Technology Futures

I'll be on vacation through August 9th, and updates may be light. Have a great week!

The EETimes has an interesting article on how U.S. cellular providers are choking off innovation and profits in the electronics industry. As I have long predicted, cellphones are absorbing the features of standalone gadgets like PDAs; PDA sales have been flat for some time. One of the hottest "gotta have" gadgets is the Palm Treo 600, which is a cellphone with the Palm PDA built in.

So what's the problem? Fewer things (and fewer chargers) to lug around sounds good, right? Not when you can't buy any of the new gadgets on the open market. Try buying JUST a Treo 600. You can't do it. You have to buy a cellphone plan with it; when you do so, you get a discount off the "Manufacturers Suggested Retail Price" (MSRP), which we all know means nothing in an open market.

By tying cellphones to service plans, the cellular companies have created an odd kind of monopoly, in which they have captured and now control the marketplace for handheld consumer devices. The EETimes article discusses the potential impact on the digital camera market--as cellphones get megapixel cameras built in, the digital camera marketplace will disappear. Not only that, consumers lose choice and competition, which keeps prices low. MP3 players are another threatened market; by adding extra memory, cellphones become music players, and the MP3 marketplace disappears.

Consumers are already losing in this situation, and it will only get much, much worse. Bundling, which is what the cellular providers have been doing, is a classic strategy for locking a marketplace up and creating a monopoly. In effect, gadgets like the MP3 player and the digital camera become free, in the sense that the real cost is hidden in the cellphone service contract. And the cellphone companies are now demanding two year renewals on service contract, making it harder and harder to switch.

Microsoft destroyed the market for Web browsers in exactly the same way. Internet Explorer, by giving it away, wrecked the market for every other company. But Internet Explorer is not really free; Microsoft bundles the cost of IE into the cost of Windows--you pay for IE whether you use it or not.

Ironically, just as cellphone number portability is available, it is becoming harder and harder to make use of it. I'd love to have a Treo 600, but my cellphone provider does not offer it, making the feeble and pathetic excuse that "no one wants it." Uh huh. That's why Palm is making them as fast as they can. But the electronics industry is groaning as well. All these cellphones are being marketed at low margin OEM prices directly to cellphone service providers. Profits are nonexistent when you can't move any product at all at dealer or retail prices. It's the same squeeze that Walmart uses on its vendors--sell to us at your lowest possible price or we'll buy from someone else.

In the short term, consumers get lower prices (Walmart) or more features (cellphones). In the long term, when choice is driven out of the marketplace, we all lose bigtime.

I reported here last week on new data that shows that broadband is now in about 30-35% of American homes. The new study was widely reported in the media, and Anthony Townsend, who is doing an extended study in South Korea on the social and economic impacts of broadband in the country, reports that the news "...made my Korean friends laugh at how far behind the US is."

South Korea has achieved virtually 100% broadband penetration, with DSL and cable broadband available nearly eveywhere, and fiber to the home is quite common. South Korea has a national goal of fiber to every home and business by 2008. What is the goal for your region and community?

I'm always amazed at how badly some Web sites perform. Here are two examples I found yesterday.

I visited the site of a national architecture/design firm that is well known. I could overlook the annoying Flash animation on the home page that made it virtually impossible to read anything (a product of the MTV generation, undoubtly, who believe that any image that remains on a screen for than ten seconds is "old fashioned"). But within two clicks, I found myself on a page that informed me that I was using an "antique" browser and that I needed to immediately upgrade to Explorer 6.0. Yes, the one that CERT, the national Internet security folks have said is a serious hazard that should not be used. It is supremely arrogant for a company to ridicule potential customers by telling them they have "antique" browsers (I was using the latest version of FireFox, which was released about three weeks ago--hardly "antique"). It costs almost nothing to design a Web site that works well on a variety of browsers. It is intellectually lazy not to do so, and from a business perspective, just plain foolish.

But wait--it gets better. This national firm also has a Web design division. When I clicked on that link, I was taken to the home page of one of these firms that buys up domain names and sits on them. Huh? You want me to hire you to do Web design but your own Web site link doesn't work? I'll pass on that.

We're moving a few blocks away next month, and I decided to see if I could DSL from Verizon. Verizon has finally adopted the strategy of most of the other phone companies, which is to price DSL at $30 to compete with the cable companies' Internet service, which tends to run $10-$15 more. I quickly got to a page that told me to enter my area code and phone number, and in a "few moments" it would tell me if I could get DSL service. I waited a "few moments," staring at a little blinking animation that was supposed to tell me something was happening. I gave up and went on to other work, but left the browser window open. About an hour later, I checked back....still blinking, still no indication of whether or not I could get DSL at the new house. Hmmm...think I'll stick with cable modem service a while longer.

How do your community, local government, and economic development Web sites rate? Do they work properly? Do they expect visitors to have a specific browser? Was the design last updated in 1998? Would you still be using paper brochures and documents that were last updated five or six years ago? If no, why are you doing so on your Web site? Who is delegated to check your Web site regularly to make sure that it still works? While doing some work for a client recently, I found that a little piece of software that had been installed to animate some pictures no longer worked on most browsers, and left an image on every subsequent page of the site, right in the middle of text and other images. No one at the company had ever checked recent browser versions against the site. It turned out the code was six years old, and was badly out of date.

On the Web, you get what you pay for. If you don't spend any time or money keeping your site fresh and up to date, you are not going to get the visitors or results you expect.