I just had to re-post this graphic from Engadget that shows Android activations in a countdown-style format. It’d be nice to see the iPhone map as well to get perspective, but from the map you can see that Android is definitely growing. Here it is:
Archive for February, 2011
Oh this space just gets stranger and more intense by the day! In today’s news, Amazon launched its instant videos and unlimited streaming for Prime subscribers of more than 5,000 movies and TV shows. Many have noticed that indeed, Amazon is entering the online on demand market much as Netflix did – by buying up the rights to lesser known titles and trying to get their catalogue to a point where customers may find it interesting. A while ago, I wrote a blog on the noise in the marketplace – and now Amazon has brought some big ‘ol cymbals to the raucous.
However, the leading story is not about the noise or the new competition in the marketplace. Nor is it about Ultraviolet and its now even steeper hill to climb to launch a meaningful service (whose silence is deafening, and to tell you the truth, boring to talk about). The lead story here was uncovered by Andrew Wallenstein at paidContent.org who looked through Netflix’s 10-K and found that Netflix relies on Amazon Web Services for the “majority of [its] computing.”
As the filing states, “Given this, along with the fact that we cannot easily switch our AWS operations to another cloud provider, any disruption of or interference with our use of AWS would impact our operations and our business would be adversely impacted.”
Hmmm. If I were in Netflix’s shoes, I’d be pretty bummed out that Amazon entered the video market and controls the majority of my growing computing needs. I’d muse “And these computing needs are driven largely by the MY Instant Viewing service that Amazon now is offering – wait a minute – MY customers.” This comes at a time when Netflix is under increasing price pressure from the studios who are hell bent on and looking forward to, for the lack of a better word, annihilating Netflix. Lucky for the studios, eh? They suddenly have a service they can turn to and use as leverage against Netflix.
So this poses a big problem for Netflix. Not only will content costs skyrocket as the studios look forward to making them squirm, but costs for computing may increase substantially as it faces a grim prospect of moving its computing elsewhere. Either that, or it increasingly relies on AWS at its own peril.
Incidentally, Netflix is off 4.5% as the time I published this to (holy horse sh*t) $225ish. I remember when they were $40. Boy do I feel like a toad.
You probably have heard about Apple’s announcement Tuesday that effectively takes a giant bite out of the revenues of the subscription services that are sold from the App Store. Articles abound, but here’s the best summary so far from paidContent.org:
[Tuesday] Apple (NSDQ: AAPL) announced its intention to tighten its hold on the payment for and the delivery of content through its successful iTunes platform. …Apple will require that all content experiences that can be paid for in an Apple app must be purchasable inside the app, with Apple collecting its 30% fee. The app can no longer direct you to a browser or some other means for completing a transaction. Crucially, the in-app purchase offer must be extended at the same price as the same offer made elsewhere. Though the announcement of the subscription model was the triggering event, the policy extends to all paid content.
So with that fodder, I need to explore (for my own sanity) what the Apple announcement means:
Apple’s greed is unfettered. A “duh” for most, but I’d be remiss if I didn’t riff a bit on this. The fact that it continues to reach into the pockets of its app creators is understandable and a good idea to make some more ka-ching. But, the fact it is demanding 30% of apps that are subscription services seems completely onerous and disrespectful to the services that already have razor thin margins. One could say in turn that the content owners need to reduce their take, but then we just get into a blame game that I don’t have the stomach to get into right now…
Apple may be paving the way for the creation of its own subscription services. With this stiff toll for services to play within the App Store – and outside of it with their requirement that any deal is the same as within the App store – services like Pandora and others might just decide to pick up their toys and go elsewhere. This conveniently clears a way for Apple to offer more of its own subscription services.
Non-Apple platforms may get a boost as services flee the tyranny of the App Store. As services bolt, they need somewhere to go. So that means – possibly – that Android platforms will begin getting more services. Android penetration begins to deepen, and perhaps Apple’s hold on the market begins to falter.
However, voila, Google made an announcement yesterday regarding One Pass, which is a payment system that enables publishers to set the terms for access to their digital content. OnePass counters almost point for point the program that Apple set forth. The best commentary I found out there was once again in paidContent.org, so please head there for more context.
I love Google’s timing, and its panache in countering Apple. But, as GigaOm aptly points out, do customer’s really want all their subscriptions in one place? Not only that, will customers really subscribe and pay for multiple services? Time will tell.
In the meantime, subscription services all over the world are spending this week trying to figure out how on earth they can continue to operate under Apple’s draconian rules.
What do you think? What are other implications of Apple’s approach with subscription services? What does it mean for you?
You have to hand it to Apple for its awesome-ness . I saw an article this past week that talked about Apple’s 64.5% share in EST/iVOD consumer spending in 2010. Sure, they are down from 74.4% in 2009, but owning more than two thirds of any market is an impressive feat.
However, we have seen competition intensify with Zune, PlayStation, Amazon and Wal-Mart. And competition will continue to intensify with industry plays like Ultraviolet , confusing people even further. So what’s on my mind today is this: is there room for more competitors and new stuff in video? Or will people settle for (or to some, surrender to) the simplicity and workability of Apple?
Is there room?
My unsolicited opinion is yes, of course there is always room for new stuff. But any new companies have a sheer cliff to scale. Not only does the service or product have to be absolutely perfect and better than Apple, but people have to know about it. And that takes loads of innovation, marketing, product refreshing and starting all over again. In this day and age, once a product/service is released, it begins becoming obsolete on day 2.
Who’s it gonna be?
So who’s going to be the courageous new competitor? One camp out there thinks that – of all things – Wal-Mart and Vudu have a shot. Well, I think that’s ridiculous. Wal-Mart just doesn’t innovate or have the right customer base. They sell cheap crap made in China to make life more affordable – hardly a fit for digital entertainment.
On my optimistic days, I think Ultraviolet has a shot. They’ve got the right players and the right ideas. With Microsoft and Sony as members, they represent 17% of the market. I’m definitely anxious to see them get on with it and launch something, because it could be very cool.
But then day 2 arrives. That’s when the pessimist Fool starts pestering me: with the consortium-style-United-Nations-procedures way of making decisions, I find it very hard to see UV executing on rapid product enhancements and innovations that are so critical. There’s just too many companies and people involved. As a small example, Microsoft’s Zune is out for itself, and Sony is world famous for its ability to not really do anything more once it does something cool (remember the Walkman).
So, in answer to my self-imposed question, given where the market is today, I think people will happily surrender to Apple. Even though Motorolla’s vision of 1984 may come true, at least my stuff will work, and my Apple shares will be worth something.
As a follow-up to my papercuts comments from the other day about how much it sucks to be a retailer, Ultimate Electronics has gone the way of Circuit City and has declared bankruptcy with several hundred million dollars of debt.
Rough times to be a retailer, I’d say. The consolidation of the small guys into the big guys is almost complete. What happens next will be even more interesting – can big box showrooms compete with the online juggernauts? Stay tuned…
What other retailers out there are on the brink?
I wanted to say “Some serious balls” as a title but thought I’d try to keep it clean. But seriously, this picture from Gizmodo is crazy – this is an Egyptian protester who is preventing the tank from moving. Makes me feel like such a twee dork for sitting in the comfort of my home writing about digital stuff. This guy really is passionate about what he believes in!
So for today, take a moment and consider how incredible the human spirit is, and think about what the world could be like if we all put our bodies on the line for something we believe in. Something peaceful, that is…