Daily Archives: January 4, 2010

3D Television Touted at CES 2010

With the annual edition of the Consumer Electronics Show (CES) in Las Vegas almost upon us, marketers are working diligently to engender consumer interest in a range of new products and technologies. Their job is to make you want things you don’t really need.

3D televisions are getting a big push. I’ve worked in 3D-visualization technology, so I feel qualified to offer an opinion, learned or otherwise.

For 3D television sets to succeed commercially, content must be widely and readily available, the devices themselves should not inconvenience consumers, and the prices of the sets should not be prohibitive.

Sony says 2012 will be year of 3D television, and it might be right. Even then, I wonder whether enough content will be available for delivery to consumers. More to the point, I question whether consumers will want to make the compromise of wearing specialized goggles to enjoy the 3D experience. For me, that is the litmus test. It’s why I believe 3D television, at least in its first incarnation, will fail to make the commercial grade.

When people flock to a cinema to see a 3D movie, they go for the big-screen spectacle. They’re willing to pay to enter that dark cathedral, to don their 3D glasses, and to settle into plush seats alongside other congregants for approximately two hours of immersive entertainment. Then, at the end of the movie, they take off the 3D eyewear, leave the theater, and return to the real world.

A lot of research into 3D home entertainment has been done by cable companies, satellite broadcasters, and television networks. They’ve all looked into the tolerance level of consumers for 3D glasses. What they’ve found, for the most part, is that consumers are willing to wear the glasses at movie theaters, but are disinclined to wear them in their own homes.

That’s because of the disparity between the cinema experience and the home-viewing experience. People bring a different set of attitudes expectations to the theater than they bring to their own living rooms. What they’ll accept at the cinema, where they get a larger-than-life entertainment experience for a limited period of time, is different from what they’re willing to tolerate in their own homes.

Besides, consumers behave differently while watching television. For the most part, filmgoers give their undivided attention to what;’s on the big screen. (Yes, we all have been in the same theater with rude talkers and senseless jabberers, but those cretins belong to a small minority of the audience, thankfully.) Television viewing tends to be more episodic, less focused. Your attention is diverted occasionally from the television set to other things in your home. During a commercial break, for example, you might walk to the kitchen or to the washroom, or you might take or make a phone call.

Given how you watch television and how you live within your home, would you be wiling to wear 3D glasses for extended periods? Ubergeeks among you might say yes, but most of you would be reluctant to make the sacrifice. That’s why ubergeeks are the earliest of early adopters, and why everybody else isn’t.

Consequently, we won’t see widespread adoption of 3D televisions until they can be viewed autostereoscopically (without glasses). That will take a few years. Autostereoscopic technology needs to improve, and standards for it need to coalesce. Effective and simple means of converting stereoscopic (requiring glasses) cinematic 3D content into autostereoscopic formats must be brought to market, too.

None of those challenges is insurmountable, but each will take time. The glasses-based 3D-television products on the market today are necessary precursors for their glasses-free successors of the future.

Unfriendly Skies Boost Cisco Videoconferencing

Even before the latest mental defective attempted to use explosive underwear to blow up a Detroit-bound flight from Amsterdam, commercial air travel has been thoroughly unpleasant. As when we go to the dentist, we actually pay airlines to inflict pain and inconvenience on us. What a business model!

In a bygone era, when Frank Sinatra sang “Come Fly with Me,” air travel was seen as exotic and sophisticated. Now it’s an airborne bus ride, replete with endless travel delays, intrusive and humiliating security checks, and customer service that verges on the aggressively antagonistic.

Yes, the security procedures might be necessary in an era of unhinged madness, but that doesn’t make them any more palatable. (Moreover, even with the advent and widespread deployment of full-body scanners, “ass bombers” — I’m not making this stuff up, unfortunately — could still wreak havoc.)

Commercial air travel is a form of self-abasement. Even without the heightened security measures – in which we all get an inkling of what it’s like to be interrogated and processed as criminals – the penny-pinching accountants at the major airlines have been doing their worst to make commercial flights ordeals worthy of the Inquisition.

This is where I get to Cisco. No, Cisco is not a commercial airline, but it stands to benefit from increasing customer dissatisfaction with the airline industry.

As its tortuous $3.4-billion acquisition of Tandberg demonstrates, Cisco is banking heavily on video-based collaboration, such as high-end telepresence and videoconferencing. This is one of Cisco’s “market adjacencies.” in that video consumes larger amounts of bandwidth than does data or voice communication, and the adoption of video-based communication will drive network upgrades of routers and switches at carriers and enterprises alike.

For that reason, the intensive push into video represents smart strategy for Cisco. To be hugely successful, however, one needs a certain amount of good fortune as well as tremendous proficiency. In that respect, the increasingly disagreeable nature of commercial air travel should play into Cisco’s hands. Air travel has been costly for enterprises for a long time, and now it’s become an exercise in self-loathing for anybody who must go on a business trip. At some point, sooner rather than later, a growing number of enterprises will consider investments in videoconferencing as alternatives to a wide range of travel on commercial airlines.

There will, of course, be instances where seeing the customer or partner in person is necessary. On those occasions, airlines will continue to be patronized by reluctant business travelers. Even then, however, gilt-edged CEOs and their rarefied ilk will consider private jets over commercial airlines. They’ll justify the investment somehow.

What’s more, the bar will be raised on what’s considered essential business travel. More meetings will be done by videoconferencing. The quality of the product, and of the experience, has improved significantly. Now, instead of feeling like you’re participating in a jerky, jitter-delayed Russian satellite broadcast from the 1970s, you actually feel like you’re taking part in a natural discussion. Videoconferencing solutions will only get better, while it’s hard to make the same claim for commercial air travel.

Consumers, too, will become more averse to the airport experience. They’ll give more consideration to driving, to buses, and to trains. As desktop videoconferencing improves, they’ll give more consideration to that option, too.

Maybe it’s time, again, to short the airlines.

As 90s Recede from View, VC Returns Turn Negative

We know that venture capital isn’t the business it was a decade ago. Statistics, contained in a story published in the San Jose Mercury News this past weekend, drive that point home.

As the dot-com boom of the late 90s recedes into the mists of time, we can see that the venture-capital industry has been sickly for the past decade. Quoting from the Mercury News piece:

Venture capital is a long-term investment — one reason why the 10-year return is most often cited in comparing the sector to stocks, real estate and other familiar benchmarks. As recently as June 20, the industry’s 10-year return was as high as 14.3 percent — but that was far below the 34 percent of just one year earlier.

Now the dazzling 83 percent return to investors during the last three months of 1999 — the industry’s best quarter ever — has rolled off the industry’s 10-year performance record. The next report, Ganesan predicted, will put the ten-year return well south of -5 percent.

The longterm inclusion of data from the dot-com boom, many say, served to camouflage what former venture partner Georges van Hoegarden characterizes as the “sub-prime” performance of the sector in recent years.

Just to be clear, with the late-90s surge now excluded from the frame of reference, the decade-spanning return on investment for the VC industry is now -(as in minus) 5 percent. Limited partners will take a long, hard look at that forlorn number and question whether they want to bet their money at the same table. In many cases, they’ll decide to go elsewhere.

Yes, the mainstay venture-capital firms — Sequoia Capital, Accel Partners, and Norwest Venture Partners among them — are managing to buck the trend. They’ll continue to produce results and find favor from limited partners. A lot of other venture-capital firms will go the way of the dinosaur, though, with the herd being thinned to an unprecedented degree.

Another trend is at work, too. The IPOs and acquisition-related exits of the future will come increasingly from non-IT sectors. Clean-tech companies figure to be at the forefront of the action. When the best that IT has to offer is a social-networking service as ethically conflicted and vapid as Facebook, you know the halcyon days are long gone.

The world is changing, and venture capital will have to change with it.

Dell’s Consumer Debacles Continue

I’ve remarked before that Dell should rethink its strategic priorities. It doesn’t have the depth and breadth — not to mention the prodigious resources — of a Hewlett-Packard (HP).

If Dell is to succeed, it will have to focus on a specific set of customers in defined markets. The company needs to stop trying to be all things to all people. That just isn’t working.

I think Dell should place more of its bets on SMB and enterprises markets, and that it should begin withdrawing resources from the consumer space. Just as Microsoft is hopelessly tone deaf when it comes to understanding consumers, Dell is similarly out of tune and out of touch.

Dell’s disconnect with consumers doesn’t just relate to its brand, or to its marketing prowess, or to the fashionability and design of its products relative to those of its competitors. The problems run deeper than that. At a fundamental level, Dell is attitudinally and philosophically maladjusted for the consumer space. To make matters worse, the condition is chronic and seemingly permanent.

How many times have we read or heard about the company’s ham-fisted dealings with exasperated consumers? Well, add several more instances to the list, as a recent piece in the Wall Street Journal demonstrates. (For additional flavor, read the comments that accompany the story.) A blog post at the New York Times echoes the frustrations of customers who placed their orders with and trust in Dell.

As many of you might have heard, we just experienced the holiday season. Typically, that’s a period where people buy gifts, including computers and consumer electronics, for their family and close friends. You would think that Dell, as a putative purveyor of consumer products, would understand the seasonal demand and the consumer expectations that come with it. But you would be wrong. Dell apparently has no clue.

The WSJ story recounts that many would-be Dell customers made orders well in advance of the holidays — sometimes months ago — only to be dismayed as delivery of their goods was repeatedly delayed, sometimes beyond the holiday period.

Quoting disaffected Dell customers from the WSJ story:

“I ordered an Inspiron 17 on NOVEMBER 28, supposedly to be delivered on Dec 14. Just checked the status page, and it has been delayed for the fourth time and now not set to deliver until JANUARY 7, 2010!,” wrote one customer.

Said another: “I haven’t received a single email from Dell, either proactively about the delays or in response to the two emails I have sent…Some people here report problems cancelling orders. I can’t even get in touch with anyone to be able to talk about cancelling mine!”

Dell didn’t respond to a request for comment. But on its blog, Dell blamed the delays on increased demand for computers and an inability to get the appropriate components from suppliers.

Perhaps I’m being unreasonable, but shouldn’t Dell, as a consumer-serving PC company, have anticipated consumer demand for its computers? Other PC vendors seem up to that task. And shouldn’t Dell have ensured that it had an adequate supply of components at hand? Why market and sell PCs if you have no means of, you know, actually assembling them and getting them to customers? It’s unconscionable, and it provides further evidence of why Dell needs to get its consumer house in order or get the hell out of it before it burns down.

The WSJ story, written by Ben Worthen, ends with this paragraph:

In the current blog post dated December 17, Dell offered to send people who were waiting for computers intended as Christmas gifts a holiday card to stick under the tree instead. That didn’t go over so well. The first response: “Thanks Dell my son will be so thrilled to receive his holiday card instead of his netbook, you really came through this time!!”

A holiday gift card, at Christmas, instead of a computer? This is a company that just doesn’t get it.

Valley IPOs Likely to Remain Few and Far Between

Not many companies based in Silicon Valley have gone public in recent years, and we shouldn’t expect the pattern to change. The trend is your friend, except when it isn’t.

In 2009, as reported by the Wall Street Journal, eight venture-capital-backed companies went public, according to research compiled by VentureSource. In 2008, only seven venture-backed companies reached the public markets.

Interestingly, though, only two of the companies that went public in 2009 were based in Silicon Valley. Those firms were online-reservations company OpenTable Inc. and Fortinet, the Internet-security specialist.

Talk percolates about the prospect of a few Valley-based IPOs materializing in 2010, but we’re more likely to see a trickle of activity, not a tsunami.

There are many reasons for the sustained torpor, and most of them have been discussed extensively here and elsewhere. Among the factors are the generally inhospitable macroeconomic conditions; the slow-growth maturity of the IT industry with which Silicon Valley is closely identified; the unappetizing prospects for big-money exits; the relative paucity of new venture-backed upstarts; and a structural realignment that is shifting money to emerging global markets and nascent industries outside the scope of the Valley’s traditional wheelhouse.

Does that mean the Valley is dead? No, it doesn’t. But it does mean that it, like the rest of the world, will have to adapt to changing circumstances and a new reality. As the late Warren Zevon intoned in a song with an expletive-laced title that I can’t cite in polite company, “The stuff (euphemism in effect) that used to work, won’t work now.”

Oh, Happy New Year!