Windows 8 – A revenue transformation for Microsoft

We are not for a lack of commentary on Windows 8, but despite all the subjective commentary on the Windows 8 User Experience and the Surface tablet, I think there is a really important story lying under the surface about the revenue potential for Microsoft.
I’m not unlike many computer users – I regularly use a version of Office 2003 I bought five years ago because it just works, and there is no need for me to upgrade.  I bought an iPhone when it came out – Apple truly revolutionized the mobile phone space.  I installed Ubuntu Linux on my home PC for a few years to learn about the offerings and state of the open source operating system market.
Two weeks ago, I tired of the Windows 8 news snippets and me-too commentary and installed the Windows 8 Consumer Preview on my home desktop to dual boot with Linux.  The preview build was a little awkward, no Windows 8 apps for Skype, Netflix, no free music player (ala Pandora, Spotify, etc).  The dual-desktop situation took a little getting used to but isn’t the traumatic experience that it is made out to be.
When Windows 8 launched, I installed it on my main laptop PC.  First the first time ever, a Windows OS upgrade went incredibly smoothly.  I downloaded it from the web, I installed it within an hour or so, it preserved all my files and gave me a genuinely refreshed view of my operating system.   More importantly, it really showed me the new revenue paths for Microsoft associated with Windows 8.
Movies and Premium TV
Windows 8 lets me buy movies directly from my PC, from within the core operating system.  I dropped premium cable years ago in favor of a Roku device connected to my flatscreen TV.  I don’t have a media PC, I hate moving around cables and hooking my laptop up to the TV to watch content online.  Roku solved a lot of those problems for under $100, but it is a partial solution.  Roku has proven to have a relatively dormant app ecosystem.  The Netflix app lacks pizazz, the news apps that were once great have been fragmented into a bunch of awful little network-centric apps.  Overall, Roku was the right solution at the time but didn’t solve all of my media consumption needs.  I still use it regularly to buy movies on Amazon and watch streaming content on Netflix.
Windows 8 changes this.  If I hook my PC up to my television, buy a media specific PC or purchase an Xbox, I can access all my media directly on my TV through Windows 8.  More importantly for Microsoft, I purchase the movies from Microsoft instead of Amazon.  Amazon, Hulu Plus, iTunes and Netflix all offer a decent experience for me to purchase content but having it built into the OS makes it all that much more seamless and it’ll eventually be the sole place I buy my content.  Movies and Premium TV content, I believe, is revenue stream #1 for Microsoft in Windows 8.
Apps
I’ve gone from flip phone to iPhone (1st gen) to Android over the last 6 years.  I’ve purchased some premium apps, I use a lot of free apps and am comfortable with the ‘App Store’ concept on my mobile devices.  Despite the current awkwardness of maintaining the Windows 8 “Metro Style” desktop as well as the old Windows XP/Windows 7 styled desktop – it’s clear that Microsoft is finally moving in the right direction in regards to bringing the vibrant mobile app ecosystem to the relatively stodgy app environment on desktop/laptop PCs.  Merging legacy Windows desktop apps into the Windows 8 “Metro-style” desktop will happen eventually, but maintaining both is key for user adoption as it doesn’t require a major shift in usage for those who are most comfortable with the old Start button style interface.
Most importantly, Microsoft has introduced a new generation of fresh applications and revenue for the company.  Criticism abounds about the number of apps in the app store for launch.  The practical truth of it is they have 10,000 apps available right now – far more than any consumer of Windows has realistically had access to with one-click install in the past.  Most are free or freemium, introducing a wave of crisp UIs and laser-focused mobile-style apps to the desktop.  Critically for Microsoft, this new app infrastructure is new revenue stream #2 for Microsoft in Windows 8.
Music
I don’t buy music anymore.  I use Pandora with Ads, I use Spotify on laptop and desktop and I usually listen to Podcasts while driving.  I’ll pay to subscribe to music services, but purchasing physical albums and even dealing with migrating digital music from device to device is too obnoxious.  Subscription services like Pandora and Spotify are the future of music consumption.  Windows 8 understands this shift and is embracing it.  Microsoft built a Pandora-meets-Spotify experience directly into the OS via the Music app.  Listen to an artist’s tracks or start up an artist-inspired ‘station’ directly from the OS.  I won’t use Pandora any more on my laptop or desktop and, if I did want to purchase a track or album, its built into the OS.  I bought a Zune when it came out many years ago.  It died with the advent of the iPod and iTunes, but it was an amazing deal for music consumers.  Microsoft learned from that and built it into Windows 8, making paid subscription optional in exchange for audio and video ads interspersed with your music.  Music subscriptions and premium audio and video ads from the Music app is revenue stream #3 for Microsoft in Windows 8.
There are a host of other ways Microsoft can monetize Windows 8 on a service level.  Skype credits to talk to friends overseas (something I’ve already done prior with Skype), now built into the gorgeous new Skype app.  Subscriptions for core apps like MS Office (I haven’t purchased Office 365 and it feels like they missed an opportunity in tying that directly into Windows 8) would keep me paying Microsoft a reasonable fee on the monthly basis for my most critical productivity tools.  SkyDrive paid storage, for those that exceed the generous free allotment, should be the #1 backup solution touted by Microsoft now with built in OS support, mapped folders and enough free space to get you hooked without giving away enough space to back up all of a digital family’s most important photos, videos and documents.
I think Windows 8 is going to be a cash cow for Microsoft – with 1.5 billion PCs worldwide and 400 million new PCs sold every year, earning recurring revenue from that massive user base could be truly transformative for Microsoft.   The latest generation of All-in-one desktop PCs with gorgeous touch screens are very reasonably priced at under $1000.  The newest round of laptops, either super-light ultra books or convertible tablets are really attractive and still come in hundreds less than comparable hardware from Apple.  Tablet manufacturers finally have a chance to get away from the serious OS-fragmentation that is Android and the introduction of Surface, while I don’t see a massive market for it today, means Microsoft can finally monetize the tablet market that has completely gotten away from it over the last three years.  I look forward to monitoring my Movie, App and Media spend with Microsoft over the next year to see if I truly shift dollars away from Amazon, iTunes, Google Play to Microsoft – at this point I don’t see how I could avoid it.  Microsoft has released a sexy new operating system while also making itself the #1 recipient of my software and service subscription dollars moving forward.

Career reinvention – what would you do differently?

We’ve all heard the sayings directed toward the younger generation about how much they could learn from those who’ve lived before them.  Your parents can teach you valuable lessons about life that will prevent you from living through some of the same hardships they endured.  The value in that learning doesn’t have to only show up in generational trends though.  Turning it inward and making it highly relevant to the present though, you can ask the question of what you’d do differently in your life if you started over.

I don’t mean a fictitious rebirth, reliving your youth, reliving your educational years or making different decisions over your time spent after school.  I’m talking about now.  Use everything you know, your experience, your income, your specialties to determine if you are using your resources to their fullest.  If someone else was in your shoes, what advice would you give them to rocket their income, their happiness, their career?

Forget about incremental changes from where you are now, forget about shaving a few more hours off your work week to spend time with your family, forget about putting in a few more hours to hope for the chance to move up in your job.  Think about a dramatic change, what if you could start from scratch, TODAY, with all the knowledge you have now.

What would you do? Would you do what you’re doing right now or would you change things?  Don’t wait for your older years to look back and regret the decisions you made. If you’re reading this blog, you’re likely mid-career with plenty of life experience, job experience, market knowledge and expertise.  Use that to your advantage, figure out how to best utilize your assets and make that your 12 month goal.  It may be a fundamental change, it may be something simple like plan for that overseas vacation you’ve always dreamed of.  What would you do differently if you started over?

NOW DO IT.

30 miles out, zero bars

I’ve spent some time over the last few weeks up near Mt. Baker, in a rural part of Washington. Isolated, but near a ski resort, this area caters to fast-driving college kids from nearby Bellingham and Vancouver. The two lane twisty road gets icy and it isn’t uncommon to see cars in the ditch, precariously close to the 30-50 foot drops to the icy river below. If you get in an accident up here, you better hope someone stops because your trusty blackberry isn’t going to help you here. There is no cell service.

My question is, why? Why isn’t there cell service in these spots? This is a state highway, 30 miles from a town of 70,000 people and there is no cell reception? Is this level of service really cost prohibitive? How far do cell towers broadcast in rural areas where signals have trees and mountains to contend with and, roughly, how much does a cell tower cost the carrier on average?

The truth is, cell phones aren’t just a luxury anymore. For many, a cell phone is their only means of calling 911 or reaching family in the case of an emergency.

Is this a problem of being cost prohibitive for any single carrier to build out their proprietary networks? Could the rural cell towers create some sort of generic network so all carriers can use the same hardware, then the equipment could be subsided by government for rural locations?

It’s time for government and the cell carriers to come together to increase cell coverage in rural locations, landline use is declining and the telecom industry needs to wake up and smell the 3G.

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The Netbook revolution – the death of …anything?

The web is all-a-twitter with netbook commentary and reviews lately.  Personally, I’ve had the pleasure of playing around with a few different netbooks lately.  First, the Hot Pink MSI Wind U100 that my significant other won via the MSI Wind Valentines Day promotion (that’s me, the guy in the first picture!), then my coworker’s HP Mini 1010NR.  I like both of them to be honest, the netbook form factor has won me over. The MSI Wind is super light and has a great battery life, the HP wins in the style department with its slick looking design, but I’m poised to buy and I think I’m going to go with the ASUS Eee PC 1000HE

The ASUS seems like a breakthrough to me.  Its $375 over at Amazon and has roughly the same features as all the other netbooks in the same price range with one huge difference. It boasts a 9.5 hour battery.  Even with the standard battery-life-puffery that goes on with the laptop manufacturers, the 1000HE’s battery is  likely to last a full day with WiFi enabled and normal usage.  My feelings are bittersweet when I realize that the possibility of 8 hours of constant usage is better than my iPhone.  I use my iPhone for browsing a couple hours a day between bus commuting, lunch hours, twittering in the evening, etc and if I don’t recharge it over night, it won’t make it through the next day.

What will I use the Asus 1000HE for?  Everything.  Sure the size of this netbook is small, but it is adequate enough to do work on and its 160GB hard drive will suffice for everything but large amounts of media, something I gave up obsessively collecting long ago.  For those media hungry folks out there, you can always pick up a 1TB external USB drive for just over $100, and you can use it on multiple PC’s if you want, always a nice bonus.  These days, I do most of my work on the web and portability is key. Take it to work, use it on the bus, take it travelling, etc…these netbooks seem like they’ll be capable of doing 95% of of what I need to do on the computer. 

I’ve spent the last few weeks thinking about the impact of these new netbook PCs.  What will they replace, what type of form factor is going to suffer?  Desktop PCs are already struggling to stay relevant in the average household, but they are the only reasonable solution for businesses where redundancy and speed is key (think RAID, massive memory support, fast graphics cards, etc).  Full size laptops have replaced desktops for many home users, but they’re a bit too clunky to carry around day-in, day-out.  I think the netbook market is going to take a chunk out of both desktops and laptops but, just like the laptop revolution over the last few years, it’ll take a few years to have full impact due to the upgrade cycle.

I think the best targets for these netbooks are service personnel, sales people and students.  Service people can bring these netbooks on site with them.  They’ll have full internet connectivity, making troubleshooting and diagnostics a breeze.  Sales people can take these on the road with them easily and output to a regular projector/monitor for client presentations.  With USB support and bluetooth, they can use pointers, full size keyboards and any other standard PC accessories they’d need for their sales pitches.  Students will love netbooks because they are stylish (many colors, designs, etc) and cheap.  Spending $400 will get you a low quality, heavy, ugly standard laptop or a top of the line netbook that weighs half as much and looks twice as good. 

For the first time in a while, I’m excited about the future of the personal computer industry. These netbooks seem like a breakthrough and, because they entered the market at $300-$400, they may be candidates for getting ridiculously cheap over the next 12-18 months as manufacturers and vendors start to optimize for this platform.

Washington’s new E-Cycle Program, could do more for local small businesses

The Seattle newspapers have been reporting on an interesting and unfortunate side effect of Washington State’s new “E-Cycle Washington” program.  The program is a new way to deal with the pricey electronic recycling predicament.  Washington’s program is entirely funded by the electronics manufacturers, allowing consumers to drop off many electronic devices (Monitors, TVs, computers, etc) at any of 200 collection sites in Washington state for free.

Unfortunately, it sounds like the program has well-intentioned but unfortunate downside.  According to the Seattle PI article, the state’s rules for “Collectors” prevents the collection sites from dismantling any of the dropped off items.  While this makes sense for some items (opening at CRT could unleash toxic substances), computers themselves have lots of great parts that can be safely removed and ‘recycled’ locally by the collection site.  If someone drops off a computer that works fine or just has a bad hard drive or something, the collection site ought to be able to open up the computer and put in a new hard drive so they can sell the computer to someone else or take out the ram, video card, CD drive, etc and sell those parts to local consumers.

Allowing the collection sites to dismantle computers would be a boon for local computer stores.  Let’s face it, local computer stores are facing an uphill battle these days with dirt cheap computers offered by Amazon, Dell, WalMart, etc.  Allowing consumers to drop off monitors, desktops and laptops for free at local computer retailers for recycle then letting those retailers dismantle and resell components out of those devices would be a great boost for the retailers and it would allow consumers to get really cheap local components to upgrade their computers instead of having to constantly buy new stuff online or from the big box stores like Best Buy, Circuit City, etc.

I hope Washington state listens to the feedback on the program, its not too late to modify the rules slightly to at least allow collection sites to dismantle desktops to recycle and resell the components locally.  The intention is to prevent toxic chemicals from leaking into local soil and water supplies from large-scale initiatives to strip the valuable metals and components out of these devices but we should prevent THAT practice specifically with this legislation through pollution laws and not prevent local businesses from profiting from this great program to allow free recycling for consumers.

Protect your home – prevent pipes from freezing!

Eugene, Oregon television station KVAL posted a great little story back on December 15th. “Two tasks in two minutes to prevent frozen pipes“.

Tip 1: Open cabinets to allow warm air to get under your sink to warm your pipes.

Tip 2: Turn on your faucets to get a trickle of water moving. Running water through the pipes makes freezing less likely (think a river freezing vs. a lake).

See the article for all the details.

Thanks for the tips KVAL! Its getting cold outside, 8 inches of snow and its still coming down!

QoS for your H2O

Those familiar with IP telephony, IP-TV and internet connectivity in general know about Quality of Service (QoS) functionality to ensure the highest priority devices on the network get access to bandwidth first. This ensures that, if your office uses VoIP for phone calls, that the phone conversation will have priority over standard internet traffic in your network to prevent choppy calls when you experience a high load on your network.

I thought up an idea this morning that seems like it would great potential. An engineer and a plumber could get together and make this happen fairly quickly I suspect. I want QoS for my H2O.

Households, especially old ones, have long had issues with hot water availability.  Sometimes its due to low pressure, sometimes its due to small water heater capacity, etc, but it can have a large impact on the functioning of a household.  You can’t start the dishwasher in the morning because it’ll pull hot water from the shower and we’ve all been burned by scalding water in the shower because someone flushed the toilet upstairs.  This is nonsense.  We send people to the moon and build electric cars, we can fix this.

We need a basic device that sits on the outlet of the cold water from the street and the hot water from the water heater and gives priority to certain devices on the plumbing network.  I suspect this would require you to run pipe from each room in the home to terminate to this device, much like a circuit breaker for electrical but man, wouldn’t that be nice?  You could give the bathrooms high priority to never have the pesky shower incidents, give the dishwasher low priority so it doesn’t impact other water usage in the house.  It’d basically just be a regulator for temperature and pressure across the various devices.  You could even control it remotely by running a small onboard web server connected to wifi in your home.  Pipe burst in your upstairs bathroom?  Shut it off with a button or over the web, no more climbing around in the basement or crawlspace to find that water shutoff and have to shut off water to the whole house!

Small Business Owners – 3 Steps To Building An Online Presence

I’ve been giving a lot of thought over the last few months to trying to establish a system to help small businesses build up a presence online.  Now, as the economy tightens up, its more important than ever for small businesses to leverage every means available to attract new customers.  Over the last 8 months, I’ve been helping a law firm build out their web site to pull in customers through both PPC ads and natural search ads.  In addition, I’ve had a few of my own projects kicking around that I’ve been experimenting with on and off.  The outcome of these projects leaves me with the strong belief that any small business can benefit greatly from having a presence online, especially those with a local service or unique product to offer.

Now I’m looking for a new project.  My thought is, since I already have a full time job, I’ll offer to work solely on commission.  I’m confident, through my experiments so far, that I can make a measurable difference to a small business that is looking to start out online.  The approach I’ve found works best is to focus on building out a simple site with the main concept of what you are looking for, turn on pay per click ads to measure user interest, then work to develop a long term strategy for attracting visitors be it paid search, natural search or community posting.  Here is a basic outline of my three part approach for building an initial online presence for small businesses.

Start out simple

Building out a website can be incredibly time consuming, with the intial phases seeming the most daunting.  Coming up with unique content, a solid layout and proper messaging can take a very long time, especially if the developer is working part time and the business owner has strong feelings about the messaging and image they want to portray on the site.  My recommendation is to build something simple to get it up and running quickly.  If both the developer and business owner understand the primary focus is on simplicity and time-to-market, they will be much more open to flexibility with an understanding that the details will be worked out and finalized in future iterations of the site.

Pay Per Click Is Your Friend

Start pay per click campaigns through Yahoo or Google as soon as the initial site is up and running.  Once you build the simple site, you will soon find that you have little to no traffic coming to the site.  Google alone may take several weeks to index your site and, even then, its unlikely you’ll rank well for any common terms if you are in a competitive market.  There are likely to be many other larger, more well established competitors already in the market.  Use pay per click campaigns to test out the competition and learn about the market as quickly as possible.  An investment of a few hundred dollars will allow you to learn some great details about your market in as little as a few days.  The key questions that will be answered by a small investment in pay per click ads are:

  1. What is the cost per click to advertise in the space?
  2. What percentage of visitors to the site are potential customers (inquire about the product, fill out a lead form, etc)?
  3. What types of search terms are people using to find your site?
  4. What sort of demand is there for your key products and search terms?

Once you have some basic data from the paid campaigns, you’ll be able to develop a picture of what the competitive landscape is and what your strategy should be moving forward. 

For the law firm I’ve been working with, by experimenting with pay per click ads we found it would take about $25 to get a lead through pay per click ads for the type of law they specialized in.  By honing the PPC campaigns over time, we were able to get that down to about $22/lead, but the point is that we were in the right ballpark after a few weeks, knowing roughly what it would cost to attain clients through the PPC approach.

Developing A Long Term Strategy

Once you have a basic website up and have gone through the pay per click research phase, you are at a decision point.  Based on the data you have so far, you should have a rough idea of whether or not further investment in your online presence is worth it.  If you find that it takes $10 in pay per click ads to sell a $5 widget, you’ll understand that you either need to significantly change your cost structure or find a new way to market your product.  My hope is, after the basic build out of the site and the initial experiments with pay per click, you’ll see there is a benefit to your new online presence.  If you see potential, then there are a number of next steps to take in building your presence.

My specialty is in building out natural search rankings for clients.  Depending on your product, I try to find a logical way to build out hundreds or thousands of pages about your product or service.  If you sell 10 different widgets, I’ll build a system to create a seperate page for each widget, a seperate page for each color of widget, and a seperate page for each size of each color of each widget.  The point of these pages isn’t to delight customers in being able to narrow down to exactly what they are looking for, they can do that on their own, the point is to signal to search engines that you are a premier widget shop.  You have lots of widget models, lots of widget colors and lots of widget sizes.  As a small business owner, you may never rank for a basic search like ‘cheap widgets’ (and you may not want to), but if painted, wooden widgets are your specialty, you should show up in the search engine results for terms like ‘yellow cedar widgets’ and my page bulk approach will get you there. 

I hope you enjoyed reading my recommended approach to building an online presence for your small business.  If you have any questions or need a hand with your efforts, leave a comment and I’ll get back to you as soon as I can.  If you would like to try taking your small business online but would rather focus on running your business instead of dealing with the technology aspect, drop me a line and lets see if we can work something out.  I’m looking forward to exciting new projects and am confident you can benefit from this simple, straight forward approach to building your small business presence online.

Jott is growing on me

As I posted a few months back, I hesitantly laid down $300 recently to pick up an iPhone.

It’s an awful phone, but a great little device for everything else.

The iPhone app store offers a ton of free apps for all kinds of uses. Most of the free apps (and probably the paid) are garbage, but there are a few gems.

Jott is one of the cool ones. I learned about it from a talk the CEO of the company gave at Lunch 2.0 in Seattle a few months back.

Jott is basically a scratchpad…that you talk to. You record something, Jott sends it off to a server with speech recognition (or a real person if necessary) and then saves it in your Jott account as text. If you don’t have an iPhone, you can record and replay Jotts on the phone or through their website. It’s all free, AWESOME!

Google Ending Free Dinners for Staff

Update: Turns out this news was bogus.  Jim Goldman over at Tech Check (CNBC) contacted Google and Google completely denied the rumor.  Here is the link to Jim Goldman’s CNBC article.

Rumors are swirling that Google will be ending its free dinner service for employees and that the announcement will be made today to staff.

The stories of Google perks are a great part of tech lore. Post the dot-com era where crazy perks were the norm, Google has reinvented ‘posh’ by offering employees free meals three times a day.  Fancy chefs, custom dishes cooked to your liking and lots and lots of free candy served to attract and retain existing staff and create a sense of jealousy among those working for other tech companies.

Word is that the free dinners just got out of control.  Employees were bringing their whole families in for the free meals, expansion of the employee base led to Google outsourcing the kitchen duties to a third party, and things were just getting crazy at the google plex.

Poor guys at Google, what are they going to do now?

ValleyWag: http://valleywag.com/5040986/googles-food-perks-on-the-chopping-block

Minyanville: http://www.minyanville.com/articles/GOOG-YHOO-MSFT-perks-Meals-dinners/index/a/18656