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

If you've looked at this blog, you'll note that there are now some Google ads embedded in the main page as well as in all of the posts. There are a few reasons for this:

• I've finally hit the point where the traffic justifies trying to monetize this thing.
• Anecdotal evidence suggets that pages with embedded Google ads do much better in Google's rankings than pages without them. I suspect the reason for this has less to do with an overt bias and more to do with the fact that sites with ads get crawled a lot more frequently, but I wouldn't put it past Google or anybody else to favor the folks who drive traffic their way.
• My accountant would really prefer that my business has multiple streams of income, even if they are small. I've never considered this blog a "business," but I suppose I might if there's a few hundred bucks a year in it.

I've rebuilt the pages to keep the ads as unobtrusive as possible. They should blend in pretty well and are located at natural break points or at the ends of blog entries.

I have also updated my search box to use Google for searches both on this site and on the web.

-btc

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.

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?

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.

I just deleted my email adddress from my account profile at Sirius Radio (NasdaqNM:SIRI).

I've only been a Sirius customer for a week or so. I joined to enjoy the three months of "E Street Radio" celebrating the re-release of Bruce's Born to Run 30 years ago as well as for Howard Stern's arrival on their airwaves in January. During my brief membership, I've averaged one "informational" email every two days or so. More of the subscription spam I've complained about before.

Sirius don't require me to give them an email, so I won't. They'll have to contact me in other ways to let me know my subscription is expiring or whatever. When they agree to respect my wishes not to hear from them by email except about subscription-related issues, or at the very least to limit their emails to infrequent newsletters, then they can have my email again.

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.

Bottom Line: Great technology, increasing competition, not cheap. Overall neutral, but would consider it if the market gives me lower levels. Probably would not be selling if I already owned it.

Details: I generally comment mostly on companies that I have had direct contact with, but Cody asked me to look at F5 (NasdaqNM:FFIV) a while back, so I thought I'd have a quick peek and see what's there.

F5 is in the business of Application Traffic Management, which is a relatively new piece of the networking world. The general idea is that you can use their products to direct and prioritize the traffic through your network depending on your business needs. For example, you might give the highest priority to two-way, real-time applications like VOIP, lower priority to a real-time, but one-way business intelligence application, and lowest priority to something that has inherent delays anyway like email.

It gets more complex than that, of course. You may have a large corporate application that runs on multiple machines in multiple locations. The ATM product could help to balance the overall load on your various servers as well as the network pipes connecting users to them. And it would adjust things in real time to keep things running as efficiently as possible.

This is important stuff, and it grows more important by the day, because networked applications like VOIP depend on an efficient network to work well. A VOIP system running over an overloaded, unbalanced or inefficient network will sound a lot like the early digital cellphones: dropped words, phrases, sudden delays and a general "jerkiness" to the sound that makes it bad news for you and your customers. And VOIP is only one of the many real-time and bidirectional applications coming along right now.

On Friday, Doug Kass posted a simple question over at RealMoney Pro/Street Insight, asking what the impact of products like Slingbox would be on Cable TV and other media providers. His question was whether such a device, which allows you to transmit signals from your cable TV box to a PC anywhere in the world using the internet, would perhaps allow people to avoid having multiple cable TV accounts – say one for the home and one for a second home, or perhaps an office.

My answer was that while the product works, there are key issues in the consumer internet infrastructure that would place roadblocks in the face of that kind of use. I listed four issues I could see. Mr. Kass replied that he thought it was just the first generation of the product and that improvements could come quickly.

I was going to reply to him directly but I thought this would be a good issue to explore further here. It’s a great illustration of how a great product also needs to fit well into it’s environment, both in terms of the technology and the business sense. This is a problem that is often overlooked by people developing or investing in new technologies.

Many of the inventors and investors of the internet bubble period failed to take such issues into account. George Gilder -- who was regarded by many as a prophet of those gilded years -– made this mistake for himself and the investors who followed his every word and prediction. When it was all over and he had lost everything for himself and his followers, his excuse was that he failed to anticipate that legislators, regulators and all sorts of other “obstructionists” had artificially slowed the spread of broadband internet and that his visions of a future “telecosm” had been predicated on the presumption that the technology would spread as quickly as possible. To this day, Gilder and his followers still blame others for the failure of things to work out as they “should have.”

The fact is that Gilder didn’t live in the real world. In the real world, technologies don’t spread as quickly as they might. All those other business interests tend to get in the way when a new and disruptive technology comes along. That Gilder failed to anticipate such things is a reflection on his naivete, not on the evil state of the world.

So let’s look at Slingbox in that context.

There was an interesting piece today in the LA Times about websites being increasingly forced to monitor content in order to attract advertisers. Yahoo has shut down its user-started chatrooms after several advertisers pulled their stuff. It seems that some legitimate companies were disturbed that their advertising was placed in user-started chatrooms dealing with pedophilia and other highly objectionable topics.

This occurs at the same time as my man Cody has recently noted that advertising is rapidly moving to the internet.

It should come as no surprise that increased advertising dollars will bring changes to the way the major internet sites have to operate, and this will impact the nature of the internet. The ultimate impact is difficult to predict, but we can make some guesses and suggest some ideas.

As Cody notes, traditional media companies including Viacom ( NYSE:VIA ) and Clear Channel ( NYSE:CCU ) are going to feel the pain as advertising drains out of TV, radio and outdoor formats where they dominate. These may represent shorts or at least "avoids" in the market. The same is largely true of most newspapers and many other paper publications that are dependent on advertising for their survival. Some of these will find new homes on the web, as many magazine publishers are already discovering, and others just won't figure out how to survive. Various credible web advertisers will gain, but one might argue that much of this potential gain is already recognized in the stocks of such companies as Google ( NasdaqNM:GOOG ) and Yahoo ( NasdaqNM:YHOO ).

But there are implications beyond this.

The nature of internet advertising is that it can be far more accurately directed than any other medium. Advertisers looking for maximum effectiveness will learn to tailor their messages to individual constituencies far more than they ever have had to in the past. The "general purpose" network TV or magazine ad will be replaced by dozens of smaller-circulation ads pitching each individual product.

There are two significant implications to this. The first is that the business of managing such advertising is going to get far more complex. Existing agencies are obviously in the best position to exploit this, but there are probably new opportunities as well. The entire business of crafting individual "narrow" messages and placing them effectively is going to balloon.

At the same time, total money that is spent through to the advertising media will probably decrease. The ability to more accurately target likely buyers is going to mean less spending and more efficiency overall. I think this is one of the reasons Yahoo and Google might be overstating the future reality. They won't get all the money that's coming out of other mass media, they'll get a portion of it, after allowing for the greater cut in advertising administration described above.

While the money spent on internet advertising will grow, the number of sites on which it is spent will continue to shrink. Just as advertisers have historically had a lot to say about the TV shows they placed their ads on, so will they have a lot to say about the content and nature of the websites they advertise on. Many segments of the internet will remain free-for-alls, but they will not be supported by large advertisers. Google's Adsense and Phil Kaplan's new service AdBrite will continue to offer a mechanism for smaller advertisers to target less credible and less well-monitored sites. Smaller blogs (like this one) will go without advertising.

Incidentally, an interesting business would be to qualify and quantify website content for advertisers. A company that gets a handle on doing this could have a huge impact on the ability of smaller and lesser known websites to "certify" their credibility or the nature of their content in a manner that would make them more appealing to larger advertisers who are unwilling to take the risk of their ads accidentally ending up on an objectionable site. I don't believe anybody is doing this for smaller sites right now, but feel free to let me know if I'm wrong.

Finally, I do believe that advertising as we know it is going to look for new ways to get products in front of people. More and more, people are using a variety of technologies to block any any all advertising from even being shown. I know I do it, for no better reason than that some of those more complex animated and java-based ads tend to slow things down and chew up bandwidth that I would rather dedicate to something else. Sponsorships and product placements in everything from videogames to movies are obviously things people have discussed, but I suspect there are some other great new ideas out there that haven't been pursued yet. Any ideas? Let me know.

-btc

The following piece is fascinating, in that it highlights how much personal communication allows us to react far more effectively than we might if we waited for "official" news.

http://www.wired.com/wired/archive/13.06/start.html?pg=3

The impact of this is profound and seriously calls into question the government's appropriate role in managing emergencies. In fact, in a larger sense it calls into account the government's ability to control communication or action in any situation. The truth as relayed by thousands of individual interacting with each other is apparently far more powerful than any official word.

But in truth, there should be no surprise in this. In the fities, and even on into the sixties, the US government grappled with how to handle communications in the event of a nuclear attack on the US. The original plan called for communication by TV and radio, using a "highly trusted" newsman to deliver the message and issue instructions about evactuation and shelter procedures.

The plans never went far. Planners realized that people wouldn't be listening, they'd be panicing and trying to make their own way.

By 2001, the problem of panic disappeared. Inherent in the concept of panic is the idea that you don't know what's going on, and thus react unpredictably. In today's world, personal communication technology increasingly means that you won't be in a situation where you don't know what's going on. More often than not, you'll know as much as anybody, and possibly more than the officials far away. Panic is replaced by "reasoned flight." We take on the logic of a swarm of bees or of an open marketplace, with no clear leader, but nonetheless with a common direction and ability to adjust in real-time to new developments.

-btc

We note that the Infinity moron cited in our earlier piece claims that "people are emotionally involved with local radio."

Maybe they once were. Certainly I once was.

But that was back when individuals were free to express their personalities on local radio. Growing up in New York over 20 years ago, WNEW and WPLJ wer the big rock stations. And you knew the people who worked there. Carol Miller was the Springsteen fan, Dave Hermann (whose daughter went to high school with me) had his own unique morning personality and classical rock mix, Scott Muni was the "old sage" of Rock and Roll Radio, others had their own personalities and played the music that "fit." If you wanted to listen to something else, you switched the station. In any event, you look at the lineups from those days and you see a list of people with definitive musical tastes of their own, who you could get emotionally invoved with. Or ignore completely if they didn't resonate with you. Your choice.

We noted this morning's headline in The New York Times, highlighting the rise of satellite radio. What stood out in this was the moronic statement by the head of Infinity Broadcasting claiming that satellite was not a viable option, because "At the end of the day, people want to hear what's going on in their local market."

We wonder where this guy has been for the past 30 years, while cable TV has proved over and over that people generally want exactly the opposite thing.

Let's state our opinion clearly: The only reason we still have a significant amount of "local content" or a substantial number of "local stations" on either radio or TV is because the FCC -- under pressure from the local stations and their advertisers -- continues to insist on shoving it down our throats, despite our obvious lack of interest.

As noted below, we were away last week, enjoying some phenomenal skiing at Alta and Snowbird Utah, where the snow simply would not stop falling for several days, and the resultant mess (road closures, avalanche danger, interlodge travel restrictions) made for a longer time away than anticipated.

However, even with this, we had the opportunity to think a bit about technology, and to consider how much it really benefits productivity.

Thursday -- the day after the storms finally broke and we got some sun -- a group of our friends joined us for skiing. We usually ski some pretty extreme stuff and equip ourselves appropriately. In recent years we have added cellphones to our equipment list, because they are clearly useful in emergencies if coverage is available. (Ski mountains often have spotty to non-existent cell coverages.)

[Incidentally, we think that in a real ski-hill emergency, the most useful item is likely to be a simple signal whistle. Its sound will carry a much longer distance than a human voice and there isn't a ski patroller on the planet who won't investigate one.]

Our friends showed up with little of the really useful equipment that we regularly carry, but did bring their cellphones and were willing and ready to talk, at every opportunity. Not long into the morning, one of our friends recieved a call from another friend of hers, informing her that another group had finally arrived and were skiing. They made plans to try to connect later in the day on the opposite side of the mountain. Our friend then assured us that once she and her friends got together, they'd call us to try to re-connect and ski the afternoon.

We reluctantly turned on our cellphones, which are usually left off unless they are needed. Vacations, to us, are a time when the world should just have to deal with our absence.

The results were predictable. An endless stream of phone interruptions and changes of meeting point, which ultimately resulted in nobody meeting anybody at any point during the day. The existence of the cellphones gave everybody a sense of connectedness that allowed them to forgo any sort of planning or discipline. But with no plan and no willingness to make one, all the communications in the world could not bring everybody together.

The following day we announced to our friends that we would be leaving our phones off. If they wanted to meet us, we'd be at Alf's Restaurant (best fries on the mountain!) at 1:30, after the lunch crush. Want to ski the afternoon with us? Be there.

From the reaction, you would think we had just accused the pope of being a child molester. How could we "isolate" ourselves this way? How could be be so "disconnected?" How could we be so arrogant?

We held our ground. We would be skiing fast and hard and weren't going to be bothered with answering the phones. We would have lunch at Alf's as usual and anybody who wanted to ski with us could either go out with us right now, meet us there at the usual time or deal with the needle-in-a-haystack odds of finding us on one of the lifts.

All our friends showed up. We didn't make or answer a single call. We all had a much better day because we were able to do what we were there for -- ski -- rather than spend half the day on the phone trying to coordinate meetings. Nobody had to adjust their schedule much to make the meeting either. With a whole morning sto ski around, everybody had plenty of opportunities to go where they wanted to and still be at the meeting point at the right time.