bizzXceleration: Performance, Value and Profit

Network Problems

Comcast to Make Monthly Internet Use Cap Official Comcast Corp., the nation's second-largest Internet service provider, Thursday said it would set an official limit on the amount of data subscribers can download and upload each month. On Oct. 1, the cable company will update its user agreement to say that users will be allowed 250 gigabytes of traffic per month, the company announced on its Web site. Comcast has already reserved the right to cut off subscribers who use too much bandwidth each month, without specifying exactly what constitutes excessive use. Customers who go over the limit are contacted by the company and asked to curb their usage.Comcast floated the idea of a 250 gigabyte cap in May and mentioned then that it might charge users $15 for every 10 gigabytes they go over, but the overage fee was missing in Thursday's announcement. Curbing the top users is necessary to keep the network fast and responsive for other users, Comcast has said. Comcast stressed that the bandwidth cap is far above the median monthly usage of its customers, which 2 to 3 gigabytes. Very few subscribers use more than 250 gigabytes, it said. A user could download 125 standard-definition movies, about four per day, before hitting the limit. The cap is also above those of some other ISPs. Cox Communications' monthly caps vary from 5 gigabytes to 75 gigabytes depending the subscriber's plan. Time Warner Cable Inc. is testing caps between 5 gigabytes and 40 gigabytes in one market. Frontier Communications Co., a phone company, plans to start charging extra for use of more than 5 gigabytes per month.

AT&T’s Rivals Are Happy to Attack Over iPhone’s Network Woes Apple sold more than a million iPhone 3G cellphones its first weekend — with some stores running out — and two million more since then, analysts say. But its July debut has been nothing less than a public relations headache for AT&T, with eager buyers complaining about dropped calls and poor network connections. Some fingers point to Apple, which has tried to deflect the complaints. But many others point to AT&T’s cellular network. Whatever the source of the problems, AT&T’s rivals, long irritated by all the attention the iPhone has received, are on the attack and happy to exploit the discontent. “A phone is only as good as the network it’s on,” said a full-page Verizon Wireless newspaper ad on Thursday, lobbing a shot at AT&T’s 3G, or third generation, high-speed network. A Verizon executive sent an e-mail to Wall Street analysts last week: “So much for a ‘new’ way of doing business at the old AT&T — your father’s phone company.” For AT&T, the nation’s No. 1 wireless carrier, which exclusively offers the iPhone, the situation is especially tricky because the stakes are so high. Apple’s customers are largely forgiving of any foibles of the iPhone’s maker. But wireless companies like AT&T and Verizon are afforded no such a luxury. The 3G network is supposed to make it easier to surf the Web and watch videos online. With nearly 90 percent of all Americans owning a mobile phone, there is little room to grow and these rivals can ill afford to lose customers. Further aggravating consumers, neither company has fully explained why calls were dropped and the network was slow. Theories abound, which is causing even more confusion — and finger-pointing. Is it a problem with the phone itself? Richard Windsor of Nomura Securities surmised in a research report that a new radio chip made by Infineo

Mobility Platforms and  Wars

Platform Wars: Battlefield Mobile During the “platform wars” of the 1980s, tech companies duked it out over which computer operating system would emerge from a crowded field. Now there’s a new platform war being waged, but this time the battleground is mobile devices. The bad news for businesses looking to standardize on a winner: The most likely outcome is multiple survivors. Many businesses initially saw mobile devices as a way to check email and make calls on the go. But it’s become clear over the last few years that these devices are small computers, capable of accessing the Web and running software just like a PC. The software piece is the challenge for businesses: As in the PC world, software written for one platform doesn’t run on another. This isn’t really a problem for PCs, since just about every business runs Microsoft Corp.’s Windows operating system. But the mobile-device world is still fragmented: Many businesses use Research In Motion Ltd.’s BlackBerry, but hardware that runs Microsoft’s Windows Mobile operating system are gaining in popularity. Apple Inc. is storming onto the market with its iPhone and associated software, and Google Inc. is about to enter the field with its Android operating system for mobile devices. Operating systems from Palm Inc. and Nokia Corp.’s Symbian PLC are also popular. In fact, rather than consolidating, the number of platforms for which developers can write mobile-device software keeps growing, says Benjamin Gray, an analyst at Forrester Research. That’s a challenge for businesses, in part because workers increasingly want to be able to choose the device that they think is the best fit for their life.

Intel thinks small with Atom chip, but how big is the risk? At Intel Corp.'s big developer conference this week, the chip giant was extolling the virtues of its newest little chip called the Atom.The Atom has surprised both company executives and analysts with its popularity among hardware makers. The chip was introduced in March and is aimed at an emerging market of very low-cost mobile devices, especially in developing countries. The Atom is helping foster this new category of portable devices, which Intel calls mobile Internet devices, or the lovely acronym MIDs. One product area is NetBooks, which are essentially smaller laptop computers with fewer capabilities than a full machine but offer increased functionality than a smart phone. Big factors driving interest in the chip is its low power consumption, lower-cost and ability to run software that is compatible with Intel's standard chip architecture, known as the x86. And even though the chip is inexpensive, it provides decent margins for Intel, and customers can use it to create Internet surfing devices that sell for as low as about $200. With the efficiencies resulting from its latest manufacturing process, Intel can yield about 2,500 Atom chips from one silicon wafer, compared with a relative yield of only several hundred units of its larger chips. But the Atom, as Intel is quick to point out, is not as powerful a processor as its other chip families. But the risk for Intel is that a growing slice of the market may find that a $10,000 car is all they need. The bulk of growth for the PC sector today is coming from developing countries, which are passing over desktop computers in favor of smaller, cheaper laptops. Indeed Intel executives admitted that they would not be working with 80% of their Atom customers if they did not have their cool little chip. If Intel succeeds with the Atom, it could make an interesting business school study on a company dealing with the classic "innovator's dilemma," a conundrum faced by many technology companies, as well as other industries. Leaders in their market often get caught off-guard by new disruptive technologies that are typically cheaper and "good enough."

Mobile Devices for Enterprise Apps, Part 1The emergence of smaller, more powerful handheld devices and the spread of high-speed mobile networks have enterprise software developers scrambling to meet demand for portable versions of their flagship applications. Research In Motion got a jump on the market with the BlackBerry's secure and reliable e-mail delivery capabilities. Competitors, including Motorola ,Nokia and Sony Ericsson, are all vying for a share of the market. Given recent enhancements made to the iPhone, Apple has to be added to the list of contenders. But is the current crop of smartphones and PDAs really up to the task? The biggest names in enterprise software -- Microsoft , Oracle and SAP prominent among them - are developing more powerful portable versions of their applications. Business intelligence (BI), customer relationship management (CRM) and enterprise resource planning (ERP) applications are notoriously and somewhat necessarily heavyweight applications, however, and mobile enterprise users -- primarily salespeople and field servicestaff -- are looking for more than simply scaled-down, lightweight versions of them. "Besides apps that are used for e-mail and personalized contacts and calendar, we're seeing some additional traction amongst CRM apps -- sales, field service. There are also sparks of interest amongst inventory management and logistics apps," Forrester Research principal analyst Peter Marston told CRM Buyer."From a features and functionality standpoint on the CRM apps, organizations aren't looking for the applications to do complicated algorithms, rather they are looking to the mobile apps to provide field users with more customer related information, such as service call information that the customer has asked for in the past, and what sorts of things that a customer has purchased before."

IBM Kicks Mobility Play Into High Gear IBM has undertaken an aggressive foray into workforce mobilization with the release of a software and services bundle that allows users to access robust enterprise applications on handheld devices, while providing companies with the services needed to support an ever-more-scattered army of employees. IBM has rolled out a mobile software and service offering that builds upon several announcements it made earlier this year at the annual RIM Wireless Enterprise Conference. The offering, called "Mobility@Work," is a package of new software tools that allow developers to run existing desktop applications on a mobile device, together with new mobile consulting services aimed at helping companies implement and manage a mobile work environment. Built on open standards, IBM's software can be used with most mobile platforms including BlackBerry, iPhone, Windows Mobile and Symbian. These new products build on IBM's existing mobile software offerings -- such as IBM Cognos 8 Go! Mobile, which lets users view and interact with BI data. IBM has also expanded its relationship with AT&T, Sprint and other wireless carriers to provide broader e-mailaccess to customers who use IBM Lotus Notes and Domino software on their handheld devices. AT&T and Sprint have certified for use IBM's Lotus Notes Traveler software, which replicates Lotus Notes e-mail, calendaring and personal information management data on select smartphones. The devices from AT&T that have this capability are the AT&T 8525, AT&T Tilt, Moto Q Global, Palm Treo 750, PantechDuo (Mustang C810), Samsung Blackjack, and Samsung Blackjack II (i617). Sprint is including it on its HTC Touch, HTC Mogul, Samsung Ace, Palm 700W and Palm 800W. With this multilayered mobility rollout, IBM is positioning itself for an anticipated surge in demand for corporate mobile applications, Dunderdale said.

TV vs Internet: the Content Wars 

Saving TV When Harbert talks about television, it’s with the sober clarity of someone who has looked at life from both sides now and has seen that only one business model is working. Cable networks target just those viewers who want what they have to offer. Broadcast networks want everyone. And the business of wanting everyone has never been worse. At the end of last season, ABC, CBS, and NBC reported their smallest combined audience ever, an event that has become a gloomy yearly occurrence. Meanwhile, cable—counting both basic channels and pay services like HBO and Showtime—now receives 55 percent of the total viewership. It may be time to perform an autopsy on network TV, which some have pronounced officially dead at age 60, the victim of a lifetime of big spending, hard living, and bad planning. Here’s the coroner’s report: The evening newscasts have been mowed down by cable’s heat, spin, and round-the-clock immediacy. In prime time, nobody watches reruns anymore—and reruns, along with syndication, used to be the only way comedy and drama series, the heart of a network’s prime-time business, made money. (The way they make money now is...well, the networks will get back to you as soon as they figure that out.) Conversations about the future of television tend to vault way past next week or next year into a world where schedules don’t exist and 10,000 programming options are all available at any moment, half of them fully inter­active. (Not enjoying this episode of Law & Order: Moonbase? That’s okay—you can change the plot!)  It sounds like fun. But in reality, the number of cable channels has topped out. And the number of households that subscribe to basic cable—about 65 million—hasn’t budged for a decade. That’s roughly 58 percent of all American TV households and it’s a much higher percentage of the total households that advertisers actually care about. People who have something to sell are attracted to viewers who have already demonstrated their willingness to buy something (like cable TV). The cable business is booming: Annual advertising revenues have jumped from $8.1 billion in 1997 to a projected $28.6 billion this year. So before the death knell tolls, let’s consider some ways broadcast TV might be reborn. Creating substance-free shows because you think your audience has no attention span is a sucker’s game. And streaming shows for free is, so far, doing a lot more for viewers than it is for a network’s balance sheet. Instead, the networks should try to make TV shows for people who want to watch TV shows. There seems to be no shortage of viewers out there: For all the hand-wringing about how new media are sapping television’s audience, the average viewer of online video in April watched fewer than eight minutes a day. By contrast, the average household has its TV on for eight hours and 14 minutes daily. That’s a record.

Is the Internet finally killing TV? More than 80 million Americans have watched a TV show online. By 2013, a research group says, scheduled programs will account for less than half of all video viewed. Is this the summer that the Internet finally kills television as we once knew it? Most industry observers are stopping short of that prediction, citing some significant hurdles still in the way. But the growing number of new deals and new devices being announced suggests that a profound change in the way people watch video -- and what video they watch -- is under way. The line between "television" and video via the Internet already has blurred and may disappear in coming years. At least one industry analyst has declared "TV is dead" and welcomes Americans to a new age of video everywhere. Increasingly, Americans are watching video when they want to, and on the screen that suits them at the time. And more programming is from new sources that threaten to unlock Hollywood's domination of content. Video is now delivered on displays and devices of every shape and size, from gigantic theater screens and ever-larger home projector screens to flat-screen HDTVs and from desktop and laptop computer monitors to tiny personal screens such as those found on iPods and mobile phones. Meanwhile, NBC Universal is touting its coverage of the Summer Olympics in Beijing as "the single most ambitious digital event coverage ever." Along with video coverage on several of its cable TV networks, NBC is streaming 2,200 hours of live competition in 25 sports on the NBCOlympics.com Web site.

 A Surprise Winner at the Olympic Games in Beijing: NBC The Olympics has become the hottest event of the summer, drawing an average audience of about 30 million a night on NBC, far beyond the network’s expectations. After a string of disappointing years in prime time, NBC executives had high hopes for a turnaround with the Beijing Olympics; but those hopes were tempered by a string of concerns. Would China display some of its repressive political tendencies and potentially embarrass NBC? Would a protest or incident mar the feel-good atmosphere? Most of all, would enough viewers show up to justify the $894 million NBC Universal paid for the American television rights? With so many concerns, the network’s sales department felt compelled to scale back the ratings guarantee it offered to advertisers. The network also withheld some commercial inventory for use as what is known as make-good ads — free commercials offered to compensate advertisers for under-delivery of an audience. They won’t need them. The Beijing Games have become the hottest event of the summer, with numbers that so far have been certifiably big — far beyond the network’s expectations. The Games have drawn an average audience of about 30 million a night on NBC itself, millions more on NBC’s cable channels, 30 million unique visitors to NBC’s Olympics Web site, 6.3 million shared videos from the coverage streamed on the site and an ultimate profit that network executives project will surpass $100 million. Late last week, the chief executive of NBC Universal, Jeff Zucker, released the additional inventory to clamoring advertisers, especially movie companies hungry to put their latest releases in front of viewers. “We don’t have any more costs, so that will go straight to the bottom line,” Mr. Zucker said. He also argued that the success of the Games showed the future of network television might not be quite as dismal as had been forecast. “It’s a great story for network television,” he said. “This proves the pipes still work.” He added, “When you have an event that transcends popular culture, the only place you can aggregate these audiences is network television.” Not surprisingly, some competitors agree. Leslie Moonves, the chief executive of CBS, who sent a note of congratulation to Mr. Zucker last week, said in a telephone interview, “Anybody who doubts the viability of network television after this is nuts.”

• NBC's Online Snub, Web Audience for Games Soars for NBC and Yahoo

NBC Universal president and C.E.O. Jeff Zucker has a lofty goal: to rescue television. But saving the industry will mean the end of business as usual. Despite overseeing NBC, the network of Cheers, Seinfeld, and Friends, Zucker is relentlessly focused on the future. He is unsparingly harsh about the prospects for broadcast television—gloomier than any other TV executive out there. In his view, the era of growth in network TV, the period of the megahit, is over. Growing his business, then, means investing in cable, digital video, mobile—anything other than network TV. In cable, Zucker has gone on a multibillion dollar acquisition spree, buying Oxygen last year for $925 million, the Weather Channel in July for $3.5 billion and, moving into the international markets, a $150 million stake in India’s fast-growing NDTV network this year. In digital media, he acknowledges that nobody is sure how digital content will be displayed, viewed, and, most important, monetized. So he’s trying just about anything to see what sticks. In March, he partnered with Fox to provide NBC content for free on a video-streaming site called Hulu. And he’s experimenting with all sorts of new distribution channels, with screens of all sizes in unexpected places—spooning out a few minutes of NBC content to video displays on gas pumps and in the back of taxicabs.  As he scrambles to do all this and to prepare for NBC’s Olympics coverage, Zucker is in a vise. Just as he needs to spend his way out of network TV’s crisis, he’s facing pressure from above, as his bosses at General Electric are demanding that he keep costs down and produce higher profits. To cut costs, Zucker has dramatically reduced the number of pilots that NBC produces each season—a move that hasn’t gone over well in hidebound and spendthrift Hollywood. Whether it’s because of the outside pressure from G.E. or his own internal drive to counter critics who say he’s risen too quickly, Zucker is clearly the fastest-moving mogul in television. He has taken the lead in articulating the fears of many other media executives and stating candidly that he is not sure what will work. “I would rather be honest about the realities of this business, whereas so many people want to just sweep that under the rug and perpetuate what has been,” Zucker says. “Look, we don’t know what’s gonna work. Predicting what the media world is gonna look like in eight years is incredibly daunting. I defy anybody to do that.”