Continuations

The EBook Wars

Mon, 08 Feb 2010 09:37:40 -0500

I was away last week and so am late to the party when it comes to commenting on the fight between Amazon and book publishers. Here are a couple of observations.

First, I was surprised it took so long for this fight to start. It is a great example of what I call “fighting over the digital pie.” What was most fascinating about it is that none of the publishers even made a mention of how much authors would receive. At present, this is all about trying to support the existing cost structure of publishers with strong parallels to the fight between networks and cable.

Second, there has been some discussion around what it actually costs to put out a book today and how that might change with ebooks. The debate seems to be largely between two extremes: either that ebooks should be much much cheaper (often unsubstantiated) or that the only cost to actually go away is PP&B (paper, printing & binding) which makes up only a small portion of the total cost. Looking at several actual breakdowns of costs, not surprisingly the truth is likely to be somewhere in-between. Pre-production costs will remain for ebooks and depending on the number of formats and additional markup could actually go up a bit. But marketing costs are up for grabs as authors can start to build their own audience via blogging and books can be discovered via social networks. Wholesalers should go away and retail margins should be highly compressed. Publishers’ cut too is likely to get compressed as their value-added diminishes in a world where authors can be directly in touch with readers. Taken together, I believe that at least 50% of the existing cost basis of the book business could be obliterated for ebooks.

Third, even with a reduced cost basis, if ebooks are to be traditionally priced (which is to say the same price for each copy), they need to succeed with DRM, something that the music industry failed at. Personally, I abhor DRM because of its implications for computing devices (closed, not hackable, not trust worthy). But I am afraid that for the first time we are getting close to highly DRM’d general purpose devices succeeding in a mass market due to their superior design and user experience. It would be quite a Faustian bargain for all of us to accept DRM in the name of convenience and design. More on that in a separate post — until then I suggest reading Alex Payne’s post on the iPad.

Fourth, nobody seemed to suggest that charging the same price for a book to each reader is an antiquated idea. A literal adaptation of the historic price discrimination model of starting with a hardcover and then moving through softcover to mass market paperback shows a lack of imagination. There are many better and more effective ways of capturing consumer surplus for digital goods. Think Farmville!

Fifth and finally, throughout most of the discussion there appears a presumption by publishers and authors that there is some kind of god-given right, or short of that a cultural mandate, for them to be able to cover their costs. That view seems to ignore most of the history of publishing during which great works were authored but very few people made a living off it. I am convinced that we will see great books published in the future completely independent of the business model (or lack thereof) of the publishing industry and the income from book sales to authors. Whether it is mico-patronage a la Kickstarter, or income from a day job a la Rowling during the early Harry Potter work.

I am hopeful that in the end we will make it to a DRM-free ebook future with a new renaissance of content but for now it looks like we will have to watch the titans battle it out.

What Do AAPL and AMZN Have, that GOOG, Twitter and FB Need?

Fri, 29 Jan 2010 10:09:38 -0500

Each has more than 100 Million credit cards on file to enable 1-click purchases of content, apps, and virtual goods. When I compare doing anything involving payment on other platforms the experience is cumbersome to the point of being useless. My 10-year old son had no trouble hijacking my Kindle, finding the store and getting a book for himself. And that’s on the Kindle! On his iPod touch he blew through the app budget we had set for the month within the first two days of having it. It will be interesting to see who figures out how to catch up with Apple and Amazon and how they do it. In the meantime, companies like Zong with their Zong Plus offering are trying to get there independently. If they get to 10s of millions of linked credit cards, they will make a juicy acquisition target.

iPad: First Overhyped, Now Underestimated

Thu, 28 Jan 2010 08:16:52 -0500

Yesterday’s “reveal” of the iPad was predictably anti-climactic. With the hype that had built up, anything short of a mind-reading, teleporting device had to be a bit of a letdown. But we are now likely to enter the phase of underestimating the iPad. People are already obsessing about such flaws as the omission of a camera. Or the lack of support for Flash. Or the absence of multi-tasking. These critiques mostly miss a couple of crucial points. First, this is of course extremely similar to the history of the iPhone - what, no Cut-and-Paste? Apple very quickly came out with significant product improvements for the iPhone. I expect that it will be no different for the iPad. Second, while Apple wants you to have a great web experience, they want you to have an even better experience for certain categories (games, videos) through native apps for which Apple takes a cut. If they get enough devices out quickly that will succeed. Third, out of the gate the iPad meets four of my five personal requirements, which I had set out here http://continuations.com/post/321509690/slates-my-personal-requirements . It is much cheaper than had been rumored, making it possible to get more than one for the house. It looks like it would survive a coffee spill and 10 hrs of battery life would be an entire week of occasional usage around the house. Because it doesn’t have multi-tasking it is much simpler to operate. There is a Wifi only option. The only thing that seems to be missing out of the gate are user profiles that would make it easy to share. Bottomline, this is very much the device that I anticipated and I believe that it would be a mistake to dismiss it as an XXL iPod Touch.

More Great News for NYC's Startup Ecosystem: NYC SeedStart

Wed, 27 Jan 2010 12:55:28 -0500

Congrats to Owen Davis and everyone else involved for launching NYC SeedStart 2010. I have long argued that there is no such thing as too much seed capital and SeedStart is a terrific addition. It is amazing that until now New York City did not have such a program, given the success of YCombinator, TechStars, Dreamit, Launchbox, SeedCamp, FBFund Rev and others. I am also thrilled to see that NYC SeedStart has adopted a simple financing model - $20,000/team for 5% of the company. Now very much looking forward to the first crop of companies!

DLD10

Tue, 26 Jan 2010 05:33:35 -0500

Heading to the Munich airport after 2 days at DLD - a thoroughly enjoyable and productive conference. Here is my report from last year: http://continuations.com/post/73536016/dld - I was happy to see that the biggest nuisance from last year had been addressed: there was now a wall between the lobby and the main presentation area. I spent even more time than before in the lobby meeting people - some pre-arranged but mostly spontaneously. I only saw a few sessions/panels - which were all quite good. The mix between media/Internet and science/art worked very well. The party at the P1 was a blast and despite the incredibly loud music I met a bunch more really interesting people there (including a German entrepreneur with a US-based startup). Definitely planning to come back next year.

Minimizing Jet Lag (for Trips to Europe)

Mon, 25 Jan 2010 04:07:32 -0500

With family (parents) in Germany, two investments in London, and conferences (eg DLD) and vacations, I wind up flying to Europe at least half a dozen times a year. Here is the system I have come up with for minimizing jet lag (without the help of pharma!): 1. Take a late flight - ideally 7pm or later 2. Eat dinner at airport before boarding 3. Right after boarding, set watch forward to European time 4. Get eye shades and put them on right away and rest. Sleep if you can, doze otherwise. 5. Don’t eat on the plane at all - drink water only 6. First meal should be a late breakfast when you get to Europe 7. Don’t go to bed when you get there. Just start the day. 8. For a short trip stay up late in Europe and don’t schedule any meetings before 10am - makes it much easier to remain on US time All of this together works super well for me - always eager to learn tips from others though (eg found Burton Sleeper Hoodie via Avner Ronen).

Staying Fit

Fri, 22 Jan 2010 07:40:50 -0500

Bryce has had some great posts about his analytical (and tech supported) approach to fitness. I used to find staying in shape to be quite the challenge — I would start the day with great plans of going to the gym or exercising and then wind up scheduling another meeting or answering emails instead.

The solution that Susan and I have settled on is to go out every morning as soon as there is enough light and hit some tennis balls (regular in summer and paddle in winter). We are lucky to have public courts a short walk from our house and to have a German Au Pair who makes sure the kids eat breakfast and get ready for school. But the key has been to make it a routine that we adhere to even when it is freezing or windy or drizzling (we are not tough enough for pouring rain).

While this has been great for feeling fit all day, we have both found that over the last couple of years of sitting at desks or in meetings for most days we have lost a lot of flexibility. So now we are experimenting with family yoga on weekends. It’s fun to have the kids involved, albeit comical how much more flexible they are. Hoping we can turn this into a similar routine and stick to it!

An Ongoing Lack of Imagination in Pricing (of Digital Content)

Thu, 21 Jan 2010 07:43:02 -0500

Yesterday brought two announcements and one rumor that all relate to the pricing of digital content: the New York Times announced that it plans to add a paywall in 2011, Amazon announced that it will offer authors a 70% royalty rate, and book publishers are apparently trying to convince Apple to act as a distributor with prices set by the publishers. All three of these are interesting and important.

Starting with the last. It appears from the Apple discussions (if the rumor is correct) that publishers still think they can and should price ebooks close to or the same as physical books. They are freaked out that at lower ebook prices the market would shift more quickly and profits would disappear faster than if they artificially keep ebook prices up.

Amazon is actively trying to subvert this. They have been selling books on the Kindle for significantly below retail. Many publishers have tried to argue that this is bad for authors who now receive less money. But as this latest move by Amazon makes clear, it is all about who gets to keep how much of what consumers pay. In the traditional publishing model the royalty to authors tends to be in the 20% range. It is easy to see that at a 70% royalty rate in a direct model an author will make almost twice as much even if the Kindle book sells for half the price.

Still — this amounts to not much more than a fight over the digital pie between publishers, Amazon and Apple. The discussion is still stuck on a ridiculous holdout from the physical era: charging every customer the same price. In a post almost a year ago on the economics of abundance, I wrote:

One important alternative that is not receiving nearly enough attention is to stop charging the same price to everyone. In economics this is know as “price discrimination” and there is an extensive literature on when and how it is possible. For instance, with so-called “perfect” price discrimination everyone would pay exactly what the good is worth to them.

The New York Times is taking a small step in this direction by following the Financial Times strategy of frequency capping visits. This allows for two possible price points: free, if you use it a few times a year and $x (NYT has not announced a price), if you use it more than that. It is a feeble attempt to distinguish between folks who value New York Times content a lot and hence visit often and those who don’t.

This is not a bad idea, it is just not a new one and not a particularly powerful one. The real power is in letting consumers pick their own price. This has of course long been the case in the not-for-profit world. If you like NPR you can listen to it for free. If you like it a lot you can contribute. There are many different levels of contribution letting you pick just how much you like it! Kickstarter has done a fantastic job of bringing the same model to the funding of individual projects.

Yet despite such clear examples, Amazon, Apple, the New York Times, book publishers, etc all seem stuck on essentially the one price model. Can we please have some more imagination in pricing? It is time to start creating offers that let readers self select based on how much they value specific content. How would this work? In the case of the New York Times here is just one of many possible examples. Put on a weekly series speaker series and make priority access to limited tickets / limited realtime online viewing spots part of a higher priced subscription.

Some Real Estate Tips for Startups

Wed, 20 Jan 2010 06:30:00 -0500

Now that the cost of servers and bandwidth has plummeted, office space tends to be the biggest expense following payroll for a lot of web startups. Here are some quick tips on what to do.

When you are just getting going, simple get some desks, ideally at a friend’s startup. New York City also has some great deals in the NYU Poly incubators. Whatever you do, it should be month-by-month with zero lockin.
As you get larger, it’s best to sublease on relatively short subleases (12 - 24 months). You don’t know how fast you will grow and you can get much better rates (generally) on subleases. Don’t make the leases too short, you don’t want to constantly be moving as it is super disruptive.
Push off getting a primary lease as long as possible. You’d be surprised how many people you can fit into a space when you really try!
When you finally have to get a primary lease, try to negotiate an out after some time (e.g. after 5 years).
Look for buildings that are likely to have expansion space for you if you grow (buildings with other startups are good because they have natural turnover).
Don’t ever sign anything but a short-term lease without talking to your board members. This will easily be your single biggest fixed expense and you want to make sure everyone is on board.

You might also want to consider Chris Dixon’s fun list of things a startup needs in picking a location for an office.

Nexus One Needs Simpler Default UX

Tue, 19 Jan 2010 06:48:44 -0500

I have been carrying around a Nexus One for a couple of weeks (in addition to my somewhat nervous feeling Blackberry). There is a ton to like about the Nexus. It works fantastically well with all of Google’s services. The setup is a cinch — just sign in with your Google account and let the phone and the cloud do the rest. The screen looks great and transitions between apps are fast. It can run multiple apps simultaneously. The turn-by-turn directions are awesome.

Given all that, I find it surprising how complicated some of the default user experience is. Here are just two of the things that struck me the most. First, the four buttons at the bottom of the phone sometimes do different things if you keep them pressed longer. For example, the home button, which clearly should take you to the home screen when you press it longer sometimes brings up a special overlay with additional features. Shouldn’t a one time press of the menu button do that? Is there really a need to have a button do two different things as the default configuration of the phone?

Second, the home screen is in the middle of a set of possible screens. So you can have more app icons both to the left and to the right. In addition, there are more icons that you get to by pressing an onscreen icon that looks like a bunch of tiny icons. That’s for instance how you get to settings. By default the settings icon does not appear on the home screen itself. So this means when you are on the home screen and don’t see an icon, there are three (!) possible places it could be: to the left, to the right and on the “all icon” screen.

What strikes me about both of these is that they might be good for power users, but they make for a needlessly complicated first time experience. I can’t help feel that it goes against the grain of some engineers to “dumb down” the experience, but I believe that it would help tremendously with adoption.

P.S. The four bottom buttons work much better when I use my thumb than any other finger (which is fine with me because I like single handed operation), just seems weird that when I try a different finger, I need to sometimes tap three or more times to make it work.

Lean Startup and Network Effects (Patience, My Young Padawan)

Fri, 15 Jan 2010 13:41:51 -0500

I am a huge fan of the Lean Startup philosophy (and Eric Ries / Steve Blank who have done so much to evangelize it). Recently, i have been thinking a lot about the relationship between this approach and network effects. For most web services, network effects are the key (only?) sustainable competitive advantage. But for every hyper growth network effects story (Twitter, Zynga, etc), I am convinced there are hundreds of web businesses that could have meaningful network effects, if only they kept at it. Instead, many startups run out of steam while still on the flat part of a (potentially) exponential growth curve. This can take many forms other than actually running out of cash. It could also be a sudden change in business model, e.g., from direct-to-consumer to whitelabel businesses (hard to pull off!). Or it could be a pre-mature merger in an attempt to force critical mass, which rarely works because of the inevitable integration friction. The huge benefit of the lean startup approach is that it allows for patience instead. It is important for entrepreneurs to keep this in mind especially after they — or their competitors — have raised new rounds of financing. As an investor, I find I constantly need to remind myself of that as well!

Don't Compete, Leapfrog (iPod)

Thu, 14 Jan 2010 12:03:32 -0500

Recently, someone (I believe it was Nicholas Carlson) said to me: “what most people forget about the iPhone is that it is also a very capable iPod.” This was said in the context of a discussion of how successful Android will be this year. Now this is an interesting alternative view to Bill Gurley’s assertion that the head-on comparison is wrong because Android aims at the much broader market of folks who have feature phones today. But: for everyone who wants to upgrade from a feature phone and already has a lot of DRM’ed content in iTunes the iPhone still makes a ton of sense (and that is a lot of people).

Palm’s approach to this was a series of ultimately futile attempts to let the Pre sync with iTunes. That was an attempt at competing by being compatible. Another approach is to compete by doing the same, in the form of music stores, such as Mewbox (Android), 7digital (working with Blackberry), or amazonMP3. But that kind of a head-on competition doesn’t provide much of an incentive for folks to switch. Anyone with DRM’ed content would have to repurchase that content.

Instead, leapfrogging seems the way to go. At home, we have had a Sonos with Rhapsody for a while and the subscription model works incredibly well. What has been wrong though is the price point, at least for broad adoption on mobiles. Now, however, it looks like we will soon be getting $9.99/month subscriptions streaming (I have been testing a service on my Blackberry) and love it). That to me is the answer for how Android and Blackberry should compete with the iPhone when it comes to content and I certainly hope that video won’t be far behind.

Google and China (Wishing for more US Credibility)

Wed, 13 Jan 2010 08:38:16 -0500

I have worried on and off on this blog about the growing reach of Google. But yesterday I was thrilled to see Google take a determined stance on the issue of censorship and — by implication human rights — in China. I very much hope that the team there has the fortitude to stick to its plan, even if that means a rough road ahead for one of the world’s largest markets. Now lets see if any other Internet and IT companies will follow suit. Many of them have lower margins and more competition in their core markets, so this will be harder for them to do, but it would be terrific.

In the meantime, this goes quite a way towards making me think that “don’t be evil” might be more than a cute slogan. Which in turn makes me wish we would do more to fix our credibility problems as a country when it comes to human rights and the environment. I wish we had the courage to go ahead with a shutdown of Guantanamo, even if that results in releasing people who will want to attack us. And I wish we would aggressively cut our consumption of oil and our emission of green house gases, even if others might try to get a temporary competitive advantage from that.

Software Patents Need To Go

Tue, 12 Jan 2010 09:02:48 -0500

My partner Brad put up a great post on the USV blog yesterday, arguing for an independent invention defense against software patents. A while back, I had proposed an alternative, a change in how litigation works. In that post, I wrote that:

Some folks have suggested doing away with software patents altogether as a way of addressing this problem. That strikes me as too dramatic a solution as I don’t believe that all software patents are evil. For instance, if someone were to spend years and lots of money to develop a new and improved way of recognizing images then it is not clear to me why that is less worthy of patent protection than say a new machine or a new drug.

I have since then changed my view of that. After a lot of digging into what has been patented over the years in software, I am now convinced that neither a change to litigation nor an independent invention defense are sufficient.

Instead we need to hit the restart button by invalidating software patents wholesale and either not allowing them going forward or only in some incredibly restrictive form. That now puts me firmly in the camp of Brad Feld, who has a post today supporting Brad’s effort and trying to rally more investor support for fundamental reform.

Running around a lot at the moment, so expect a longer post in the future detailing the process of my conversion!

Fighting Over The Digital Pie

Mon, 11 Jan 2010 10:00:28 -0500

The demand for books, music, news, TV, phone calls is constrained by the time that people have. In a mature market (e.g., the US) that time is growing at best at the rate of population growth (low single digits), but in reality is likely to be shrinking as other online activities (e.g., social networking) take up time. The supply for all of the above, however, is increasing by one or more orders of magnitude, as anyone can be a publisher and as the cost of bandwidth has plummeted.

The basic mechanisms of economics are not broken (yet) and when rapidly growing supply meets with steady or shrinking demand, price drops — in many cases all the way to free. That is exactly what is happening in a number of industries. But now we are getting into the next round. Demand is so inelastic (again because time and attention to consume are essentially fixed), that as price drops the total industry size starts to decrease. And industries with declining market sizes have many interesting aspects that we now all seeing themselves play out.

When the pie is getting smaller the only way to have more is to take it away from others. That is at the root of the fights over cable fees (Fox vs TimeWarner), paywalls (newspapers vs Google), rights to scan (book publishers vs Google), net neutrality (web vs telcos), music (artist vs labels), and so on. These are all fights over how to distribute shrinking pies. Along with these fights we will also see more mergers and more calls for government regulation. I predict that things will get a lot uglier before they get better!

Promoting Scratch! (Imagine-Program-Share)

Fri, 08 Jan 2010 07:35:20 -0500

I am going to my kids’ school this morning to meet with the head of the computer lab, the principal and the district’s main computer person to talk about Scratch (that is assuming it stops snowing!). The school is beginning to take first steps in teaching Scratch and I want to convince them to step up the pace. I firmly believe that learning how to make computers/robots do things (rather than just do things with computers/robots) will be a critical skill going forward.

Scratch is wonderful for many reasons. It is super easy for kids to get started and build something that is immediately meaningful. I have described why that is before:

[Scratch] is a visual programming environment for kids. Instead of writing code in a text editor, kids snap together templates to form scripts. The scripts are attached to sprites. Creating sprites is also super easy in the integrated graphics editor.

Instead of drawing graphic, kids can just copy and paste them off the web. But even better, Scratch comes with a community of published projects, which can be downloaded, modified, extended, etc. much like in the open source world. All of this is captured well by the tag line of “Imagine-Program-Share.”

The point I want to make this morning is that the use of Scratch can and should be pervasive throughout instruction rather than being something taught separately. For instance, the kids have been using Keynote to present several science and history projects. For all of these Scratch would have offered an interesting alternative. Scratch is great for just telling a story with moving pictures or showing a mini simulation. So Scratch could and should even be part of English class — create a miniature play in Scratch. Of course, it is also fantastic for most of math instruction.

The key message to students should be that “programming” computers is no longer something separate to be learned by a few “geeks,” but instead relevant to all areas of knowledge and practice. My goal this morning is to convince the teachers of that!

Slates - My Personal Requirements

Thu, 07 Jan 2010 08:00:37 -0500

Even if Apple were to announce something entirely different on Jan 27 (just love the idea of the biggest headfake yet) it is clear that 2010 will be the year of slates, with Ballmer showing off HP’s upcoming Windows 7-based slate. So much has been written that I won’t even try to link to any of it. I have read a bunch but it’s impossible to have read it all and so the following points may well have been covered by a bunch of other people. Instead of speculation about what capabilities will be delivered by whom, I have been spending time thinking about what capabilities I would like to see personally.

First is price. I really want a price point where I could get a bunch of them — there should be no “hogging” the slate. I want there to be a slate in reach easily in any part of the house. That will make it useful at all those times where you’d like to quickly access something (middle of dinner conversation, homework, watching TV, etc).

Second is user modes. This is closely related to the first point. I would like the slate to not be tied to a person. Instead, when you could pick up any slate in the house, select your icon and be where you left off. Ideally, there would also be an obvious guest mode. So you can leave the slate around the house the same way you might leave books or magazines.

Third is durability and battery life. The thing shouldn’t scratch super easily — it will be lying around in unpredictable places. Having to plug it in every night would be annoying at best. Built-in support for plug-less charging via a mat or a cradle would also be highly desirable.

Fourth is connectivity. I don’t see carrying the slate with me outside of the house — maybe that is simply shortsighted on my part and I am prepared to be blown away — and so don’t care about 3G. But for the use cases that I would love a slate for, killer strong and fast wifi is an absolute must. I don’t want to sit in the garden and have to go inside to get to the next page of something I am reading.

Fifth is simplicity. This is probably the most important by far. I don’t want to have to trouble shoot another set of devices around the house. The kids should be able to use them out of the box. And I am not just talking about our own house. There are my parents (in Germany — another reason why wifi is more important than 3G) and my mother-in-law. They all use computers and so I am not asking for miracles here, just a real consumer device.

Those are my personal key requirements. I could see getting three or four slates just for our house if they meet those requirements. Having written about it I am now more curious than before about what will actually be available (so that really backfired!).

Next Decade for NYC Tech Startups

Wed, 06 Jan 2010 08:24:35 -0500

Tonight I will be on Brian Lehrer’s TV show, together with Chris Dixon and Henry Blodget, to talk about what’s in store for NYC tech startups over the next decade. At least that is the putative topic, although I would not be surprised if the conversation goes elsewhere. Here are some points I am planning to make:

It has never been easier to hire top tech talent for NYC startups. And that’s not just because folks no longer want to work (as much) in finance. It is because people want to live and work in NYC. Google has done a lot to promote this, which I have in the past called Google’s gift to NYC.

Seed and angel funding, which I believe are the critical missing link and have been in (relative) undersupply in NYC are looking up also. FRC now has a NYC office. Founder Collective announced its fund. Individual angels are also back following the rebound in the stock market.

All the top VC firms are now investing in NYC. Boston-based firms have been doing that for some time but have really stepped up the pace (for instance, Bijan from Spark Capital seems to be in NYC more than in Boston). It used to be that West Coast firms would not venture past Silicon Valley (they barely invested in San Francisco), but now they are here all the time. Just as three examples, Accel, Redpoint and Kleiner all have significant investments in NYC.

NYC now has all the key ingredients of a startup ecosystem, including (in addition to the above) service providers focused on startups (lawyers, recruiters, etc.) and a growing number of serial entrepreneurs.

As important as any of the above are the shifts that are taking place in where startup opportunities exist. Silicon Valley and Route 128 (anyone remember that?) completely dominated the infrastructure space. But a lot more opportunities these days exist at the application and content layers. Graphic and social design are becoming as (if not more) important than technical design. These are areas that NYC has traditionally excelled in.

Finally, a whole new generation of entrepreneurs are “net native,” meaning they have grown up with the Internet. They are not only too young to remember the dominance of Silicon Valley and Route 128 but more importantly they have internalized the Internet’s global reach and place less emphasis on geography for their startups.

All told, I believe this will be a terrific decade for tech startups in NYC. I look forward to tonight (7:30pm) and am eager to hear any other points folks think worth mentioning.

Avatar - Crossing the Uncanny Valley

Tue, 05 Jan 2010 06:54:00 -0500

UPDATE: As the comment by vruz correctly points out, I am wrong in my use of the term uncanny valley, exactly because the creatures depicted in Avatar are not human. Still believe that we are seeing the beginning of something new and important!

On Sunday, I finally got around to seeing Avatar in 3D (not yet IMAX, which was sold out). I was excited to find that it is in fact the 3D and computer animation breakthrough that we have all been waiting for (OK, at least that I have been waiting for). After about the first 20 minutes or so, I completely forgot about the “sunglasses” on my nose and the immense depth of view felt utterly immersive. The net result — again speaking strictly about my own experience — was a sense of reality, despite the fact that the movie mostly depicts a completely foreign world inhabited by 10 foot aliens who are blue to boot!

Folks have complained about the fairly wimpy story line, but I feel that misses the boat. It is a bit like complaining about the bad layout and graphic design of early web sites in say 1995 and forgetting to marvel at what the web will bring. What Cameron has accomplished is crossing the uncanny valley both with respect to computer animation and the use of 3D. We have had plenty of successful computer animated movies to date. And we have had plenty of use of 3D in the last couple of years. But we have also had the awful experience of movies such as Polar Express, which clearly illustrate how deep the uncanny valley is. With Avatar, we instead have a first clear indication that it is possible to get to the other side — to deliver an experience that feels real.

I believe that this is an important breakthrough that will have repercussions beyond cinema. In another few years we will be able to have the same type of experience in a realtime computer setting (in a funny co-incidence on of the leading companies in that area is called Avatar Reality). To date, implementations of shopping in a virtual mall online have fallen dramatically short of being there and a flat (2D) functional UI, such as Amazon, has been by far more attractive. In some ways that is just another instance of the uncanny valley. And for some use cases that will always be preferable — e.g., you are in a rush and know exactly which item you want. But for “shopping” as in going with others, looking at random things, running into people, etc. an immersive experience could be transformative.

In the more immediate future, I look forward to a second viewing this coming weekend on an IMAX screen. I believe that not seeing other audience members and having the screen fill the entire field of view will further strengthen the effect (including sound coming from behind the screen).

2010 (?)

Mon, 04 Jan 2010 06:21:33 -0500

Well, it’s the 4th of January, 2010 and I have so far written and crossed out 2009 at least half a dozen times. My brain is apparently reluctant to accept that it is 2010. After all, in a few minutes I will be braving the cold on the way to a (probably frozen) Metro North train, instead of firing up my jet pack or better yet beaming myself into the office. On the other hand, I did see Avatar last night and that is a mind-blowing experience that definitely qualifies for 2010 (if you are among the three people who have not yet seen it, you *must* see it in 3D).

But this is not the only contrast that has me scratching my head about 2010. Usually after going on vacation and staying away from the Internet for a week or more, I find that my mind clears up. With respect to 2010 that has, however, failed to be the case. Here are a couple more examples of why.

1. Stock Market. There is the potential for at least one blockbuster Internet IPO in 2010 (see for instance Techcrunch’s top 10 IPO candidates). If that were to happen, it might throw the door wide open for a slew of companies, sort of like Netscape’s IPO did (OK, maybe not quite that much). At the same time though, I look at tech company valuations and valuations more broadly and can’t help thinking that the market has gotten way ahead of any real economic recovery. And it only takes a couple of posts over at ZeroHedge to make me think we might be headed for another meltdown. Very confusing.

2. Mobile. Both iPhone and Blackberry adoption is continuing to grow rapidly. Google is about to release the best Android phone yet. Companies making use of new mobile capabilities (e.g. Foursquare) are receiving tons of attention. Yet at the same time, a lot of this feels precarious. Apple exercises too much control via the app store approval process (as well as app store placement and TV ads). RIM doesn’t really seem to care about developers (or making it easier to develop for the BB). Android could or is already splintering into too many devices with sufficient differences to make life hard for developers.

So at the beginning of 2010, I see tremendous opportunities but equally formidable threats almost everywhere I look (Google? International Affairs?). I am therefore starting the year (and the decade) with an unusual mix of excitement and trepidation. Does anyone else feel this way?