Microsoft and Intel (and I'm sure others) contributed part of the blame for their weak Q4 results to increased netbook sales (see my last post), but is this really true? Computerworld is not convinced. I'm inclined to agree with them. I can't remember the last time I've seen a netbook, and I've spent the past year and half in several cities: Austin, Houston, Seattle (current), Paris, Rome, Brussels, Florence, and many others. No matter where I've gone though or how many buses I take, I haven't seen anyone using one of these things. Given how techie Austin and Seattle are, it's hard to believe that there's all of a sudden this huge shift towards netbooks. After all, how many people realize what a netbook is?
So what's to blame for weak OS and PC sales? For starters, we're kind of in a down economy. People are scaling back large purchases, including new computers. I don't think that means that they're going to go and buy a computer that worse than the one they currently have (a netbook) because it's more portable - the idea of owning a netbook seems to just be a cheap luxury item rather than a replacement or an upgrade. I can't imagine anyone thinking that having such a tiny keyboard and screen would be an upgrade, even if they don't notice the weaker specs. Let's be honest though, what's the point in upgrading unless your computer is totally falling apart? My home laptop has been flaky lately (Firefox not loading pages and forcing me to restart the browser or the computer), but I'm still not prepared to replace it. My reasoning is that Windows 7 is going to be out next year (most likely) so to get a new Vista machine wouldn't make sense, but I think for most people they just don't see a much better machine out there that's affordable that they really need. How much do people do nowadays on their computer that isn't browsing the web, word processing, e-mails, listening to music, or looking at photos? There haven't been any great advancements in hardware to make these things better. I think that chip makers should really be optimizing their architectures for these things because my laptop is supposed to be a home entertainment machine but I don't think it does multimedia especially well (aside from having a nice screen).
The other factor to consider is that people really aren't interested in buying desktops anymore. I can't think of any reason to buy a desktop unless it's strictly for office use or you're a hardcore gamer. Of course, when I say strictly for office use I think if you only have one computer for work it's going to be a laptop so you can take it on trips and work from home and stuff - I'm referring to your second work computer. I think that Apple had the right idea with their latest MacBooks: optimize for the notebook market. They put in batteries that aren't replaceable but give you twice the battery life: people are willing to upgrade their laptops because of something like that. They're not going to upgrade just because you make the case shinier or something. It's really all about innovation and knowing your market. You need to bring out the features that your audience has a use case for and then price it competitively. The problem is that not enough people in the market are doing that right now, and Microsoft is going to be in a rut with Windows until Windows 7 comes out.
In fact, the impending release of Windows 7 has probably dealt a bigger blow to notebook and PC sales than netbooks have. Fortunately (or unfortunately, depending on how you look at it), this may not influence enterprise users that much. On one hand, they haven't been marketing it very well at all for businesses and have instead been trying to generate excitement from general consumers. I don't think this is a terrible thing, and maybe they'll pull more features out of their hat later in the year. On the other hand though, Windows 7 will probably work on older hardware so businesses can afford to buy lower-end or older computers. So this goes back to the innovation part: computer manufacturers need to be cost-effective and need to really think about how to satisfy their customers. The only way to survive this economic downturn is to innovate, not to point fingers at external factors and hope that it inspires investor confidence. We'll see how well everyone does this in the next couple of quarters. Speaking of which...
Grim and Good Quarterly Results
Sprint Nextel had a terrible quarter and have decided to cut 8,000 jobs and possibly replace some of them through outsourcing. Plus, they've frozen 401(k) matching for the year as well as any salary increases. Their 2008 net loss was $1.1 billion and lost 1.3 million customers last quarter. While I feel bad for the people who lost their jobs, Sprint had this coming for a while. Aside from the fact that they have crappy phones so AT&T probably drained a lot of subscribers from them, their service is unimpressive as is their customer service (I currently am on Sprint). They haven't been trying at all as far as I can tell over the past year to make anything better for their customers, and I almost quit a while ago for AT&T. I decided to wait a bit longer to see who gets a phone I really want, and hopefully the Palm Pre will be that phone. Sprint really needs the Pre to not fail. Given that they're at the point of selling off Nextel, I don't know how many pieces they'll be in this time next year if the Pre fails. It's not going to single-handedly save them, but it'll at least stop the bleeding.
The other company that announced a bad quarter last week was AOL. They saw a decline in revenues that has led them to lay off 700 employees. AOL has been going downhill for a long time now though and could stand to be acquired by someone who can cut it up and make its pieces work well separately. It really is sad to look at the list of companies laying off employees, and I really hope and pray that this year will see some sort of rebound. I know things won't be vastly different this time next year, but I'm hoping we can see the start of an upturn before the end of the year. More realistically though, it could take 2 years.
It's not bad news all around though: Netflix posted a ridiculous 45% growth in profits with a 27% growth in their subscriber base to over 9 million people. They say that people don't tend to cut out entertainment from their budget though when times are tough because it's an escape from reality, and I guess paying $9 a month for Netflix is just a lot cheaper now than renting from Blockbuster is. Even I'm extremely tempted to sign up with them and I'm never lacking in content on my DVR (Motorola or TiVo HD).
Another company to post gains was Amazon.com with an 18% growth in revenues and 24% increase in gross profits worldwide, partially thanks to lowered tax rates, and a customer base of over 88 million people. However, gross profit margins didn't get much better. You can read all the gritty details, including the Q&A session with Jeff B and friends, here. It's quite an epic read. I think people are just gratefully and happy that our hard work through Q4 really paid off, and it's a testament to the strength of our customers. Amazon truly does focus on the customer, and I think that's an enormous part of why we're able to survive this downtown. We'll keep working hard on making our products better and better and hopefully our customers will continue to support us. I can assure you that Amazon is not going to be squandering these profits - they're going to be invested wisely.
DTV Transition Still On
This is a short story, but I thought it was kind of funny. Remember a while ago when I said that Obama wanted to push back on the Digital TV transition because the coupon program was underfunded and he didn't think people were ready for it (and it would look bad for people who were uninformed if their TVs stopped working soon after he took office)? Well, the Senate had no problem agreeing with him. A lot of techies weren't happy with this though citing that it'll only create more confusion to change the date and if people aren't prepared now then a few more months won't help. After all, people will just go to their local electronics store I'm sure and figure it out, or read a newspaper or something. In a rather shocking move, the House agreed that changing the date would be futile. The margin it lost by isn't that big, but only 6.5 million being unprepared isn't that big of a deal. That means that it's likely that they'll talk to a neighbor on the morning of February 18 or a co-worker and figure it out. I don't expect riots in the street or anything. Coincidentally, I'm getting my TiVo's CableCARD installed on February 18, so I'm sure it'll be super easy to get in touch with Broadstripe to find out when the cable guy will be coming.
This Week in Google
There was a decent amount of Google news last week, so let's start with the bad: YouTube users are pretty unhappy about the audio being muted on their videos. YouTube has been flooded with protest videos and profanity against Warner Music and YouTube. Some people are even hoping that Warner Music folds. It's gotten so ridiculous that even some of Warner's own artists (like Metallica) have had to move their content off of YouTube onto their own websites. There is such a thing as fair use for this copyrighted music, and this purge is completely ridiculous. Hopefully they'll come to their senses, but I don't see how discouraging people from listening to the music you're trying to promote is going to help you survive the current economic climate.
Google is responding to the economy by increasing the number and frequency of some of their advertising. Some of their products have little or no advertising as it is, so I think it totally makes sense to experiment more with those properties. I guess that we'll see what happens at the end of the quarter in their earnings call.
Now onto the really good Google news: they're trying to help in the fight for net neutrality by backing M-labs in providing free tools to see how net neutral your ISP really is by checking how your connection responds to BitTorrent traffic. Aggregating this data could prove to be very useful in giving consumers more information in choosing their ISP and discriminating against those who unfairly block or restrict certain traffic on their networks.
Lastly, Google has released offline Gmail access as a Google Labs extra. I haven't tried it out yet personally, but I know that this is going to definitely push Outlook huggers to the edge when they realize how much lighter and accessible Gmail is. It basically syncs with Gmail regularly and stores items locally when offline to be sent when your Internet connection is restored.
Free Your Phone
The Electronic Frontier Foundation is tired of locked cell phones and the way that gross telecommunications monopolies dangle them as carrots in front of their customers. They've started a campaign to add a clause to the DMCA to make unlocking your cell phone a legal act. It's actually pretty disgusting that it's considered copyright infringement to be able to use that $300 phone you bought however you want. It sounds like Apple's locked-down app store is also in their crosshairs. I'll definitely keep you posted as more develops on this battle, which I'm very excited about.
One more quick piece of cell phone news: Congress is trying to ban the sale of cell phones with cameras that do not make a sound when you take a picture. It wouldn't take effect until a year after it's passed, but it doesn't sound like it's even near being up for a vote. I think it's a pretty good idea. Granted, you can buy an ultracompact camera that can be muted, but that's harder to aim under women's skirts and people who own those don't have them nearly as readily available as their cell phone. Only two small things that should be considered: people should be able to at least choose the sound (they've already thought about this) and the camera should not be such that it can take pictures accidentally in your pocket even when it's on vibrate (my old phone always took pictures in my pocket).
Last Notes
Ok, time for the one-liners!
Network World has a great list of online privacy tips that are just as applicable for adults as they are for teens/tweens. It's amazing how much information people who should know better volunteer online without giving it a second thought.
Kind of related to that: you should always log off of your web accounts when you're using a computer that someone else has the potential to use. College Humor has a fun series of pictures about what stands to happen to you if you don't.
Seattle is now the most wired city in America, according to Forbes! Eat it, Atlanta! Also, Austin has finally made the list at the #30 spot. That's great news for two of my favorite cities in the world!
So much for theories that Apple doesn't want Flash on the iPhone: they're working with Adobe to get Flash working on the iPhone. So I guess iPhone users will have to continue to be patient and keep hope alive.
Lastly, I got my computer working as a home media server for my PS3 after 6 months and I'm really stoked! I thought I'd share this forum post that may help other PS3 owners who have had the issues I've had. I actually had just turned off my firewall because my TiVo was having issues playing music from my computer (though transferring videos from my TiVo works wonderfully), and all of a sudden Windows Media Player asked if I wanted to let "Unknown Device" see my media library as soon as I turned on my PS3! Unlike TVersity and PlayOn, it wasn't laggy for me at all. I just figured out that in Zone Alarm if you go to "Alerts and Logs" you can see the IP addresses that are being blocked and add them to your trusted zone if you want to. My PS3 was one of those IPs. Just a fun tip for any other Zone Alarm users having home media server issues.
Have a fantastic week, everyone! I'm on call for work so I'm counting on a rollercoaster of a week ;)
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