, or maybe even casino managers in their day jobs, who enjoyed playing mariachi music on the weekends. And for that one day of the year, they became part of the process of converting Las Vegas into a Mexican Independence celebration to rival anything in Mexico.

Today, also in the LA Times, there's a piece about how Vegas is vying for the Chinese tourist trade. Different week, different "YOU," different "YOUcity."

The CEOs Rothenberg cites in his article should learn from Vegas. The businesses at the core of that city's economy understand this better than any large capital-intensive businesses anywhere.

Max Boot has a more sobering view of YOUplanet. In his view, all great powers have eventually fallen when their militaries failed to adapt to a changing world. His take on where we stand right now is that the US Military needs to adapt its industrial-age military, which is based on size and advanced technology to a YOUplanet reality.

He points out that: We have an insurmountable advantage in high-end military hardware. No other state is building nuclear-powered aircraft carriers, stealth fighters or unmanned aerial vehicles. In fact, we spend more on the development and testing of new weapons — $71 billion this year — than any other country spends on its entire defense. But all that spending produces weapons systems that aren't much good for pacifying Baghdad or Kandahar.

Sort of reminds me of the first Star Wars movie, in which the rebel general points out the secret to their potential victory. "The Empire doesn't consider a small one-man fighter to be any threat, or they'd have a tighter defense. An analysis of the plans provided by Princess Leia has demonstrated a weakness in the battle station."

That, as Boot sees it, is our defense posture today. Capable of wiping out entire cities, but too big, bureaucratic and procedure-driven to deal with small, well-trained and motivated teams or individuals who get the YOUplanet reality. In the same manner that Rosenberg questions the ability of most corporations to adapt to this reality, he questions whether the US military -- that most conservative of institutions -- can change fast enough.

Boot concludes: It may sound melodramatic, but the future of U.S. power rests on our ability to remake a government still structured for Industrial Age warfare to do battle with decentralized adversaries in the Information Age. After all, aren't we the mightiest, richest nation in history? How could our hegemony possibly be endangered? That's what previous superpowers thought too. But their dominance lasted only until they missed a revolutionary turn in military technology and tactics.

And, I checked. Nobody's trademarked "YOUplanet." I'm already working on my application.

-btc

Randall Rothenberg, senior director of intellectual capital at Booz Allen Hamilton published a rather astounding piece in the LA Times today. It's astounding in that it so succinctly sums up much of what I have beleived for some time, while simultaneously asking some really hard questions, to which the answers are unknown. While these are ideas I've knocked around with some of my friends in recent years, I've rarely seen them begun to be asked in mainstream publications.

The crux of his opinion is expressed simply: "Whether by kings or capitalists, economic development since the dawn of homo economicus has depended on mobilizing resources on an increasingly mass scale, with all others (entrepreneurs and small businesses in particular) denied access. In scarcity and limits lay profits. The Web, the ultimate tool with unlimited access, has overturned such economics."

He completes the article by pointing out where this is logically going: "If economists were to turn this into an equation, it might be P2 + AT = C2. Translation: Power to the people + access to tools = the consumer is in control." Then asks the key question: "But can giant, resource-intensive businesses adapt to this radically decentralized economic principle? Not easily. As Lafley put it: 'We need to learn how to let go.' Or, in '60s terminology, let it all hang out, go with the flow, turn off your mind, relax and float downstream — just about the hardest thing for any CEO to do."

There is another truth buried in his discussion and arguments. That truth is the one that is less comfortable for many to face. The truth is that in a world where individual creativity -- not labor, capital or government -- is the driving factor behind wealth, what happens to the great majority of people who are not particularly creative? The late-capitalist "deal" was one of large blocks of resources -- labor, capital, government -- sharing large pools of resources. The difference between governmental systems was largely in how they split up the rewards and how well the system as a whole worked. The new state of affairs breaks up that deal and calls into question what a YouTube society looks like. Saying, as he does, that YouTube and its ilk are as likely to subvert business as to support its reinvention is just the tip of the iceberg, in my opinion. It's not just the business of the future, but the world of the future that is in question.

I disagree with Rothenberg's statement that the YouTube World is a victory of the radical left. Certainly, it evokes a lot of the ideas expressed by those who in the past described themselves as leftist (but were more accurately anarchist) just as it evokes many ideas expressed by liberterians (who share little with what is commonly refered to as the "radical right").

What's interesting here is that the change is not about re-dividing the pie, which is mostly what you hear politicians and other pundits talking about, but rather it's about changing the recipie completely. That's something that's got to be uncomfortable to all the cooks in the kitchen, regardless of what school of cooking they came from.

I'll have a lot more to say about the implications of this in the days ahead.

-btc

In a recent piece on his own blog, Jeff Matthews points out the folly of paying too much attention to various white papers by supposedly neutral IT analysts working for companies like Gartner Inc. (NYSE:IT). I responded based on my own experience, but thought it was worth repeating the discussion here, with a bit of extra material, since it's relevant to the focus of this blog:

I am in the position of having been on both sides of Gartner. As a product manager in the software biz, I was a customer of the consulting services they offer to vendors. As IT management on the "buy side," I am and have been a customer of the consulting, advisory and research services they offer to the business customers of the very same vendors. At present I'm involved in at least one project in which a Gartner consultant is engaged.

My experience with Gartner, Delphi (who they purchased), Forrester, IDC and the others suggests that none of these companies is impartial, and that any "white papers," speeches at conferences or other materials provided by their analysts must be taken with a huge grain of salt.

The thing that you have to keep in mind about all these companies -- and which many IT managers either forget or never really understood in the first place -- is that they sell services to both sides of every IT transaction and do so in a self-serving manner. The vendors who spend the most on "consulting fees" to Gartner and the others tend to be the ones whose products are most often mentioned and recommended in white papers, speeches, articles and other public information generated by those firms. As a result, you see Gartner analysts go against the interests of their top vendor-clients about as often as you see Wall Street's Finest put "sell" ratings on their companies' investment banking clients.

Had I seen this kind of thing only once or twice, I'd be content to write it off as an abberation, but I've seen it consistently, both as a "buy-side" and a "sell-side" guy in IT.

Photography has been my interest, and at times my unparallelled passion, since I got my first camera back in junior high school. I won a bunch of prizes as a teen, did a lot more with it in college, then pursued it very seriously later, doing both 35mm and large format (4x5") work, mostly in black and white.

I fell out of photography again in the mid-90s, because the lack of a darkroom really made it impossible to do the kind of work that I enjoy, which tends to be very printing-intesive. I got back into it a few years ago, still working on film, but often moving to digital for my post-processing work.

Still, it's only recently that I've moved away from film entirely. For one thing, reasonable quality printing of digital photos is finally good enough to satisfy my needs. For another, the papers have come a ong way. Photoshop has also come a long, long way and now allows me to do just about everything that I ever wanted to when working in chemicals. Until very recently I still kept one film camera -- there were still a few things I liked to do, and certain effects I liked that were tough to accomplish with a digital camera and Photoshop. 10+ megapixel cameras and better familiarity with the application have solved those problems for me. My photos don't look the same as they do in silver medium, but they are a look that I like and it's a medium that I've become conversant enough in to abandon its predecessor.

I've slowly sold off my 4x5 camera equipment, then some of my 35mm film cameras, and now finally the last one. My last roll of film, started last winter, will be processed unfinished, because I can't think of any reason I'll ever finish it.

But, I've got to be a contrarian here. Digital works fine for me, but I still think film has a future, and that people like my former instructor John Sexton, are perhaps being a bit too concerned about the disappearance of silver-based potography as an art form.

Make no mistake about it, digital will rule the consumer and commercial worlds in the years to come. But just as there are those who still work in platinum, palladium, daguerreotype and other commercially obsolete technologies, there will also be artists who continue to work in silver for the unique look it makes possible.

In fact, I suspect that the opportunities for those who want to work in silver will actually expand in the coming years, particularly for those who are working in black and white. The reason is that the tyrrany imposed by Kodak and others whose manufacturing methods and scale demanded that they produce only large runs of similar product will be over. As with other purely artistic mediums, silver photography will come to be dominated by smaller firms, selling highly differentiated products, working in small batches and tailoring their products to small niches. There is already evidence of this happenning, as small manufacturers around the world (many in eastern Europe) have sprung up as the big players have abandoned the niche.

Though I have moved my own work to digital, I hope to continue decorating my walls with the works of those who continue to work in other media as well. And I suspect that they'll probably have a far greater set of choices and creative options than I did when I worked with silver and chemistry a decade ago.

-btc

What can I say except that nothing about Dell's poor numbers surprised me one bit. Dell (NasdaqNM:DELL) has been missing the mark in so many ways in recent quarters that it had to catch up with them eventually.

Two days ago I ordered a new Dell notebook. It will probably be the last one I buy. I got another Dell this one last time because I prematurely destroyed my old one well before the end of its useful life. And since my batch of accessories -- including docking station, extra power supplies, DVD writer, and a few others -- are still current, getting a slightly newer model from the same manufacturer made sense. By the time I upgrade again, all these parts and accessories will probably be obsolete and then it'll be time for a new brand.

So let me walk through the experience to show why Dell is missing the mark and why it's across the board, not just in one area: product selection, the ordering process, service, etc.

I've been following Howard's comments about the lack of availability of Sirius (NasdaqNM:SIRI) radio receivers anywhere in the New York area. I've actually been surprised.

I've been working on a few small projects here and as a result I've been spending way too much time at Radio Shack (NYSE:RSH), Fry's Electronics and even Best Buy (NYSE:BBY)in the past few days. What I've seen is that the shortages of Sirius receivers that existed over Christmas and into early January are now mostly gone. Not everybody has everything in stock and the highly-touted recording S50 model is almost impossible to find, but if you wanted Sirius tomorrow, you wouldn't have a problem getting it in the LA area.

In Salt Lake City a couple of weeks ago, the stock was even better. No shortages up there.

It seems that Sirius must have hired Michael "Great Job Brownie" Brown away from FEMA, and now have him managing their supply chain. Stuff is going to where it's not needed, and is unavailable where there is tremendous demand.

This is just one example of many things Sirius is not doing all that well, as it is experiencing fantastic subscriber growth and -- perhaps without even knowing it -- a change in what it is and where it's money comes from.

A few conclusions are very obvious:

• The demand for Sirius receivers seems to be concentrated in the northeast, with LA and a few other major cities being secondary areas of demand. My own limited observations of retailers suggest that smaller cities and rural areas have not experienced the rush to buy these satellite receivers, even though they are also the areas that are least well-served by terrestrial radio.
• All the areas where Sirius receivers are partially or completely sold out are areas where Howard Stern has had a long-standing strong presence. Like it or not, Howard is driving the sales.
• Sirius is well behind the curve in dealing with this phenomenon, just as they're behind the curve with regards to demand for webcasting, for better satellite reception and (ultimately) for internet-only subscription demands, which is where this is going next.

More on what they need to be doing later.

For now, they just need to start trucking radios from the west to the Northeast. They're losing subsciption dollars in the meantime.

-btc

As I write this, I'm sitting in my favorite bar, facing one of my favorite mountains and waiting for snow to arrive. I do this a few times every winter to decompress and get myself away from much of the complexity of the world. But today I happen to be thinking about complexity. Not being immersed in it, it's easy to think about.

I noticed this piece earlier today. It didn't really tell me anything I didn't know, but it did tell me that the state of the world hasn't improved, and perhaps it's gotten worse. In a nutshell, at least 50% of product returns are caused by consumers just not being able to figure out whatever they bought. This is also a huge cost to manufacturers whose customer service reps spend most of their time helping people use their products rather than dealing with actual product problems.

This is a huge cost to business, and one of the biggest reasons that many technologies are so slow to be adopted.

And we've known it for years.

This one is too good not to share.

What if Microsoft invented the iPod?

I've been chatting with Cody about a debate he's been having over at RealMoney about corporate demand for phones with cameras. He's making the point (that I agree with) that many companies just don't want them. William Gabrielski is saying it's high time that Blackberry finally included a phone.

I've done a bit of research on these things in the past, and while not all my info is 100% current, here's what I've found, and why I have to throw in my hat with Cody's side of the discussion:

Who doesn't want camera phones?

Somehow I managed to get myself onto an online focus group for something Microsoft is calling it's "Work Essentials" online service.

As far as I can tell, the idea is that Microsoft Office users like me would use this online service to get all sorts of extra templates, tips, etc. that would help us do our jobs. And Microsoft is very interested in what kind of stuff we would want out there, and how they could best communicate to us about it.

There are lots of problems with their approach.

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.

Why in the world would an IT person want to work for a bank?

Historically, they haven't been great places to work. Generally they substitute fancy titles and other garbage for pay and benefits. And even in the best of worlds, they have always been much more tightly controlled than many other organizations.

In article after article this past week, those of us who weren't paying attention in the first place were informed that tech spending in the new year is going to depend more and more on businesses stepping up to the plate and buying more tech. The idea that businesses are finally "ready" to do so after several years of ho-hum capital spending is quite popular among analysts, particularly those covering big-cap tech. They point out that after many years of limited investment, there are new efficiencies to be found and new productivity to be gained from adopting new technologies.

To all of them I say: Forget it.

Forget it, because efficiency and productivity is no longer what most IT departments are primarily focused on. Because CFOs who used to spend the bulk of their time on questions of best captial allocation no longer can. Because the only new projects IT organizations have the bandwith for are non-productive and non-beneficial, and thus not worthy of large capital investments if they can possibly be avoided.

There's been a lot written about Microsoft (NasdaqNM:MSFT) lately, and the stock has certainly been performing nicely, up from a low just below $24, to a recent high above $28.

But I've begun to sense quite a bit of hyperbole and unrealistic expectations built into much of the recent analysis. Much of this has to do with the impact of the realease of the upcoming "Vista" operating system and the presumed impact on an upgrade cycle.

At the present time, two factors appear to be pushing Microsoft.

1) The excitement over the release of the XBox 360.
2) The excitement over the potential of the upcoming release of Vista on 2006 earnings.

I can't comment much on the XBOX impact, and will leave this to others, but it's clear that this business will always be dominated by profits from the games themselves, not from the consoles which by many accounts are actually sold at a loss.

However, I can comment about the likely impact of Vista, and I think many of the analysts are overstating the likely impact on both Microsoft and on a corporate upgrade cycle in general. Those who have followed my opinions on this realize that this is nothing new. And until Microsoft comes up with something really new themselves, it's likely to remain my take on things.

My lack of service experience has continued this week, to include my mom, again with Verizon, but this time for her landline service.

My brother and I changed some of her services for her last time we visited. We put her primary line on the Verizon Freedom plan, to get rid of about $80 in "legacy" long distance charges from AT&T every month. We also asked for their International choice plan, which for $3 per month, entitles her to cheaper long distance rates.

Of course, somehow the request to add the international plan got lost and Verizon tried to nail her with $1.68 per minute for a few calls to Israel. Confronted with two witnesses to the conversation -- me and my brother -- they agreed to credit her for the difference to the $.10 per minute "discount rate."

And it's no wonder people are fleeing to Skype, Vonage and all sorts of other alternate providers.

At Vonage, for only $24.99 per month, you get unlimited calls in the US and Canada, and without any need for complicated "international plans" you are given the "regular" rate to Israel of only $.05 per minute. Even after covering the cost of broadband from your cable provider, that's still a whole lot cheaper than Verizon's "Freedom" plan.

When mom moves, there'll be big changes. Verizon most likely won't be part of them, unless they decide to stop acting like a monopoly and provide the same simple, seamless service available through other alternatives.

-btc

My dad always used to say that we live in a so-called "service economy," with no service.

Can't think of better evidence of this than my past week.

Verizon, Part One

Friday afternoon my cellphone, along with several other items were stolen from my car. It was parked right in front of my brother's garage for a few minutes while I was unloading things and somebody walked onto the private property, went through it and disappeared.

[As an aside, is it any wonder that states are finding it easier and easier to pass legislation allowing their citizens to shoot anybody who even seems like a threat to life or property?]

Anyway, my Treo 600 -- which I never really liked -- was gone. As I'm not eligible for any kind of new phone until August and the deductible on my insurance is pretty high, I decided to go back to a simpler phone combined with my old Palm.

Cancelling my old phone was pretty easy. It was disconnected and the ESN permanently blacklisted within minutes of my discovering the theft. The guy at Verizon also offered me a simple Kyocera phone for about $90 as a replacement. I told him it would be easier for me to go to a Verizon store in the area and pick it up there, or maybe pay a bit more for a slightly nicer replacement.

I should have known better.

Not long ago I commented about the IT mess at Overstock.com and the qualifications of it's CIO.

It now seems he's disappeared on a "leave of absence" and that if he chooses to return it will not be in an IT capacity. If you believe the various posts floating around the internet -- including a missive by the CEO on one of the Motley Fool messageboards -- they'd like him to come back in some sort of marketing role.

Which is part of the problem which I was trying to illustrate in my previous discussion of this.

Whatever else this guy is, he isn't and wasn't an IT guy. IT is a tough job. To lead an IT organization -- particularly a project-focused one -- have to be a complete skeptic and usually a pessimist. You have to be the guy who is always saying "no," because there is a common term for CIOs who are optimists: Late and over budget.

To be effective in IT, it needs to be in your blood. You need to have a real desire to do it, to put in the hours, to make things work when by all reason they probably shouldn't, and to manage to stay in your job and avoid burning out even though you're always the guy who is saying "no." For most people, there are easier ways to make money.

Being a marketing or development guy is the exact opposite. You spend your entire life thinking about possibilities, not obstacles.

Sadly, "possibilities" guys sometimes get put in the job, because management decides they want a "can do" person in the role, not the usual obstructionist. Usually these kinds of appointments end in disaster, when the new optimist listens to some consultant or sales person, tells management that he "can do!" and falls flat on his face because of all the details he didn't bother to investigate before saying "can do!"

Seems that this is exactly what happened at Overstock.

I've just gotten the third emailed request to answer a brief survey in order to renew my Infoworld subscription. This is on top of the two or three snail-mail requests that arrived either with the magazine or seperately.

I haven't bothered responding because this is one publication I never read on paper anymore. All their good columns are syndicated and can be read in any RSS reader (one excellent career column is linked at the left). In addition, their content is free, online and searchable. They will send you email updates of anything that meets your personal interest criteria.

Why would I want to kill trees to get this thing?

I think many, many of their subscribers must be coming to the same conclusion.

Historically, you had to get on a waiting list to be approved for a complimentary subscription to this kind of magazine. The logic was that they would give a limited number of free subscriptions to "qualified" individuals and their advertisers would pay to reach those individuals, typically people with significant budgetary and purchasing influence in large IT shops.

I know where I stand in the overall scheme of things and it's not that high up. After all, I'm mostly working in consulting roles where I have no budget and no purchasing authority at all. At most, I can have some influence on the people who do.

The fact that they're chasing me down this way suggests that they're having a tough time coming up with enough qualified individuals to keep their advertisers happy. The one-year waitlists of the past must be long gone, destroyed by the easy access that the web provides.

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