Move Ubiquitous: A Proposed Shift In Strategy and Thought for Move.com
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The Seedy Underbelly of Spyware Subsidies for Windows Hardware: Why PCs Are So Cheap
Do you ever wonder how PC makers can profit from a selling $399.00 laptop? Did you know software vendors pay PC makers big bucks to load up your low-cost Windows PC with trojan horses and/or spyware disguised as “trial software”? Well, I have a story to tell you about my experience in a conference call that sheds light on this clandestine industry looking to mislead you and squeeze every penny they can from you.
What compelled me to blog about this subject started with a conversation I had with a woman about a PC decision. I was speaking with a colleague of mine recently regarding the purchase of a laptop. It is no secret that I am a Mac user and I admit to my bias right up front. I suggested a Macbook for her purchase and it amazed me that the myth of the Apple premium still prevailed in the minds of non-techie consumers.
My colleague somewhat dismissed my recommendation based on her belief that Apple computers cost more than Windows PCs for the same functionality and even cited a Microsoft commercial she recently watched on TV that proved her point. I debated whether to actually engage in this conversation with her or advise her on a Windows PC purchase and let the Mac discussion go. But, I recently had an experience with the inside workings of the PC maker market that literally made me ill and I had to share it with her and I feel I need to share it with you, too.
About three months ago, I was invited to a conference call with a MAJOR antivirus software company and another MAJOR content delivery company who has push technology products that enables marketeers to “push” communicate with users via the Window’s system tray and the applications themselves. Examples include trial software like antivirus, spyware and data back-up tools that are pre-installed on your brand new Windows PC. After a period of time, you get messages popped to you when you boot your computer reminding you to sign up online, that your computer needs protection or that your trial period is about to expire. Other examples include CD/DVD burning tools, games and photo/multi-media programs.
What was alarming about this discussion was that both MAJOR players were seeing how they could leverage the push technology to “grab” more market share in selling subscription services and upgrades by being “more aggressive” in the messaging and exploiting consumer fear over security concerns and data loss. Essentially pushing messages that tell the user that their computer is “at risk.” They were seeking higher “conversion rates” using on the fly push messaging technology to instill fear in the their users. They also made no bones about the “trojan horse nature” of what they were trying to do and laughed about the irony of the meeting topic. Yuk!
Essentially, this was a discussion about installing active, live spyware on the users Windows PC to promote anti-spyware and anti-virus software. Keep in mind that both parties on this conference call were MAJOR players in the space.
Another thing I learned is each of these vendors pay PC makers a fee to pre-install their “software” on low-end Windows PCs and laptops. This is one way PC makers are able to get prices down on the hardware they sell to consumers and why you find that Dell will sell the identical computer for less to a consumer than a small business. Essentially, software vendors subsidize the end cost of a Windows PC by paying the PC for preloading their “crapware” on your Dell or Toshiba.
This accepted business practice is outside Microsoft’s circle of control because they do not control the user experience or the hardware/software relationship (as Apple does). What winds up happening is that the Windows consumer ends up with unsecured, bloated, slow and inoperable equipment. And, the PC makers expose their customers to the seedy underbelly of the gotcha scam artists of the affinity marketing wing of software companies looking to extract more and more money from their installed customer base. All of this is without regard to productivity, innovation and the user experience.
I sincerely hope Microsoft goes after PC makers who exploit their customers this way. But, it is an age old practice that has billions in revenue on the line. So why buy an Apple instead? This is not allowed in the Apple developer world–when you buy an Apple computer, the cost is not subsidized by spyware and your computer will work just as good in a year as it did when you bought it. Sure, the initial cost may appear to be higher, but the actual end cost is likely less because you won’t need to pay for antivirus subscriptions or the GeekSquad to clean up your 30 day old Dell. If you must have a Windows computer, pay the extra money for a business level system that does not have preinstall crapware on it. If you just don’t like Apple, consider Umbuntu as an alternative. Like Apple, spyware is a “no-go” for Umbuntu or other Linux based OSs.
By the way, my colleague ended up with a Dell, but she bought the small business configuration for more money than a Macbook. LOL.
~DK
The Burden of Social Network Business Models: There is a Better Way
The buzz around social networking seems to have slowed a bit, but the ubiquity of discussion about social media is still very much alive. As major media outlets like cable news, network television, radio and producers of goods and service find social networks invaluable sources to keep in contact with their audiences, social networking sites like Twitter, Facebook and Bebo continue to find ways to monetize their traffic and network data. Will there ever be a solid financial model that will support the continuation of free, ad supported social networks?
According to a January post on All Things Digital, social network giant, Facebook’s 2008 EBITDA income is only $50 million, resulting in a $150 million cash-flow negative year for Facebook. Now, 2008 was an extraordinary year for Facebook. The presidential election raised the level of public awareness to levels that make other websites envious. Even with anemic revenue figures and an ambiguous roadmap to profitability, Facebook enjoys a financial valuation of over $15 billion and a loyal source of capitol from the likes of Microsoft.
Clearly the potential for commercial success is there for Facebook. With a growth rate of over 270% in the 35-54 year old demographic, the social network giant is not having network retention issues. But still, how should the management leverage this growth and retention without compromising the stickiness of its functionality and loyalty of its user-base?
Targeted display ads are clearly in the revenue roadmap for Facebook. They offer pay per click ad services and offer more robust right-bar display ads for larger accounts like banks, automotive, insurance and others. But is this ad model scalable? Other social network sites have tried and have somewhat succeeded with the subscription model. Reuion.com (now MyLife.com), classmates.com and others offer reduced features for free and full functionality to users who pay a monthly fee. The subscription model was established on the outset for these sites, so introducing a pay to play structure is not an issue, but if Facebook, MySpace and Twitter introduced a subscription product, a network revolt would ensue and it would be all over.
So, should new social network and web 2.0 sites adopt the subscription model or go for the very long, expensive task of ad supported services like Facebook? I think establishing a premium social network for more distinguishing users might have some traction, but you then become prisoner to adoption. Yet with great branding, gorilla marketing and very high standards, this might work. Apple’s Mobile Me (formerly .Mac) subscription service is regarded as a premium services that users find to become an integral part of their iPhone and Mac experience. But, in the social networking world, almost everything you can imagine is free to users.
I like an all-hands approach to revenue models for social networking sites. Offer services on a subscription basis, rich functionality for free supported by targeted keyword and display ads, but also from the onset, establish policies that allow the company to aggregate and enrich its data and package it as a refined data product. Unlike Facebook, social network sites should work out mutually beneficial deals with the media giants for featured content. Instead of providing free channels that CNN and MSNBC financially gain from at your expense, workout better ways to reach their audiences and sell that access for a fee.
Social networking is a tough financial game as users have been trained to play for free. I think this is actually a good thing as I am part of the “web as the last frontier” crowd. I enjoy the unpredictability and chaos of the web. We technologist should be idealistic and rebellious. We should recoil from conventional thought, but we need to be mindful of the long run if we plan to be finish the marathon. Ethics, architecture, innovation and revenue are all part of the equation.
~DK
Now Your iPhone App is up on the App Store, Now What?
On April 21, 2009, Jack the Rabbit (my experiment in iPhone App absurdity) was approved and “ready for sale” on the iTunes App Store. To be honest, I had mixed expectations. If you recall my previous post on this subject, the idea of Jack the Rabbit as a gag-style iPhone game was possibly a ridiculously ingenious idea that might just be a bit. So, as Jack the Rabbit was live, I waited with baited breath to see the numbers of downloads accumulate by the thousands.
Sad to say, the downloads at $.99 have been slow. Most of them are likely from my closest friends and people from work. But I did notice some international downloads. The slowness of the progress sparked my curiosity, though. Why did Sound Grenade and Big Mouth take off faster and with more force than Jack the Rabbit? Both of those examples are equally quirky (somewhat useless) apps that seem to be in the same genre as Jack the Rabbit. What is their key to success?
Sound Grenade is free, supported by Ad Mob display ads, but Big Mouth is priced at the tier 1 price mark just like Jack the Rabbit. Both games show up high enough for casual impulse downloads, which is something Jack the Rabbit is not benefiting from. Clearly my app would greatly benefit from better placement on the App Store. It fails to even show up when you sort by release date. So, instead of standing by, complaining, I decided to poke around and what I found was a fairly obvious set of solutions for the web marketing savvy.
According to Appleiphoneapps.com, SEO is a huge part of getting traction on your app. Some insider tricks include carefully place mentions of other apps by other developers. Those mentions generate keywords that make it more likely that your app will show up in search results. Other tricks include editing the application details also brings up new activity on the app, creating new flashier icons and of course the version release seems to attract attention. But the fancy mega pages on the App Store are invitation only from Apple.
Admittedly, just instinct, I think some basic gorilla marketing and having a special site for your app always helps. Don’t expect a “build it and they will come” approach to extract all the potential sales from your hard work on developing your App. So far to day, Jack the Rabbit has generated 50 sales in one week. We are considering other steps to boost sales, but at this point, a jack off game seems to be more amusing to me than the iPhone and iPod Touch crowd. Then again, patience may prove to be my best ally. I need to learn that in general.
In the meantime, download Jack the Rabbit, see what you think and post a review on the App Store. I love hearing feedback, no matter what you have to say.
~DK
MSNBC Selling Ads for Government Grant Scam Companies: Grant 360
If you log into MSNBC’s website, you will notice a very frequently trafficed advertisement for Grants 360, a company operated outside the US in the UK that advertises they have access to allow people residing in the US to get free governement grant money. The ad features a picture of a man holding up a government check for $12, 493.00, implying that if you engage Grants 360 you, too can get free money from the government.
The details of this offering is that:
- Pay for a $1.95 processing fee and they will send you information on how to get free money from the government.
- The catch is that you give them your credit card and if you do not cancel in 24 hours, you will be charged a monthly recurring fee of $57.61 on your credit card.
- Grants 360 also slips in a $38.21 charge for access to their “Tax Guide” also charged to your account.
- To cancel, you have to send them an email with the required information and they will not charge you.
This is clearly a scam, gotcha campaign designed to catch people off guard and trick them into accepting a recurring bill that can total of $731.48 per year. It is also highly probable that you will have a difficult time canceling your account in time and they will loop you into at least a one month charge that you cannot get back.
People, please do not fall prey to this predatory, deceptive and unethical advertisement. You should never have to pay for such information. This type of marketing is designed to get money from you with no value add. They information Grants 360 sells you is information readily available for free from grants.gov and irs.gov.
What’s worse is that MSNBC should take the higher road with their advertisers and not allow this garbage from Grants 360 to be displayed for us MSNBC viewers.
Chime in, let MSNBC know that you do not accept their behavior. I have no issue with advertising as long as the advertisers actually sell something meaningful and that is not constructed with mal intent. Let the FTC and the Justice Departments in your area know about this scam. Lets put a stop to this and hold the avertisers and the media companies that allow the trash in their content accountable.
I have written extensively on this subject. Below is the roll of content on Sprawl3 on this subject:
http://sprawl3.com/blog/2009/02/04/facebook-misleading-users-with-display-ads-grant-access-club-scam/
http://sprawl3.com/blog/2009/02/17/quick-update-internet-scams-and-how-to-avoid-them/
http://wordscause.com/2009/02/17/update-on-internet-scams-and-how-to-avoid-them/
http://sprawl3.com/blog/2009/03/09/update-on-government-stimulus-grant-scams/
~DK
Small Daily Disasters in Offshoring: When is Enough Enough?
The daily complexity of getting information to and from the offshore teams brings about a multitude of inefficiencies that would make anyone question the actual reasons management decided to leverage overseas contracts with developers. I am in the midst of questioning this situation from many fronts and I would like to use this post to clarify my view on the subject and offer an insider’s perspective why choosing to “offshore” is a poor choice and in the process ethical questions around this subject and how it related to our economic health in the United States.
First, let me outline my current situation is some details so you have context for my perspective:
My current employer develops website products for the B2B marketing sector. The types of products we offer center around web accessible tools that allow medium and small businesses to offer new products to existing customers. These products include website building tools, marketing tools, discount portals for business products and resell technical support products. The core development tools and technology is not specialized and our technical intellectual property is only our back-end tools that allow customers to manage their custom packages of products. The type of tools we use are largely PHP, MySQL and Java. Forgive my obscurity, but I cannot be too specific on the what and how of my company; the point I am trying to make is that we are not doing work that requires talent in short supply in the United States or even the states where we are located.
Our current team structure is a small, three persons technical team in the US and a 16 persons team between overseas teams. The idea is that the overseas teams do the actual coding needed to build or repair products and the local team simply manages the architectural road map and technical specification of new products. Because of the lopsided concentration of the teams overseas, both the product and the technical staff in the US are highly dependent on the capacity and volume of work from the off shore teams. Truth be told, the “goals” or intent in the division of labor between the US and off shore teams never meets the objectives. The bulk of what actually gets done is performed by the local staff and the off shore teams do work that really is overflow from the local teams–the work they cannot get to in a given day. The technical managers have attempted on several occasions to make the steps to push the flow of activities over seas, but the need for immediate response and the undisciplined approach of sales and product to development cycles do not provide the opportunity to properly instruct the off shore people to meet speed volume and quality expectations.
Based on six months of observation and experience, attempts to alter the work flow have failed because of the need for opportunistic development and time to market pushed by the business side. So, in essence, my company needs a nimble, flexible technical team that can respond to opportunities with context and less direction that an overseas team needs to function. But this is an idea that meets complete resistance and when it boils down to it, the reasons are surprising yet predictable and definitely not informed by wisdom. When I press, here are the reasons I get for why we have and outsourced overseas foot print:
- Cost: The current cost of an FTE in India is 30% of that of a US based employee. The cost of an FTE many overseas locations are roughly 50% of a US employee.
- Tax benefits: The burden of taxes on US employees is not a factor for outsourced labor. Moreover at certain levels, there are employers can take advantage tax loop holes on the IRS tax code that allows employers to keep profits overseas if they happen to use other countries in which to incorporate.
- It looks good to prospective buyers or investors: It gives the appearance that your company can handle big, complex multinational production. Its also seen as “cool.”
- Volume: We can take advantage of around the clock development hours.
- Talent Shortages: The talent is not available here in the States.
While on the surface, these reasons may seem valid, especially when companies are worried about the bottom line. But, these reasons are not fully informed and are short sighted. Here is the counter argument for each of these points:
- Cost: While and individual costs of our outsourced labor is less on an hourly/daily rate. Typically and almost universally, the quality and amount of effort required to meet product expectations is more than double that of the local team. For example, the time and effort to produce our most recent launched proved to be three times more than estimated. Its not that the skills of the offshore team were under par, its not that they lack any individual requirements to be great software developers. Its how they are viewed by management and by the product development teams–they are commodity labor. Assembly line workers, assembling code. Extra investment in the people on the team lowers the margin, so they get little to no internal support and are usually asked to perform work in ways they would never ask a US employee. So, if you factor in the extra time and cycles needed to support the inefficiencies brought about by the desire to use “cheap” labor, you end up spending more to get the same job done. Moreover, the opportunity costs are almost immeasurable in our case as we spend nearly double the time to get the same amount of work a local team could do in half the time.
- Tax benefits: I have to admit, I am not fully versed in tax loophole science. I know that some state and federal tax requirements on employees based in the US make it tempting to just go elsewhere for help. Moreover, if you can set up shelters in other countries, companies can take advantage of tax havens by realizing income in those off shore entities they set up. But when it comes to gaming the tax system, there is a social cost. Take this case for an example: the cost of the overseas footprint is $1.2 million/year. In this situation–a tiny company is shipping $1.2 million in labor costs overseas. That $1.2 million is not recirculating in the local economy or used to create local jobs that provide tax revenue to local and state governments. The countries to which we are exporting this cash are not consumers of the company’s products, nor are they contributing to the intellectual capitol of the local business district. The money saved, is kept at the top levels where wealth and spending patterns are already fixed. Immediate tax benefits might be there for the executives or principal owners, but the erosion of domestic capitol is exacerbated by outsourcing.
- It looks good to prospective buyers: Does it really? I am part of the upper management community. When M&A conversations come up, whether the “A” part of the acronym has an outsourced engineering wing never plays part of the decision making. Its all about intellectual property, market share and brand. Many of us think that the chicness of outsourcing is laughable. If a company has a market in India, having a team there makes sense, but simply outsourcing to make you look “cool” is dishonest and amateur. Being utterly dependent on overseas labor to survive is an indication of wasteful spending, misaligned priorities and shows a lack of creativity.
- Volume: The idea sounds good…having the capability to code around the clock is great, but if the core team spends all their time fixing quality issues, misunderstandings and out of context decisions, then you are doing everything twice. For a small company, this concept is lost on the simple lack of scale in the overseas teams. The need for a large overseas team just does not pan out. The cost may be 50% less per FTE, but local talent would require half the staff and time to produce the volume because work is only accomplished once.
- Talent is not available in the US: In today’s economy this is not true and, in fact, it is not true in most cases and in most economic cycles. Your company simply has to be attractive enough for talent to want to work for you. Moreover, talent is not a commodity. Its an increasingly valuable, appreciating asset if you view it that way. People, the right people, give you an edge in business or they don’t. How are you supposed to compete if you view your core talent as a commodity that can be outsourced to another overseas firm? What does that say about your products? Now, in the case of highly specialized needs, say like language memory software–you might have to look to countries that have a concentration of expertise in that space. All roads do not lead to cheap labor. Specialist in some overseas industries are very expensive because they add value, not just mindless production. Most internet and software expertise can be found in the US. If you are smart, you will know that sometimes a solid academic in computer science can fill nearly any need when it comes to tech product development. Specific language skills are not a factor when you have a scientist who studied the theory of programming languages in college and who views languages and protocols as tools not skills in and of themselves.
I acknowledge that I am not objective when it comes to this subject. My perspective is clouded by negative experiences and a core ethical belief that treating any human as a commodity is immoral. And when it comes to US companies worried about decline consumption of their goods and services, they have to look in the mirror to see who is the cause. The trend of rewarding cleaver marketing over quality and innovation pushed the US into a paper economy that brokers production of ideas to overseas factories and promotes sales of services over building things.
In the end, my efforts to improve the efficiency of my own situation is slow going. We are doing work twice at half the price per cycle and I am watching unemployment numbers in the US rising at alarming rates.
Building My First iPhone App: Things I Wish I Knew
I am on the cusp of launching my first iPhone/iPod App, Jack the Rabbit, so I thought I would reflect a bit while I wait on Apple to let it loose on the App Store. Let me begin with a bit of a story; I promise that it is relevant.
Back in January, I was having dinner with some colleagues of mine in Florida. Less so me, but we are all nerds and the entire dinner conversation centered on tech. Most of these guys I hang out with when in Florida are hard-core UNIX geeks that take immense pleasure in their mastery of obscure technologies. The boys around the table are what I call alpha nerds; not alpha males in the physical sense as they fit many of the stereotypes you might hold when picturing a nerd: balding, chubby with a terrible sense of fashion. They’ve manage to adapt in spite of their physical shortcomings pretty well by developing their minds to acquire power and social status through knowing how to operate technology most people can’t understand. They have a secret vocabulary only few can even keep up with in conversation, so in their element, they rule the roost. You plunk them down outside of that element and they are like fish out of water.
When it comes to their equipment, they choose to run Linux as the only OS on their machines. They see “smart phones” as unhackable evils of necessity and the industrial design of their devices are their lowest priority–its all about power and upgradability. Carrying around a thick 17 inch laptop with a whining fan is a badge of honor because they can bring down the power grid during a reboot if they want. They prefer command line computer programs and know how to avoid a mouse every step of the way. They are antiestablishment types who rail against Microsoft for just being Microsoft and think Apple is for wimps.
During dinner, we started on a discussion on Apple’s SDK (software development kit) for the iPhone. I attempted to get them to appreciate the pure beauty of its simplicity and touted the benefits of Objective-C as a programming language. They weren’t easily convinced and still considered Apple’s technologies as soft, consumer toys. One of the guys at the table offered a ridiculous idea for an iPhone App: a game that made it appear the player was “jerking off.” The only thing funnier than a fart is making fun of a poor chap for pulling it. The idea of the game was actually stupidly brilliant–after all the Sound Grenade was pulling down $150,000.00 per month and all it did was make a nauseating high-pitched sound, but it was a fun gag for some demented individuals. Well, a jerk-off game might have some legs.
I said, “Lets make this stupid game and see what happens.” and they agreed.
So, a few alpha nerd UNIX geeks and myself started to look into what we needed to do. The first few hurdles almost stopped us dead at the dinner table. You see, we didn’t know everything about the Apple iPhone SDK before we got all riled up about making big money from a jerk-off game. Here is what you actually need to even get started:
A Macintosh. Not an old one, you need an Intel Mac running OS X 10.5 or higher. I was the only one in the group that had a Mac. The idea of having to buy one sent the UNIX boys in a tailspin. But they managed to find a friend that had one they could use. Buying one would mean admonishment from the really fast, unstable and extremely ugly computer club.
A developer account. That is easy enough.. oh wait… that required an iTunes account and $99.00 to get in? Hummmm. Fine. I was able to get one via Sprawl3 for all of us.
An iPhone or iPod Touch for each of us. That seems fairly obvious, but they UNIX crew didn’t like being indoctrinated in the COS (Church of Steve [Jobs]). “You can’t use an iPod on Ubuntu, right?” Well, we are developing and iPhone App, so drink the cool-aid and like it, damn it! Well, only one actually ended up buying a device. I supplied the others.
Learn Objective-C and the OS X: Should be easy enough. OS X is based on UNIX after all, right? Well, I think the boys just enjoyed talking smack, because I heard an ear full about how screwy this Mac thing is the whole time. But, they managed to suck it up and get down to business.
We are off and running. I stitched up the requirements–and a buddy of mine did the graphics and animation and the developers figured out how to program in O-C. Now, how do we get this app up on the App Store? This is a bit of a process and one that went smoothly. It was entirely business, but if I had someone to give me pointers, it would have been a bit less daunting. So here is what I learned:
When you sign up, you need an active Apple (or iTunes) account. But you can start the application process to be an iPhone developer before you pay any money. Fill out all the information exactly as instructed.
Make sure you have all your paperwork handy. If you are a company, have a few forms of ID (Articles of Incorporation, Statement of Information, Fictitious Business Name Form, et al) and your EIN (Employer Identification Number). If you are not a business, you need the typical identity information.
Have access to a fax machine. Apple will only take faxed documents for the application. (weird, huh?) You will get notified via email at least two times before you are prompted to pay for your right to build iPhone Apps. The wait time is anywhere between 2 to 4 weeks to be approved to access the iPhone Developer Portal.
Once you are approved, you are allowed into the iPhone Developer Portal. (This is an insider’s resource for you and your development team.) It is not the instant access you might think to upload apps, it just gives you tools you need to generate the credentials you need to install apps on your test iPhone and to give your developers access to those credentials so they can do the same.
So, now you have your App done and you’re ready to upload it and sit back and get rich, right? Not so fast… you have more steps to do. I suggest getting these following steps done as soon as possible. I opted to wait until “we were ready to upload.” Wrong move, trust me.
Now you need to set up an iTunes Connect account. If you plan to sell your app, you will need to have your bank account information and your EIN handy. This takes time to get approval, so do it early.
Sheesh! Well, you’re finally ready to load your program on the App store. You get it up, figure out that you rounded the corners on your icon and have to redo it. You got the certificates and signing of your application worked out for the hundredth time and finally the upload is accepted. Now, blast off, right? Nope…
Read the fine print. It takes on average of 7 to 10 business days for Apple to approve your app for the App Store. So, bake in that time and a little simple app can actually take you over a month to get done and up on the store.
Well, Jack the Rabbit is ready to go, I sit here reloading the iTunes connect window, waiting for my status to change from “In Review” to “Ready to Sell” while I write this. Its been three days and I hear some people get approved in a single day. I must have the wrong contacts in Cupertino. Oh well.
Lessons learned.. too many to mention, but I have to tell you, the process was fun and definitely less difficult than developing for other mobile platforms. Apple did a good job with setting up the whole iPhone Portal; I assume this portal is pure cash flow for them.
As for the UNIX geeks, they are back to Ubuntu and Redhat and their 20 pound Toshiba Satellites while we all wait to see our adolescent idea make us all rich. I’ll keep you posted on how it goes. Oh, and by the way, Linux users can use an iPod. Mozilla released SongBird, an open source take on iTunes. It even lets you load music to your iPod. So, there Ubuntu boy:-)~
~DK
P.S. Jack the Rabbit was suppose to come out today. April fools on me, I guess.
The Tyranny of Wireless Contracts: at&t and Verizon Gunning for Your TV, Phone and Laptop Too
Do you have a two-year contract with a cell phone carrier? Everyone I know does. Cell phones are seen as a necessity and in business, they truly are. As US consumers continue to migrate over to more and more wireless services from carriers such as at&t, Verizon and Sprint we find ourselves perpetually locked into agreements we often don’t fully understand or actually need.
In a recent article posted on MSNBC’s website, Peter Svensson discusses a new trend that wireless carriers are dipping their toes into subsidizing notebook computers with built-in 3G wireless capabilities. Carriers like at&t are offering customers deeply discounted netbooks in trade for two-year contracts. The idea is that the cost of a notebook will be recouped many times over time through monthly access charges to use their wireless networks.
On the surface, that cheap netbook from at&t may seem like a good deal for consumers interested in having mobile computers with everywhere connectivity, but if you find yourself late on your bill, the carriers will have a “kill pill” that will enable the carrier to disable the notebook remotely. Moreover, the wireless carrier will be able to have some level of computing control and tracking of your subsidized computer that can and will have severe privacy implications to the user.
This contract-to-play business model is the life blood of these wireless providers. Giving the subscribers a mandatory sense of obligation to the service for which they are paying. Often, newer technology becomes available while the subscriber is in mid-contract. Wireless providers will often offer early upgrade options for new phones to entice users into extending their agreements with their carriers. If you find yourself wanting to get out of your contract, be prepared to pay a healthy “early termination fee.” These fee are typically around $170.00 or more just to get out of your bind.
Wireless carriers are also dipping into the wired world. Verizon is aggressively marketing its FIOS all-in home communication service, land line, television and internet. at&t is also doing the all-in product approach with terrestrial communication services. Like their wireless business model, consumers are enticed by low-cost entry, subsidized equipment in trade for a two-year contract. The non-contract price is too high to seriously considered. Verizon’s most recent campaign offers FIOS Triple Play for $99.00/month with a two year price guarantee (i.e. contract with an early termination fee). The $99.00/month price doesn’t include equipment fees, taxes and all kinds of other bloat. Sound like your cell bill? Thought so…its the same game.
While required for my business, my wireless contractual obligations often intruded in my needs to adopt newer technology. Getting out of contracts cost me several hundreds of dollars over the years. A recent event of my iPhone upgrade to the 3G really shocked me. My fully “unsubsidized” iPhone Edge required a two year contract to activate service with at&t, even though I didn’t receive any financial subsidy from the carrier. For my full price iPhone to be used with another number, I needed to sign up for a multi-year contract with an “early term” fee. That made no sense to me, but at&t didn’t even have the systems in place to fulfill a non-contract service.
In the US, the wireless industry has historically smothered innovation with their arcane business models. Carriers force hardware vendors to use the carrier software on the devices and they put in protections in the product models to service their own interests. Do you ever wonder why every Verizon phone seems to be the same exact experience from every other phone they offer? How about V-Cast or VZ Navigator? Both are terrible products but enable the company to slightly meet the consumer demands for innovation while granting the carrier the ability to charge for air-time and a monthly subscription. VZ Navigator costs $9.99/ month plus air time and its not even “real GPS.”
Apple and Google are not benevolent entities for consumers; they like to make money, but at least the products they offer have value beyond the basics. They are busting the long stifling business practices of the wireless business. Both the iPhone and G1 phones feature robust software and offer the ability for community development, so innovation will certainly come quicker that at&t and Verizon would ever wish it to. Still, contracts and exclusive deals choke competition and enable carriers to play contract games with consumers. Technically the iPhone can work on Sprint and T-Mobile, but that is deemed illegal or at least unsupported by Apple.
Subscribers are often in perpetual contract with their carriers for years and years. And there are no signs of this practice slowing down. As the wireless carriers continue to move into other areas of our communication needs, getting you to sign on the dotted-line will be the mode to engage their services.
I would like to see this contract paradigm seriously challenged or abolished. I think its bad for the consumer, bad for innovation and ultimately bad for the economy. Carriers should compete on pure technical prowess in features and service. Carriers know that as long as you have an early termination fee, you will put up with most of their “crap” and passively accept inferior quality and service. New deals and killer prices will continued to be offered to new customers, while you watch your contract timer tick away all the while paying hidden fees you think are taxes.
So, when considering subsidized computers with a two year contract, remember MSN dial-up rebates back in the days. That $300.00 rebate put you in the back seat of the broadband revolution for terrible MSN dial-up service. Imagine where netbooks will be in two years from now? Do you really want to pay for it for 24 months?
Find ways to escape the tyranny of contracts in your life. When you do, let me know. I would love to hear how you did it.
~DK
So, Your Customers Hate Your Redesign? Should You Care?
Change. We have all signed up for change and a lot of it this year. As a culture, we elected change in our government on the basis of “change we can believe in” and we are undergoing a massive financial and cultural change in our country. Change is a word that seems to be inner-twined in every conversation, yet change is often rebuked and even feared in basic parts of our lives. Its ironic, really… but this rebuke of change seems especially tied to technology that we use everyday.
Take the negative backlash on Facebook’s recent “change” or redesign of its site. Accordingly to TechCrunch, 94 percent of users survey “don’t like the redesign.” 94 percent? Wow… that is a huge risk–what backlash! Now waves of Facebook users will flock to Bebo, right? I don’t see it that way, but the survey results got me thinking about change in general and what really drives companies to take the leap to move beyond their own design conventions.
Yesterday, I needed to get my BMW 325 serviced and was given a loaner car while in the shop. The loaner was a 2008 328i. It was basically was an updated version of my car. In addition to the outer appearance, BMW decided to change the ergonomics of the car substantially. I found myself confused by the relationship with design conventions that the new model held to with the changes they introduced. In fact, I was annoyed by most of the ergonomic changes and could not wait to get into my familiar older model. I thought the inclusion of all the car’s interior controls located on the center console was ingenious in the older model 3-series. The door controls all at finger distance from each other. Everything is in a logical, intuitive place makes one appreciate the simplicity and thought in the interior design. This subtle design decision set BMW from the mass market sedans and I love it.
But the new 3-series follows the pack in terms of interior ergonomics. The door/window controls are on the doors and the center console is just a console for storage and housing the shifter. The window controls are a stretch to reach and you have to think about where your fingers go to roll a window. I was annoyed more than you know about this change. I hated it. Moreover, I love BMWs amber instrument panels and utter simplicity, even barren appointment of “tech” on the console. If I wanted a moving gadget bag, I would have bought an Infinity or Lexus. The BMW is a ultimate driving machine, not a computer game, right? But, the new 3-series includes more gadgetry than I expected. The changes in design created a sense of “I don’t like the redesign” feelings. I was not pleased with the evolution of my beloved 3.
As I started the car, I swore to never buy one of these new ones. Off to the Audi lot! But then I drove new 3 and understood that most of the changes were improvements on a seemingly perfect design. I adjusted in a few hours and my perspective changed and all of a sudden I realize this was no sellout car–it was a 3-series through and through.
If I were consulted on design changes by BMW, I would have held the designers back. I would demand the retention of all the aesthetics and ergonomics I cherished in my old model. My 3-series would stay the same, forever.
What this story really describes is that an entrenched and enthusiastic following is not the best judge of direction for a company. You cannot depend on your customers entirely to tell you what they want, need or even can adjust to. Planning strategic decisions on our seemingly inherent fear of change will force stagnation. If it were up to me, the 3-series I love would never change. It would just get faster, but the form and ergos would stay constant. Moving ergos around–not an option for me. So, I am not a good judge of design innovation for BMW. I am too wed to the design in place and not objective or able to be selfless.
When it comes to change, some companies move forward with the understanding that their customers are not the best judge of direction. Apple has never been a company to look back and is often criticized for leaving legacy customers behind on product updates. If it were left to Apple’s customers, we would still be using parallel ports for printers and the floppy disk drives would still be on every Mac and PC in the market–even though it was a useless storage option 5 years before its demise. Apple has trained its legions of followers to leave the past behind and accept change as part of the deal. You cannot survive the Apple community if you depend on consistency and predictability. Still, it stings when you learn your new Macbook Pro just lost its relevance to a new wave of interfaces. Take the new Apple LED Cinema Display. Apple left behind its own products that did not have the mini-DVI interface. If you don’t have a new Mac with the new video interface, this display is useless. Even those who have the first generation Macbook Air are out in the cold because micro-DVI has been retired as quickly as it was introduced.
Pissed off about thoughtless change? You can take it that way, but it is not thoughtless and in terms of Apple’s new display– it is a massive leap forward in design and interface technology. Its far better than anything out there and needs to exist to move the industry forward. Apple needed to push off legacy technology to move forward. Apple needed to leave behind VGA, DVI and Micro-DVI to pull it off, so they did without apology.
So Facebook probably expected backlash or complaints. Any change to a well known interface will cause the change-phobics angst. The 94 percent disapproval rate is sensational, but hardly news worthy. It will take time for people to adjust and learn how to leverage improvements offered by the design and after the users take the change for a ride, it will still be Facebook.
What we in the web development community need to remember is that usability testing and decisions based on user feedback alone will not drive innovation. Challenging convention and innovation sometimes comes from listening to your intuition, not the voices of the masses. Your product’s essence needs to remind users what they are driving by delivering the right experience–you might need to move the window controls to pull off the greater improvement.
~DK
Update on Government Stimulus Grant Scams
On February 4, 2009, I wrote an article, “Facebook Misleading Users with Display Ads: Grant Access Club Scam,” outliningg ads displayed on Facebook that sought to entrap consumers in a endless loop of credit card charges with the hope that they too can cash in on the Obama administration’s stimulus plan. The Grant Access Club was my main focus, but copy cats and even the LLC that owns Grant Access Club have proliferated hundreds of similar scams. Finally, the media started to take notice.
Today, National Public Radio, NPR, ran a story covering the same scams–although it didn’t deal with Facebook as a vehicle for the scams.
Tamera Kieth from NPR writes, ” The economic stimulus package was only signed last month, but already there are numerous scams trying to lure people with promises of free government cash. The Federal Trade Commission and Better Business Bureau are sounding alarms.” (Stimulus Package Attracts Con Artists).
Check out Kieth’s article on NPR, or listen to the podcast of the story, but remember… Sprawl3 broke the story over a month ago 
~DK
