Priest of the Order of the Butterfly
Posts: 750 from 2003/2/14
From: Earth
A few more thoughts...
I. The medium is the message (again!).
Where the content comes from is important, but what will be the most important issue is HOW the consumer of the content experiences it. This WILL BE the distribution system. In the consumer lies the core value and personalizing the experience to them IS the future. What they see, touch and use is the terminal or port to the digital world. It does not matter how it gets there.
Today, we can and do deliver the promise of this future distribution system to a desktop, to the core of a home entertainment center or to the base station in a "digital home." The Pegasos can fulfill all these roles, because it IS a computer. The Pegasos is just building block #1 toward establishing the fully featured computing environment that will be increasingly demanded from all consumer electronics products seeking to fill these roles. This is what is coming. To stake a claim in this new world of distribution you must start here. The sooner we establish this position the sooner we can gain mind and market share.
Hardware can be optimized, cost reduced and made much smaller. This is why partners like Motorola and IBM are important. The hardware is a necessary development step, but ultimately a commodity. We have secured these relationships. We have the same building blocks as Apple, hardware, OS and applications -- all in one package. Now, the OS and applications should be our focus as they are the key to the end user device. The device itself migrates from a fixed location today to anywhere and anytime in the future (and could still hook up to the TV or monitor). We all have the ingredients ready to go.
You can see an indication of the future of digital distribution with the iPod. Apple is selling iPods not music, but is beginning to assert a role in the distribution of the music itself. For HP to re-badge the iPod as their own is evidence of the strategy we are suggesting. We will not have to sell a million iPods to gain the same acclaim.
The content providers are desperate for a solution. Piracy will not stop with music; the "pipe" is getting bigger. Movies and video games are next. If we can show them the complete package *working* and the vision for the future they will embrace us. Our indications and experience tell us that we can achieve a "tipping point" relatively quickly. Witness Disney's effort to go around the "distributors" with MovieBeam. At the same time, consider Voom from Cablevision (not to mention the forces pushing their scope from cable to include satellite), an organization that you consider a "distributor" today. What they both had to develop was the end user device, because that is what makes the whole notion possible. The end user device is the distribution system. At this point personalization is critical. We can do that. Nevertheless, having an entire system defined and packaged is the key to obtain validation in the broader world.
Akin to the advent of the fax machine, to send or receive you had to have a machine, the objective is to integrate the content with the network itself and introduce an indispensable platform that will usher in a new generation of digital distribution.
The medium is the message (again!).
II. Building a Trusted Community
Establishing a Secure Trusted Internet based distribution system requires completely new innovation. At a minimum it must attend to these issues:
1. DRM
2. Identity theft
3. credit card fraud
It must also have a system of micropayments integrated by design.
This will be a two-way channel. By the way, in addition to providing a solution for the above our system will allow Voice and Video over IP with no further associated telephone charges. This alone creates HUGE revenue opportunities and aids in driving the product into the home. Skype has well over a million users and grows daily. In Italy, FastWeb has had a TV-based service available on its fiber-to-the-home networks for about a year. In November 2003, France Telecom's ISP, Wanadoo, launched in a betatest Visio, a person to person videotelephone service using a PC and webcam. Building a foundation for these applications in the home makes the realization of the same in the mobile space more realistic.
We can be the first to market with the next generation of distribution. The opportunity is even more compelling, because the "system" is broken today and growing less controllable for the traditional content businesses daily. As music moved from vinyl to tape to a CD to where we think things are going: bringing an always on network INTO the digital distribution itself. When this position is further enhanced and actualized by an operating system the final step can be made.
That is the LONG term view.
Thanks for all the comments here!
R&B