Saturday, October 25, 2008

Nvidia laid off?

Having been in this industry almost as long as Gordon Moore and Jerry Sanders I have gotten to know a lot of people in it. And having known Nvidia since before it was Nvidia, I have gotten to know every single employee in the company and all who once worked for the company.  In fact, other than Jen Hsun Huang, I’m the only one who sends them all a Christmas AND birthday card every single year for the last fourteen years – do you have any idea what that costs me in postage?

And I get thank you notes back from almost all of them (you out there reading this know who you are who don’t send the thank you cards.)

I also have all their phone numbers, office, mobile, home, and favorite bar or hockey park.

So, yesterday, at great expense I called everyone one of them, using the excuse (for the US members) to encourage them to be sure to vote, and taking the opportunity to ask them how they were enjoying their job. And, most important, everyone one of them either answered my call or called me back immediately. (There were three exceptions — one birth and two dental surgeries — but they had someone else call me back.)

All of them, every last one of them told me they were pretty happy, even Derek Perez said he felt good now that scars from the whipping have pretty much healed over. In fact they said they were as happy as tree frogs, and then inexplicably began to whistle and sing.

But what about the layoffs, I persisted. I read somewhere that there is a new wave of layoffs. Surely those reporters can’t be wrong? Surely those reports must have worried you? No one knew what I was talking about. Layoffs? We’ve had a couple of sabbaticals, and a few have quit to go back to the farm and a simpler life, one left on a religious mission, and one left to pursue a political career, but there haven’t been any layoffs other than the few that were made redundant a few months ago.

So each and every 5,500 of you are safe, happy (as tree frogs) and not anticipating or worried about a layoff?

Not only were they not worried about layoffs but 16 of the managers (my best drinking buddies, but that’s just a coincidence) asked me if I could help them find some more people – seems Nvidia may be getting ready to ramp up.

I wished them all to have a great weekend, reminded a couple of their up-coming anniversary, and hung up the phone, it was pretty warm by now.

Maybe I’ll call AMD and hear what the barking moles have to say.

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Tuesday, October 14, 2008

In Prosperous Periods Promote Tactically, In Down Times Promote Strategically

The sudden realization that the emperor had no clothes and magnitude of the financial crisis is only now being fully addressed.. But, economists are unanimous that regardless of what governments do, it will take time, a lot of time, to rebuild faith in financial institutions and rejuvenate the economy.

In a knee jerk reaction management is moving to cut costs – circling the wagons – by reducing staff and marketing budgets.On the surface it appears logical. But if you look at downturns and recessions in the past it wasn’t financial institutions or governments that led the economy back. Recovery was developed and carried out by Silicon Valley (which is somewhat symbolic of the complete PC/CE industry). And it will do it again as consumers and partners come to realize that the intellect, credibility and creativity reside in the technology areas; not in the world’s financial centers and most assuredly not in our seats of governmental power.

So while Paring overhead and “discretionary expenses” would seem to be relatively simple it has always had a greater or lesser degree of negative impact. Keep in mind that NPD recently reinforced the strength of the industry by pointing out that in downturns and upswings consumer and computer technology has consistently beat the overall market’s averages. NPD’s June retail-tracking service showed a three percent dollar increase over June 2007. This was the second consecutive month of positive news, after May’s jump of over seven percent. And this is after five straight months of flat or negative results, stretching back to December.

Before you wade into your promotional budget with a massive red pencil, consider how much should you cut from the promotional (advertising, sales support and PR) budget? To answer this, ask yourself:

* What does advertising/PR do for us? Can we accomplish this with a smaller investment? How much smaller?

* What will happen next year or a couple of years out if we cut our promotional budget, keep it the same, or increase it?

* If our competition is in the same position, is there a way to use the short-term problem to our advantage?

Long Term Investment Advertising/public relations should be an investment in both immediate sales and long-term objectives. It helps retain your share of market/image among your customers and prospects. It reinforces customers’ commitment to do business with you. Some of the more successful (profitable) manufacturers and retailers in the PC/CE industry view communications not as an expense, but as an integral part of their total marketing mix. If at all possible, they maintain an aggressive promotional policy and program. They know their advertising and PR have a favorable effect on sales and income.

Today, there is a volume of data which indicates that during deep, long recessions or other “difficult” times, the firms that trim their communications budgets suffer—and suffer hardest.Other research found that companies that accelerate advertising/PR spending during market slumps perform better in both the short- and long-term.Researcher Vernon Van Diver studied over 10,000 companies in about 800 business media sources found a relationship between promotional activities and subsequent sales.

He found two interesting patterns: 1. Companies that invest in promotion above their industry norm invariably, in succeeding years, have rising sales curves. 2. Companies that promote below their industry norm invariably, in succeeding years, have declining sales curves.

Additional Research Researchers from the BPA and several communications firms have drawn conclusions similar to Van Diver’s. Relationships between advertising/PR and sales have been proven time and again:

* Sales increases follow promotional increases, but rarely in the same year

* Sales decline with increasing momentum after promotion is cut back

* To retain your share of sales, promotion must increase as much as the overall average

* To increase your share of sales faster, communications must be increased faster than the industry norm over a period of four years or more

* If a marketer increases or decreases his traditional share of promotion relative to his competitors, similar changes occur in his share of market

* It is now possible to predict—with a high degree of accuracy—what the volume of sales will be at some future date

* It is possible to set an attainable sales objective very near maximum

* It is possible to determine the change in sales volume that follows each change in the advertising/PR budget, up or down

* It is possible to figure how much to allow for increases or decreases in competitive promotion

Using these principles, Van Diver studied 100 businesses across all industry segments. He made predictions six months or more before earnings and sales were disclosed. On the average, his predictions were within one percent of the actual figures.

Pretty remarkable.

In a similar study, it was found that over a one year period organizations that did not cut back promotional spending enjoyed increases in both sales and net profits the next year. Sales were up an average of 55 percent and net profit was up 40 percent over the base year. Marketers who cut back expenditures experienced no real growth during the period. Their net profits did not keep pace with that of consistent promoters.

Do these types of results hold true in good times and bad? Are the same results achieved when the market is flat, down, booming?

The quick answer is yes!

NPD just reported that the industry experienced a three percent dollar increase after six months of flat or negative results. The challenge in the months ahead for the industry’s players will be to can grow during this down period or be drug down with it. Growth, stagnation or shrinkage is really in the hands of senior management.

A Competitive Edge Company management should exploit opportunities that deliver an ever-greater competitive edge. If you want to be an industry player, present yourself as one. Don’t wait on your promotion until all of the marketing variables are right. If the stars are in perfect alignment for you, you can be certain they are in line for your competition as well!

By waiting, everyone starts out on an even footing.

The best plan of action is to proceed with your promotion while the competition is pulling in their horns.

In good times and bad, make your choices based on:

* Long-range, progressive promotion is synonymous with company growth

* Company strengths that hold up in hard times can be permanently molded with steadily aggressive advertising/PR

* Keeping pace with or exceeding industry communications norms is a company’s insurance of increasing sales.

* A rise or fall in ad/PR spending is followed at some later date by an increase or decrease in sales

The more aggressive your promotion, the easier it is to meet and even exceed, energetic sales and profit projections. Today’s environment is going to put past research conducted in good times and bad to the test!

Andy Marken

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Tuesday, August 26, 2008

Nvidia paints the town green

The fountains flowed a toxic green that puts all those terrible green beer St. Patrick’s hangovers in perspective. You were never that sick. But the point was made. San Jose, at least for these three days in August belongs to Nvidia.

What we find interesting is what Nvidia has chosen to concentrate on. There has been plenty of candy for the game boys, but the emphasis is on business, high end computing, entertainment and the future.
One thing is for sure, stereographics is here to stay—at least for a couple of years. Jen Hsung Huang showcased 3D video in his keynote and showed how much more fun games might be if you had a 3D view. Now, you might well say, we’ve had the opportunity for years and so far, gamers have played with 3D for a bit and their glasses wind up in the toy box with the steering wheels, old joy sticks, pedals, and t-shirts. But this time it’s differerent or at least that’s what the hardware vendors (of graphics boards, glasses, computers, glasses and displays) want us to believe. At Nvision the high quality screen and fast stereoscopic performance was pretty convincing. The next day’s keynote highlighted 3D and stereoscopic views for space exploration as if to say, again, it’s not just fun and games.
And that, really, seems to be what Nvidia is setting out to do with Nvision—bring more people into the family to share the vision of 3D and great graphics. It’s not just fun and games, it’s graphics.

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Thursday, August 07, 2008

Larry’s Bee - Part Two

Last week I posed a postulate that Intel could justify the investment in Larrabee (Larry’s Bee) on the basis of obtaining some level of parity with the incumbents, mainly ATI and Nvidia. And in my rush to post and then catch an airplane, I included the total discrete graphics semiconductor market, not just the desktop discrete market – sigh. OK, I’ll eat a little humble pie, give you the right numbers but more importantly suggest something bigger.

First the numbers

I mistakenly used the total GPU (desktop and notebook) in my calculation of Intel’s TAM – although the charts revealed the real numbers.

In any case the desktop potential in 2010 is 100 million units. I’m not including notebooks because I don’t think Intel will have a Bee mobile version by 2010.

So, same speculation, they hit parity by end of 2010, gives them a TAM of $3.3 billion, a little less than the $4.6 Billion I mistakenly quoted.  But read on….

Larry’s bee maybe more

Some of you have seen my forecasts on the expansion of the discrete GPU market due to expanded use of Crossfire and SLI down to the mainstream level, the deployment of hybrid architectures (with integrated and discrete GPUs), and GPU-compute.

Now I want to suggest that Larry’s Bee will have a synergistic impact, and not be just a spoiler for ATI, Nvidia, and others.

Not just a spoiler

Intel has been steadily leaking information about Larry’s Bee for almost two years. Some might call that salting the mine. Others suggest it is a deflection and FUD program designed to defer purchases of current parts and make the consumer wait for the Bee. Not that many, if any, would put such tactics beyond Intel, but I think there’s more going on than even Intel may realize. Intel will by the very nature of its marketing muscle and brand strength attract new attention to the 3D world and gaming in particular.

Regardless of the quality or performance of the Bee, Intel’s brand will raise the awareness of PC gaming, and give the industry increased credibility as a viable entertainment vehicle, and as a safe bet for a consumer’s purchase. No doubt my friends at ATI and Nvidia are not going to be happy with this legitimization of the Bee as I’m suggesting it will happen, but they should.

Why?

Because as the incumbents they (ATI and Nvidia) have made the industry what it is today. Others like 3Dfx, Matrox, and S3 also contributed in the past, but it was ATI and Nvidia who kept at it, had the passion, and made the investments. Their work has brought new gamers to the fold, and that has paid off handsomely for them. In fact, the numbers show why Intel, the only company with the resources needed to enter the market wants a piece of the action.

Intel also wants a piece of the action because as the graphics vendors expand their influence on users and increase the ability of accelerate functions beyond gaming, Intel is in danger of seeing the CPU over shadowed by the GPU.

At Jon Peddie Research we think there are still more people who are curious about PC gaming and would like to try to it, but just a little timid. They’ve tried the free stuff from the web and what comes bundled with a new PC and while entertaining for a while it usually doesn’t hold their interest. However, FPSs, racing, RPGs, and RTSs games would. The action, the cinematic quality of the images and in some cases the stories are attractive. Something is needed to push them over the edge. Something to get them to invest the extra $100 to $300 to get a good enough graphics board to handle the richness of today’s games. Intel will be spending a lot of money to convince them that they want to invest in a good, gaming capable machine.

and the Nintendo

And least we forget, look at how the Wii resonated with people who never thought they’d be interested games.

The vixen Vista

We think Vista is a model for such consumers. Why Vista? Because Vista introduced the notion that to use it you had to have good graphics. Rather than being a turn off and scaring people away, it was a catalyst to new PC sales and to a certain extent aftermarket sales of graphics AIBs.

If a boring, do nothing entertaining operating system can have that kind of effect, which was largely due to Microsoft’s marketing effect combined with some of their OEMs, imagine what the impact of an Intel could be on PC gaming.

So we did

We put our heads together, looked at all our models, especially the ones in our new Gaming PC Market reports we’re introducing soon, and decided that Intel’s entrance, combined with the support of the game publishers and developers (who will lavish praise and testimonials on the Bee and Intel), plus Microsoft’s and the OEMs (Dell, HP, etc) support will make the market jump a full five percentage points, or something north of 1.5 million new users growing to 10 million in three to five yerars

Newbees not loyal

I don’t think once these new PC gamers take the plunge they will remain loyal to Intel, or anyone else. The Bee is going to have to earn and keep the loyalty of these newly hatched gamers. As they get involved with PC gaming and learn more about the ins and outs, they will change allegiances annually at the least. Some new gamers in fact will enjoy tuning their machines joining communities, debating the merits of various hardware rigs and they’ll be the first to jump.

And yeah, Intel is going to steal some market share from the incumbents, that always happens and sticking your head in the sand, or putting too much effort in discrediting the Bee isn’t going to have much if any effect on the its impact. It’s at best a distraction, and at worse a drain.

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Friday, August 01, 2008

Why not Larrabee?

Anyone not stuck in outer space or maximum security knows Intel is going to introduce a new chip code named Larrabee. At Siggraph they are going to reveal, after almost two years of teases and leaks, the architecture of the device.

It is not a GPU as many have mistakenly described it, but it can do most graphics functions, Intel says it can do all, we’ll have to wait for proof. Right now its slide-ware, but development systems are supposed to become available in November.

ATI and Nvidia will be very busy discrediting the device and pointing out its shortcomings. They should, given that Intel has all but ruined their share prices with disparaging comments about GPUs. Perhaps Intel needs to be reminded of some of its past triumphs; the Itanium and XScale come immediately to mind.

Nonetheless the question is, in my mind at least, is there room in the market for a third major player in discrete graphics?

What is Larrabee’s market potential?
If you look at the market development for discrete desktop GPUs over time your answer is probably no. In the late nineties when the market was just cresting 100 million units a year, the number of suppliers swelled to over 70. Today, it is approaching 400 million units a year; but the market has consolidated to four discrete graphics chips suppliers plus two integrated (only) suppliers. And of that population, two suppliers, ATI and Nvidia, own 98% of the discrete GPU business (which was 350 million units in 2007.) And, the trend line indicates a flattening to decline in the business as the red line shows in Figure 1. However, Intel is no light-weight start up, and to enter the market today a company has to have a major infrastructure, deep IP, and marketing prowess – Intel has all that and more. So yes, there is room for a third player if that player is Intel.

Figure 1: Shipments of GPUs to date

Assuming flat growth in discrete graphics chips, if Intel could reach parity with the incumbents that would give them 33% of 20 million units a quarter. Are seven million units a quarter worth the investment? Intel won’t be able to charge any more than ATI or Nvidia.

It’s a bigger market
However, you can’t assume flat growth in discrete GPUs. We recently increased the forecast on desktop discrete GPUs to take into consideration multi-AIBs (i.e., Crossfire and SLI), and two new developments: Hybrid configurations (which have a GPU and an IGP), and GPU compute. Clearly Intel sees an opportunity for Larrabee in GPU compute, and probably in Hybrid.

This revised forecast gives Intel a market potential of 46 million units in 2010, the first full year of shipments of Larrabee. Assume they can sell the chips for $100 that represents a market value of $4.6 billion and more if they build AIBs.

Now there’s a lot of “if” in that, not the least of which is that they can bite into ATI and Nvidia’s market share. But $4.6 billion is an admirable goal and can represent Intel’s TAM.

Intel has told me they intend to push Larrabee into graphics applications first, so the GPU compute portion of the market may not be realized immediately in their TAM calculation. However, they will come out with several versions of Larrabee (various number of cores, just as ATI and Nvidia do) and so the entire discrete spectrum is open to them.

Figure 2: Potential increase in GPU shipments due to new architectures and multi-AIBs

When is a GPU not a GPU?
One final note. GPUs. Larrabee is not a GPU in the sense an ATI, Nvidia, or S3 chip is a GPU. It is gang of X86 cores that can do graphics processing, so it is a GCPU – graphics capable processing unit, as are ATI, Nvidia, and S3’s chips. It’s unlikely the industry is going to take such subtleties into consideration and adopt a new term like GCPU and rather will incorrectly label and refer to Larrabee as a GPU.

Probably Intel will come up with a catchy mnemonic for Larrabee. It would be wise of them to do that to differentiate it and to drive home their point that existing graphics processing architectures “will be a footnote in the history books However, the industry, analysts, reporters, users, and investors have demonstrated too many times that they are lazy and will find it easier to simply call Larrabee a GPU.  A GPU by any other color smellith as sweet….

Then and now
Intel is announcing a 2010 part now. Maybe that will influence some potential buyers to wait, certainly that would Intel’s ambition. However, do you think ATI and Nvidia are just going to sit on their hands till 2010 and wait for Larrabee to show up?

ATI and Nvidia are fleet-footed companies and can turn much faster than Intel. So if they chose to they could have a counter punch to Larrabee by 2010.

And lets not forget that ATI and Nvidia have been building hardware optimizations direct and OpenGL for the last 10 years, designs that are based on the APIs. Larrabee can’t do that and so there will be constraints in Larrabee which Intel is confident it can overcome in software. A lot can happen between now and 2010.

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Wednesday, July 09, 2008

Paranoid protectionists Prima Donnas of the press plead for protection

We recently sent out about a zillion invites to the press to invite them to our luncheon in LA during Siggraph.

Aside from finding out who’s not working (out of the office till…) and who’s not employed (permanent failure party does not exist) we also learned that there’s a whole bunch of press people who just can’t cope with email, especially from strangers (given such an attitude, I would guess their friends list is small) These timid and violated poor souls seek refuse from the onslaught of email from strangers offering millions from Nigeria, sex forever, and new hair in places you didn’t know you had, and have put a firewall up to block the spam that any semi intelligent Outlook user can do with his or her Junk Mail function.

Their robots says things like:

  * I apologize for this automatic reply to your email. To control spam, I now allow incoming messages only from senders I have approved beforehand. This message was created automatically by mail delivery software (TMDA).

  * Your message attached below is being held because the address

has not been verified. To release your message for delivery, please send an empty message to the following address, or use your mailer’s “Reply” feature.

  * I’m protecting myself from receiving junk mail. Since I have a simple email address, the spammers have flooded my mail box - I need to invoke this challenge in order to read messages from real people (like yourself) that need to communicate with me.

I wonder if they have a cutout service that goes through their newspapers and magazines removing all the unwanted ads, and another robot that operates the TiVo so they never have to watch an unwanted, and certainly unrequested ad. Then there’s the junk mail robot that carefully and cleverly filters all their post mail, strangely and ironically never having anything left – gee, no birthday card from mom again this year.

Such a clean, pristine and unmolested life they lead, one of their robots runs ahead and rips down all billboards, ads stuck on the side of telephone poles, and each and every banner in front of every shop – such offense shall not invade the virgin minds of our pampered press corps.

I laugh at them as I cash the checks from the Nigerian bank of the West Nile, and go off to Scotland to collect my lottery winnings, I actually don’t even have time for the $1,000 gift card at BestBuy someone sent me, and as for never being incapable of sex any time anywhere, well, what can I say, I grin a lot now. The hair thing is a bit annoying, what with a trip to the barber every other day, but with all the money I have coming in from the Bahamas, it hardly matters. And the fact that I no longer have to work for living since I took up that offer from Sam Smaltz to be my own boss, just makes my life as a real estate magnate all the more sweet. Of course I am annoyed with the offers to refinance my credit cards, house, and car, since I’ve long ago paid them off with the money that was left to me by an uncle I didn’t know I had in Egypt.

Alas, I feel sorry for the poor protected and persecuted press that deny themselves this richness and wealth, and I’ve tried to do something about it, but every time I send them a few hundred thousand dollars it comes back.

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Saturday, July 05, 2008

iPhone breaks Moore’s law

My new phone cost more than my PC or TV

I’m getting ready to buy the iPhone. I mean buy it, not lease it from AT&T. I’ve been saving my allowance, and taking bottles and cans to the recyclers, and I’m getting close to the $700 needed (plus taxes) for the 16 GB 3G iPhone, I can hardly wait.

While I’m waiting I watch a little TV on my new 32-inch HD LCD TV that only cost $449 from Circuit City. And when I get bored with TV, I turn to my new $649 Dell Inspiron notebook with a 15- inch screen.

Soon I’ll have everything I need, and all of it for under $1,000 each, although I better hurry because I know the next generation iPhone will probably be $999 plus taxes.

How come, I wonder, everything else in the universe electronic goes down in price or stays at the same price with added functionality and the iPhone goes up? Isn’t that what Moore’s law is all about?

Does Apple and AT&T know they’ve broken the law? Will they get arrested and have to go to jail? OMG – if Apple has to go to jail, what’s going to happen to all the Apple stores - will they be bought by CompUSA or Circuit City?

And how come a puny 3.5 inch 480 x 320 pocket computer costs more than my 15.4 inch 1680 x 1050 notebook computer, or my 32-inch 1900 x 1080 TV? Why does a smaller screen, with a less powerful processor cost more? I used to think I understood electronics and economics, but now, well now, I don’t know if anybody does.

You gotta give Steve Jobs credit, he is a disruptive force, breaking the law and changing the rules.

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Friday, June 20, 2008

Attempted rapprochement

Rumor has it there was an attempt at rapprochement. Long annoyed with The Inquirer’s loose cannon Charlie Demerjian, Nvidia has been shunning him and took him off the invitee list of most events. Water to a duck in the case of Charlie, he has so many sources the only reason he goes to any event is to score food and babes – he does better on the food as not many babes go to those things either.

So Derek Perez, Nvidia’s boss of PR and infamous for having a knife fight with a former competitor and now employee Brian Burke, thought if I can live with Burke, I can live with anyone. Perez sent out a friendly “Hey, how about coffee, or breakfast,” email.

Charlie, not one to turn down a donut, and bored to tears in Taipei, said why not, and met Perez at the hotel restaurant.

If you’ve ever met Charlie, you know he doesn’t suffer fools, is quick to make decision, and not the most tactful person on the planet. Oh, and did I mention, opinionated. The annoying thing about him is he’s often right.

The coffee part went OK, but when the serious talk got started and Perez started laying down some ground rules, Charlie said, no, no, hell, no, what the F**’s wrong with you, you deaf – no.

Body builder and short fused Perez had had just about enough and before anyone could blink, karate trained Perez had ninjaed his dish of eggs right into Charlie’s face.

Swift acting guards quickly defused the situation as Demerjian was in the process of loading his quart bottle of Coke with Mentos – the carnage was avoided but it was a tense few moments. Both men were escorted out of the restaurant, through separate doors and the police took over after that.

Charlie was next seen at the Intel event, and then at the ATI event. Perez hasn’t been seen and isn’t answering email, but then the 9800 GTX+ may have been keeping him busy.

Disclaimer: This is a joke. It did not really happen. Though Derek did invite Charlie for coffee.

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Wednesday, June 18, 2008

This is a rant about spin - Intel extends command in fast-computers tally

The annual supercomputer conference was just held in Dresden Germany. At it they show off the top 500 supercomputers. Usually there are two or three new ones at the top and the rest shift downward till they fall off.

Look at how the AP reported this event:

Intel extends command in fast-computers tally
Associated Press 06.18.08, 9:14 AM ET

Microprocessors from Intel Corp. run more of the world's fastest computers than ever, according to a report released Wednesday that tracks progress in the computing industry.

The latest list of the world's 500 most powerful computers, published twice a year by academic researchers, shows that 75 percent of the machines are powered by Intel (nasdaq: INTC - news - people ) chips, up from 71 percent in November. Chips from Intel's main rival, Advanced Micro Devices Inc. (nyse: AMD - news - people ), showed up in 11 percent of the top 500, down from 16 percent on the last list.

The fastest computer on the list is the $100 million "Roadrunner" machine built by IBM Corp. (nyse: IBM - news - people ) for the Department of Energy's nuclear lab in Los Alamos, N.M. Roadrunner is the first computer in the world to surpass a petaflop - 1,000 trillion calculations per second. It's more than twice as fast as the IBM machine that ranks No. 2 on the list.

IBM made an industry-leading 42 percent of the supercomputers on the list, but its overall count diminished slightly. Hewlett-Packard Co. (nyse: HPQ - news - people ) gained ground, with 37 percent of the fastest machines in the latest report.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Now look at the reality of it – Intel is in the bottom fourth of the top ten, and AMD is in the top half. So why does Intel get the headline? Why not AMD or IBM, or even Cray? Because Intel has 75 machines, each one of them slower than a new AIB from ATI or Nvidia?

Are the AP folks in love with Intel or just stupid?

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Thursday, May 22, 2008

Moore’s law violated by inflation – your new laptop will cost more

Another contributor to sluggish PC sales for this year

Even though one of the applied tenants of Moore’s law is that prices will drop over time (Moore never said that, it’s just a statement that has been applied to his original observation about feature size shrinkage over time), it appears the rising price of oil will change that as nations around the world grapple with inflation. Prices will rise.

This appears to be showing up first in laptop costs as reports of higher priced magnesium-aluminum alloy chassis are coming out of China with cost increases of 10% due to rising metal costs caused by the increasing cost of extracting, processing, and delivering those metals thanks to the higher price of oil. And although some notebook vendors are looking at using plastics, that won’t help given that plastic is made from oil.

Other costs are increasing as well and Acer, HP, and Levovo had indicated their ODMs are raising prices by as $5 to $20. Compal and Wistron the world’s three largest contract manufacturers have reported they will be raising prices for the first time.

At the same time Hynix Semiconductor, the world’s No. 2 memory chip maker raised contract prices for computer memory chips by about 15 percent last month and expected further increases in May although some expect DRAM prices to start falling again in the fourth quarter; this may be wishful thinking.

Desktop PCs won’t escape these cost increases and if personal and corporate incomes don’t increase accordingly then the inflationary increases in PCs could have a dampening effect on already sluggish sales.

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Saturday, May 10, 2008

The New Communications Tools…Listening, Helping

Guest blogger Andy Marken has weighed in with his very opinionated view on how, exactly marketing professionals are going to have to change their ways in order to take advantage of the new order: Web 2.0. It’s not business as usual and it’s going to require new attitudes as more people get in on the act.

By G.A. “Andy” Marken, Marken Communications Inc,

Marketing and communications “experts” like to tell us how the Internet and Web 2.0 have opened up new opportunities for the industry to reach out to and influence people in new, exciting, more effective ways. 

Instant information web sites, 10s of thousands of them are ready for your news bloggers, almost free social networks in which you can embed your news. Unique opportunities for the company to tap directly into the consumer before he/she makes a purchase.

How much better can it get? 

Marketing is fired up, and in unison they ask:
- Did you send them the well crafted release we approved?
- How many clips/hits did you get?
- Why are you working with XYZ user community group? How many buyers are there?
- Why did you send product to him/her to review…it’s just an ego, self-expression blog?

Managers and communications people talk the talk when it comes to blogs, podcasts, UGs, social sites. But, at the same time they: 
- Emphasize spending their time on “tier one,” media
- Measure performance and results on the volume of media clips/hits
- Question the reach/influence of specialized user groups/communities
- Ask how many people be influenced by an existing customer influence/sell
- Question the ROI is of a blogger who might have 500 readers a month
- Wonder how to handle it when a blogger writes something negative about the company/product

Social networking really isn’t anything new. It has just taken its individual and collective voice online. 

The Audience(s)
Social networking locations are roughly described as:
- rating, review sites – expressing an individual’s self-esteem and providing information/assistance/guidance
- video, content sharing sites – is all about expressing your identity (10s of thousands of new segments posted for viewing/sharing every month)
- blogs – a way people express their identity, focus on showing their status or improving their self-esteem, providing unique information, insights, assistance (thousands are brought online each month). The community is loosely defined with paid bloggers, ego bloggers, helpful or venomous bloggers. Most every editor, reporter, analyst has his/her own blog where he/she puts down information, ideas, and thoughts that don’t fit in their publication; editorial guidelines; or something simply needs to be said.
- specialty groups – individuals/organizations that come together because they share a common interest and want to share/learn from like individuals (name any subject, there’s an online community)
- social networks – these can be profile-driven (audiophiles, videophiles, Jaguar enthusiasts, etc) – affiliation/belonging – or purpose-driven (video post production groups, home theater specialists, auto restorers). Again it is subject, sharing a common interest/value, being part of a community.

What we have to get past is the focus of tier one, tier two locations/individuals.

Everyone who wants information/assistance is important. 

Each can influence the image of the company and its products.

They’re all part of the new media frontier. 

Fading Importance
In the brave new communications world, less importance is being placed on the basic public relations tool – the news/press release – and greater attention on relationships. Increasingly members of the media view the well-crafted, thoroughly reviewed announcement sent out over the wire or distribution service as old news by the time it arrives. Everyone receives the information, so it’s of comparatively less importance.

News people – print, radio/TV, web, blog – now have new sources. They are very adept at searching the web—scanning white papers, event listings, price changes, job openings, special interest portal sites, user forums and online newsletters.

They find two or three disconnected ideas and piece together their own story lines. As a result, despite what many believe the release is the beginning of the process, not an end product in today’s always on online world.

New Platforms

Finding, tracking and handling social media coverage of company/product news, information/misinformation and issues is a significant challenge for PR/communications people. Social media isn’t traditional media. Rather, social media is more a form of personal discussions. Old-fashioned media service email/telemarketer pitches may get you in print…negative print but print just the same.

Bloggers come in all shapes, sizes, ages and backgrounds. Some are non-journalists; some are seasoned professionals; some are people passionate about a company, product, technology, subject; some are simply passionate about seeing their ideas/opinions read. Then, there are some who have made their mind up before they talk with you; some have an axe to grid, and others (most) are open to discussions, ideas.

The only best approach for the marketer in this brave new world is to listen, gain insights, develop ideas before you launch your blog/podcast program. Next to getting product and service recommendations from user review sites or from friends or other authorities, blogs are almost as credible as word of mouth recommendations.

Value Proposition
One of the greatest opportunities for companies, the most challenging and the most difficult to quantify are user reviews – user groups, blogs, social nets.

It is impossible for public relations to point to a circulation of 10,000, 100,000, 1,000,000 and show any true ROI (return on investment) for someone writing a review or talking about a company/product/service.

Study after study shows that consumers today go online to research a subject, product, solution before they buy. 

The first thing the prospective customer searches out is user reviews followed by comparison charts and expert reviews.

Conventional news media may make the consumer aware of the product/service but people make their buying decisions from peer recommendations. Not from the manufacturer’s web site or literature, not from the retail clerk, not from the expert’s recommendations. 

Social Nets – Common Interest
Social networks like MySpace, YouTube, Plaxo, Facebook, LinkedIn and thousands of niche interest, professional and avocation site members come together because of a common interest. They are also superior avenues for reaching influential decision makers and consumers.

People around the globe are members of these sites because they are able to exchange information, ideas and problems/solutions on specific business, personal or professional topics.

Locations like DigitalMediaNet, OcModShop, Tom’s Guide, AnandTech, CDFreaks, audiophile, digitalmediathoughts and hundreds of horizontal and vertical interest sites have forums, blogs and news available in one community location. 

They represent fantastic opportunities for people to get a quick understanding and indoctrination into the tight social network community where common goals, common problems are shared/resolved. They are such rich locations that many public relations/communications and marketing individuals look at the locations as narrowcast goldmine opportunities. 

Wrong !

Sit on the sidelines. Listen. Observe. 

There will be times and opportunities for company representatives – openly identified – to add information and ideas.

But regardless of how the online discussion flows, these social sites are one of the best product/service focus groups in the world. They have free and open discussions. Even negative statements can yield positive returns for the company in the shape of new policies, new products, new ways of thinking and new methods of working with consumers. 

In the new Web 2.0 environment communications people have to understand, appreciate and embrace the idea that:
- there is no local market or territory any more. We work and live in a global market and information community
- we must have open and continual conversation with our consumers and partners as a group and individually
- the company may have 10 million customers but each is an individual with unique wants and needs
- once you step into the Web 2.0 world you have to take the good with the bad and win one customer, one user at a time

Public relations thinking that encompasses message management, branding and compunctions distribution pipelines is broken. It will never be as it was before.

Professionals have to understand the power and influence word of mouth, blogs, social networking communications has in the digital world. 

There is no clear cut ROI but the dangers of ignoring these communities are obvious. 

Public relations or communications people who ignore customer issues because “it isn’t my job,” are missing a golden opportunity to get personal inputs on the person’s image of the company, why the individual bought the product/service, what they like/dislike and what they feel should be improved. It doesn’t take many of these discussions to see a market pattern.

Certainly it can be a dangerous when you begin your digital world trip. Safety in the trip depends on your ability to shut up…listen…help.

It is the only way your company and you can be certain both make the trip successfully.

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Monday, January 21, 2008

My CES

Behold the Consumer Electronics Show, an almost legendary annual occurrence which draws well over a hundred thousand people to Las Vegas. Being a gaming analyst the acronym CES would be more aptly defined as the Computer Entertainment Show, at least that’s what I was looking for.

My CES experience started before I even left the ground of San Francisco International Airport. I was flying Richard Branson’s new airline Virgin America, and Virgin has recognized that consumer electronics have become an important element in attracting airline customers. Their new entertainment, information, and communication system, which they call Red, allows passengers to watch, play, surf, buy, and message - all from the comfort of their airline seat.  It is way more than a novelty and kept me enchanted for the majority of the flight. The system uses a traditional armrest control, with a removable “remote”. However this is more than just a remote, on the flipside is a full function video game controller as well as a decent sized QWERTY keyboard. (see figures 1 and 2). Airline passengers are able to text message / chat and play games with and against passengers in other seats.

Figures 1 and 2: Virgin"s Red In-Flight Entertainment, Communication, Information, Shopping and Food/Drink ordering system.  (Source: JPR)

My first impression of the actual show was “Uh - oh, two days will not be enough time to do what I want to do”. Having attended big game industry shows such as E3 and graphics shows like Siggraph, I thought this couldn’t be much different. Boy was I wrong. My goal was to walk the ENTIRE show, spending quality time at any booth or display that I encountered and attracted my interest. This was simply impossible and when I told people what I wanted to do in the time frame that I had, they gave me the same look that tourists get in Paris when they announce that they planning to go through the Louvre Museum in a day or two.

There was an air of happiness in the environment, attendees seemed genuinely excited and optimistic about their products and the prospect of successful business in 2008, shrugging off predictions of doom and gloom yet letting the economists sometimes dire warnings sharpen their business acumen and perhaps temper unnecessary spending by their companies.

On the gaming front CES had almost no representative by the software companies. CES was the ruled on the gaming front by hardware and peripherals and it was a refreshing and educational change from the normal troupe of attendees.

There was a huge presence of companies selling various designs of “gaming furniture”. (see figures 3-5) On the low end this represented beanbag simple floor chairs made for pulling up in front of the television for use with the various gaming consoles. In the mid priced area there were full size chairs in various designs ranging from rockers to office like chairs. Many incorporated speaker and rumblers - devices built into the furniture that shake and simulate the rumble of deep bass induced sensations such as a cars powerful engine. Repose, Boomchair, Pyramint, and ACE Bayou were among the companies displaying their wares. Also at the show was Buttkicker Corp - they make a rumbler made to attach to your existing office chair and other types of furniture.

Figures 3-5: Competitive Comfort: Gaming and Media Furniture were well represented at CES (Source: JPR)

In the high end for gamers there were companies selling entire frames (such as HotSeat - see figure 6) with built in chair to simulate a cockpit environment and allow mounting of steering wheels, flight sticks, and various other simulation paraphernalia. As well as full packages that include everything for driving fans.

Figures 6-7: Hotseat simulator frame, seat, and mounting system and Virtual GT Driving Sim Cockpit (Source: JPR)

At the extreme high end, some companies had cockpit systems that included hydraulic actuators (DBox - Figure 8) to create motion and in one case a cockpit specifically designed for flight sims which could tilt the monitors and simulate tilt when the aircraft is banked. (Dreamflyer - Figure 9). DBox representatives claim their hydraulic actuators have a 5000 hour lifespan which is fairly robust.

Figures 8 - 9 It doesn’t get much better than this: Hydraulic Actuators and Tilting Cockpits (Source: JPR)

The next thing I noticed at CES was the amazing number of companies “hopping on the Wii bandwagon”. There were at least 15 companies displaying Wii accessories and customization. As soon as I saw the Wii Zapper last year (their gun controller) I predicted someone would soon be making more realistic looking Wii controller holders and this turned out to be correct. A few companies actually departed from the innocent white coloring and had more realistic looking black ones but the most impressive display of Wii accessories came from CTA Corporation. Not only do they have a full line of gun Wii remote holders (Figure 10), they have Wii steering wheels, airplane yokes, fishing rods, ping pong paddles, baseball bat, pool stick, tennis racket, golf club, boxing gloves, cooking items and swords and shields. All these accessories actually hold the Nintendo Wii controllers. Additionally they have Wii cooling stands, grips and myriad other accessories. Not a Nintendo exclusive accessory company CTA has items for PS3, PSP, PC and IPod. They have a battery and charger division, digital photo frames, and well – too much stuff to list. Check them out they have a great portfolio of products.

Figure 10: Wii Mote Guns from CTA (Source: JPR)

My personal favorite at the show, which is actually financially attainable for most PC gamers (versus $10,000 cockpits), were the AIB water cooling kits from Cool-It systems. These things look awesome and I look forward to tesing it out. Though Cool-It makes various styles of water coolers for both AMD and Nvidia cards, the key elements are the fact that they can be ordered factory sealed which takes a lot of the fear out of converting your system. Many models cool the entire card (figure 11), not just the GPU. Witnessing the evil that heat does to gaming performance on a daily basis, I really think water cooling is the way to go, unless your air cooling is perfectly planned out which is very difficult.

Figure 11: Cool-It Full Card Cooling - notice the tubes going all over the place (Source: JPR)

Geoff Lyon, CEO of Cool-It (Figure 12) was there to take me though their products which consisted primarily of card coolers but his current pride and joy is his sever rack automated cooling systems which he is pictured with. The rack system detects hotspots and applies increased airflow to specific areas versus the entire rack or room, saving on energy expense.

Figure 12: Geoff Lyon and the automated rack cooling system.

So CES will definitely be a regular pilgrimage for me now that I know about the large representation for the gaming industry. This side (chairs, sim pods, coolers, speakers, etc) of the products line is not well represented at typical gaming conventions yet are multi billion dollar businesses. Next year I will plan on at least three – four days.

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Friday, January 18, 2008

MacWorld — love it or love it

Every danged time I got to MacWorld I kill myself trying to get to the keynote. Okay, so I maybe I don’t give myself enough time. But it seems to be that getting on the 7:50 a.m. ferry for a 9:30 keynote, should be enough time. It’s only a 20 minute walk to the convention center.

Unfortunately, the MacWorld organizers have a whimsical sense of humor. They move the press registration every year and then they plant doofusses at key points to send you to the wrong place. Go to the West Hall, all press go to the West Hall said the doofus chorus. And every danged time, I fall for it. I ran around from the North Hall to the West Hall and finally to the South Hall where I belonged (I know this means nothing to people who aren’t familiar with San Francisco, but just substitute your own most hideous trade show experience, multiply it by at least 3 years and you’ll get the idea.) By the time I got my butt in a seat in the auditorium, I was hating life, hating my inability to schedule appropriately for unexpected surprises (well, hello, they were unexpected, right?), hating all the hundreds of people sitting in front of me, and most of all hating Steve Jobs. Dammit, why do I have to run around dancing to Apple’s tune when they don’t give a good gol durned dingity’poop about me.

You’ll excuse my French.

And then the keynote started, Steve Jobs took the stage exuding aging boomer cool, and soon I found myself texting my husband — I want an iPhone, now dammit, now!

Apple finally announced a deal, long in the negotiating, to rent moves via iTunes and smugly told the crowd he’d won over all the major studios.  Apple reloaded the Apple TV box so that now rented iTunes can play on TVs connected to the Apple TV, and Apple announced the new Air laptop. It’s a beautiful, thin, 3 lb laptop with a full size screen, full size keyboard, and remarkable 5 hours battery life.  I want it. It’s beautiful. It’s Apple. It costs $1799 for the 80 GB hard drive version. It costs, ummm, $3,098 for the 64 GB solid state drive version. The battery is non-replaceable. Who cares? I want it.

Now, for my money, here was the most important part of the show. Steve Jobs told us that we could have an optical drive for this nifty little Air. No big deal, it’s a simple matter of adding an external USB drive. Blu-Ray? HD-DVD? Sure, fine, knock yourself out but the future is the network. You’ll get whatever you want from the Apple network, from iTunes. Download what you want when you want it.

The future is also Adobe Air, Google, and the whole server-centric lot of them, said Jobs. If you’re old enough, and much of the Steve Jobs fan club is, you’ll remember that this was much the same message of the NeXT computer that Steve Jobs tried to sell after he was booted out of Apple for reasons that are way too complicated, arcane, and boring to go into here. Jobs wanted to sell a client computer that was as expensive as a regular computer. It didn’t have a floppy drive, it didn’t have a disc drive, it got everything it needed from the network. It made us really nervous.

The AIR is NeXT again and this time there is a whole infrastructure, called the Internet, to support it and it is beautiful. It just goes to show that if you live long enough all the stuff you thought was going to happen tomorrow really will happen — the day after tomorrow.

So, what’s with all those glum faces on the elevator? It wasn’t enough. You can ask Scott McNealy of Sun and you can ask Larry Ellison of Oracle and you can ask Eric Schmidt of Google, and they will tell you that the network is god but no one really understands the gospel. Steve Jobs has just wandered out into the wilderness.

The early word is that the investment community and others are disappointed with the Apple announcements. Everyone saw movie rentals coming. The Apple TV is an orphan no one loves. And the AIR? Why it’s wonderful, but it’s no iPod, and it’s no iPhone. Steve, what have you done for us lately?

In the end, the prophets in the wilderness will be proved right. They are working behind the scenes to redefine our world, but we won’t really notice just as long as we can watch Banacek any time we please. We won’t really notice that it’s not NBC who’s bringing us our entertainment, it’s Apple, or Microsoft, or Amazon. 

The revolution will come but you’ll miss it because you’ll be watching TV.

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Friday, October 26, 2007

Oh god, please don’t let us screw it up

That’s the prayer of the Internet dependent as we all enjoy another growth period.

And then comes the news that Microsoft has outbid all comers for the “privilege” of investing $240 million bucks in Facebook, the latest thing in social networking ... probably. Microsoft’s investment legitimizes a valuation of $15 billion for Facebook. I know I’m not the first to make this observation but that’s more than the valuation of many companies that actually design and build products, popular products! There are news stories all over the place about this—the AP story gets right to the heart of it.

Much is being made of Rupert Murdoch’s “brilliance” in paying a measley $580 million for MySpace for News Corp. but in the long run, Microsoft could well have the better deal. MySpace, dominated by teen screamers, pre-teens, and stalkers is slowing down and losing relevance for adult users. Facebook has a more grownup appeal and is growing faster than it’s more adolescent rival. In addition Facebook has added attractive development tools for advertisers and partners.

But the most important advantage Microsoft may have is that they didn’t actually buy Facebook (and founder Mark Zuckerberg isn’t selling for the moment either). Microsoft has made a deal to sell advertising for the site and share the proceeds and no doubt the new partners have plenty of plans for new revenue sharing opportunities but an outright buy might never be in the cards. (Here we are firmly in what-do-I-know territory.)

Shawnee sniffed that all this smelled like irrational exhuberance to her and she’s right, if a tad glib. The key to social networking is very likely to turn out to be not about individual sites like MySpace, Facebook, Friendster (remember them?), LinkedIn, or any other of growing list of affinity sites. Rather, it’s the enhanced ability of people to communicate and network online.  After all, how is a site like Facebook all that different from a site like ExtremeTech, or Hot Topic? Sites come and go, becoming popular and then fading as users wander off to play with a new toy. When a site is hot, then by all means buy in, get leverage, buy advertising, make strategic deals but when it fades do you want to be the guy holding the bag with a $580 million or $15 billion price tag? I think not.

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