Strategies for a discontinuous future.

Sunday, November 21, 2004

MercuryNews.com | 11/15/2004 | Akimbo breaks ground with Internet TV service

I've been watching them for a while as my buddies and I had the same idea a couple of years ago, but we never got around to building the box. The fundamental risk of running into legal troubles in the US was just too high. Let's see if Akimbo can survive the Anti-Innovationism of US lawmakers. For now, I find the stratgic implications of Akimbo's technology choices to be more interesting. I don't understand why they'd choose to build it on Microsoft platform.

Let's think about this. Akimbo may want to reassure the Hollywood mafia about the security provided by Windows DRM. However, barely ever has a DRM scheme survived contact with widespread adoption. Secondly, consumer electronics makers are too distrustful of Microsoft to let Windows DRM become industry standard. They do not want to meet the fate of PC manufactureres and let Microsoft become the de-facto platform, just as the cell phone makers have successfully resisted Microsoft so far. For example, Sony and Philips aquired significant DRM IP with the Intertrust acquisition. Perhaps Akimbo wants to enter into a technology licensing relationship with Microsoft. Fat chance of that happening : Microsoft has no incentive to do it. May be Akimbo wants to build upon "Network Effects" and "First Mover Advantage" to create buyer lock-in. Gawd, that's so 2000 that I don't even want to ponder upon the stupidity of that premise. Finally, even if Akimbo does become successful, what's there to prevent Microsoft from muscling into their market? Akimbo would've just succeeded in seeding the market for Microsoft, just like so many others did before. Microsoft can easily co-opt Akimbo into its ambitious IP-TV strategy, which seems to be gaining traction in the market. This leads me to believe that Akimbo is walking into a strategic minefield unless they are really positioning themselves as just an acquisition play. That is a very risky strategy, because their only potential buyer is Microsoft as nobody else in the industry would want to own a Windows based set-top box for the reasons outlined earlier.

I think the potential for radical disruption can only be unleashed by making a completely open platform based upon Linux and free (as in freedom) codec standards such as Ogg-Vorbis. Tivo has gone further along this model than anybody else, but I still don't think it has gone far enough, unless it's cooking up something with the Strangeberry acquisition. (Here's a cool account of how Tivo leveraged Linux to build its platform). Tivo just hasn't pushed for becoming a de-facto platform. I personally think that there is a real need for a radically open set-top box platform with a solid programming API that can allow people to freely share video content, and easily bridge the TV and IP networks. We've been waiting for just too bloody long to disrupt the media industry, and this will not happen until a dominant design emerges that completely re-writes the value equations for the media/CE/networking/software industries.

Today's value propositions are all wrong : RBOCs and Cable MSOs want to nickle and dime you to death by upselling you on "value-added" services like VOIP and digital TV, Hollywoods wants to keep churning out crap but charge you for accessing your own hard drive, sue your 12 year old daughter and prevent you from taping broadcast signals, Microsoft wants to get a piece of every CE device in your living room by co-opting it into the Windows platform and so on. None of that has any real value to Joe Consumer who hates getting locked in and could not care about the technologies used to serve him : all he really wants to pay for is a rapidly declining flat fee for accessing fat pipes in a dumb network, and get his voice, video and data service through unfettered access to any and all software or devices that he fully owns, and pays for just one time when he buys them outright. No nickle-and-diming, and definitely no bloody monthly bills. He wants to zap the annoying commercials through his Tivo as consumer marketers continue to remain intellectually bankrupt, can't wait for his RBOC to get skype'd and sent to hell, buy his music at ITMS in an open MP3 format, play it everywhere from his PC to IPod to MP3 player in his car as he damn-well pleases, share it with his friends and order his movies through an on-demand video service by clicking a button on his remote control that downloads HDTV quality video on his set-top box in mere seconds. The real value drivers have always been instant gratification and ever lower prices. The only new value driver introduced by the Internet is shareability, which BTW, adds value to Joe Consumer's social capital as well. As the gap between what an increasingly annoying and evil industry wants to sell and what Joe Consumer wants to buy continues to widen, the opportunity for a truly open and programmable set-top box platform still remains wide open.

-- Mahashunyam // 6:34 AM //

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