What Sells

When cable television started in America it was localized service by a horde of individual providers. Americans had instilled in them at the time television was free. These small fragmented cable companies needed a hook to get people to pay for television, especially when cable only had about a dozen channels.

It is generally forgotten now, but the hook was risqué fair. I was playing around with a movie I had recorded from that era. You would never see anything like it on cable today, even though it was benign by the standards of the time (it is a comedy with strong sexual overtones). [I do not know what cable carries today on its restricted risqué channels]

Amazingly, you can not even get to this movie through such large video libraries as Netflex (the movie is still popular and in 5 languages). I suspect Reagan’s election and the Conservative moment caused cable to change its image as the purveyor of the risqué. To change its image cable focused on its other hooks. Such as, movies and no commercials for some content. This made HBO become a large highly successful company.

In these economic times the biggest fear of the three big cable companies, Comcast, Cox and Time Warner, is losing subscribers. They have enjoyed a license to print money through constantly raising rates. Cable and Satellite have an Achilles Heel. It is “Content” [programming]. There are only a few major players that dominate content. They are Disney, Viacom, CBS, and NBC. They are conglomerates that have gobbled up the likes of Showtime and the major movie studios. Now these big players are using alternative channels like the internet, as well as cable and satellite, for their media. This additional distribution leverage has created some fights with satellite and cable over rates. The most recent dust up was Time Warner and Viacom. Did you happen to see the full page advertisements with Dora the Explorer crying?

As the vise tightens on cable and satellite revenue look for a return to their roots, more risqué fair. There is one axiom that does not seem to ever change, “sex sells”.

Economic Contagion

Years ago, when the first Bush was president, I drew a cartoon. It was after the collapse of the Soviet Union. In the cartoon were two graves. At the head of one grave that was filled in was Gorbachev, the former President of the Soviet Union. On the tombstone was engraved “Communism”, referring to the economic system [the economic and political system are two separate entities just like democracy and capitalism]. When the Soviet Union and Communism (economic system) collapsed, the contagion was confined to Russia and the satellite Eastern nations.

At the head of the other grave stood George Bush the senior. It was an open grave. On the tombstone was engraved “Capitalism”. Fast forward to today and we see a difference. Capitalism with Globalization has been embraced world wide. The travails of capitalism is taking the world with it.

Both Communism and Capitalism are viable economic systems under the right conditions. But both as they grow reach a point of self destruction. I wonder have we reached that point with Capitalism?

Tech Report: Types of Software

In this dire economic time people look to save money. This is particularly true of software. But there are some things you need to be aware.

There are three categories of software generally sold. They are “Academic/educational version”, “Commercial/Retail”, and OEM.

Academic software, which is sometimes called educational software too, is a version that has a restricted purchase to students and teachers. It is sometimes not full featured and sometimes limits any upgrades to another Academic version. The most important limitation is that it can not legally be used for any commercial venture, including your personal website if you charge anything or receive any revenue.

The advantage is reduced price.

Commercial or retail software is what you usually expect. If you go to a store like BestBuy you will most likely be purchasing a retail version. This is full featured with only the normal restrictions of any software.

The disadvantage is you pay the full advertised price.

OEM stands for “Original Equipment Manufacturer”. It is software whose use is tied to a particular piece of hardware. An example a PC with the operating system already loaded. The operating system is likely an OEM version. This means it can only be used with that specific hardware. The software when installed captures the Motherboard identification or other configuration information. If there is a change in your system and you need to reload the software it will likely fail.

The advantage is that manufacturers can get software at a greatly reduced price and use the preloaded software as a selling feature for their product. But the term OEM is not limited to just software. You will find hard drives, optical drives and other equipment listed as OEM. In these cases you generally get no tech support, manuals, or normal wrapping material.

The disadvantage is flexibility in use for the consumer in the case of software. With the other items the consumer must be very savvy with what they buy and how to use it.

Tech Report: Servers

There is industry shaking news that CISCO is going to enter the server market.

Both IBM and HP get a large share of their revenue from selling computer hardware to businesses. IBM took a big hit in the 1980s when businesses made the switch from mainframe computers to servers. Imagine a mainframe is a tractor trailer. You can load it up with all manner of things, in the case of computing the number of transactions. But along comes pickup trucks or servers. Businesses that could not afford the processing expense of buying a mainframe could afford a server or pickup truck. These pickup trucks could not carry the number of transactions of a mainframe and often you needed several of these pickup trucks linked together for your business. But costs and flexibility just about totally trumped mainframes. Especially as servers got more and more powerful, imagine super sized pickup trucks.

HP on the other hand had been a niche player in the large server market. But over the years it has gathered market share at the small server end. It took market share from the likes of SUN Microsystems.

CISCO is set to change the business economics of the sever business. CISCO is the 500 pound guerilla in the router business. Every network has to have a router to direct network traffic. You likely have a router in your home if you have DSL or you have a home computering network (LAN) connecting multiple computers. CISCO already has a business entry. Its routers are in most all Fortunate 500 companies, mid and small businesses and all over the world. It also has deep pockets.

Computers have become more and more powerful. This means that many have spare processing power. Virtualization software is the rage. It allows the spare processing power to be harassed to create in effect another separate machine by software using the same hardware. I downloaded the free virtualization software from Microsoft last week (have not decided to use it yet). If you recall when the MAC went to Intel processors people were loading programs like “Bootstrap” and “Parallel” on their machines. These programs allow MAC users to create a “virtual machine” so they could run both the MAC operating system and a Windows operating system simultaneously on the same machine.

CISCO has stated that its strategy will be to focus on providing server hardware that specifically targets the virtualization market. Businesses will likely jump on the band wagon in these economic times. Running more than one machine on the same hardware reduces costs. This puts companies like IBM, Dell, SUN and HP in a quandary. Their business models are based on the number of discreet machines sold. It also puts pressure on Oracle, the big database software company. The Oracle pricing model is based on a hardware calculus.

CISCO picked the right time to attack the incumbent server players. The economic situation in this financial downturn could be an industry changing moment.

Buy CISCO (if it executes well).