Datacenter potential in Ethiopia

Where is Africa in this picture?  It's a fraction of the "rest of world" slice.  

A bit of history:  Until the late 2000s, data centers tended to be where the telecom cables were i.e. near big population centers with lots of Internet users. The important internet data center locations were NYC, Northern Virginia, SF bay area, Amsterdam, London, Hong Kong, etc. But as we approached the second decade of this century, energy gradually became a bigger cost than bandwidth so they started developing near power sources. Nowadays, Google and Facebook's datacenters are in places like Iowa and Oregon, far from cities and near abundant supplies of energy. 

This is an opportunity for Ethiopia.  (And it's what my company QRB Labs is focused on).

But two caveats: 

a) latency still matters so they can't be too far from the consumer for some applications like communications and live media. So in the short term, for content hosting, the focus will likely be regional rather than international.

b) for some applications, privacy, data security and intellectual property considerations are complicated, so the data centers need predictable and favorable legal environments. So Ethiopia has some catching up to do before it can really compete in hosting AI and other cloud computing services. But it remains an interesting potential area, especially for the model training portion of AI which is not latency sensitive.

There is one immediate application which is energy intensive, not very latency sensitive and completely location agnostic: Bitcoin mining.  I've written about it at length here, but let's put it in the context of data centers in general. The legal requirements are pretty simple as all the data involved is public and the algorithms are open source. And contrary to common misconceptions,  mining is purely infrastructure serving global users, it doesn't depend on local adoption of Bitcoin or the local financial regulations. So it can be anywhere in the world. The catch is, because it is location agnostic, miners are constantly seeking the cheapest power worldwide. Mining is globally hyper-competitive,  any miner that pays more than the other miners on average will immediately go out of business. So to attract miners power prices have to be very low. In the US, while AI data centers can pay up to $0.10/kWh, and households average around $0.15/kWh, and other industries such as manufacturing tend to be somewhere in between those two, big Bitcoin miners pay $0.02/kWh or less (total cost around $0.04 with half being energy). Of course, power providers will prioritize customers who can pay the higher prices. Thus, the natural equilibrium is that Bitcoin miners tend to buy power that no one else can use, also known as stranded power, and thus average lower price than any other users.

So with the right strategy, Ethiopia has a chance to benefit from the data center boom, selling stranded power to Bitcoin miners while working to develop the higher paying demand.  The highest priority should be for the power company to make electricity pricing be supply and demand-based, with aggressive location-based differentiation.

The second priority should be for the government  to radically reform the equipment import process. Currently this is a huge handicap. Importing data center equipment is a 9 step bureaucratic process. It takes on average more than 6 weeks to process each shipment, not including transportation time. 

• Security clearance. Each piece of equipment goes through lengthy "pre-import" approval and post-arrival "import release" approval processes. But everyone involved knows that computer hardware doesn't pose any cyber-security threat. Cyber threats are generally software and network based. In fact it's difficult to think of a single example in the world of a national security problem which can be solved by controlling which computers are allowed into the country. To be blunt, it is a gigantic waste of time. The national security interest should be focused on the energy security of the country.  Is the power company planning  the supply and demand correctly? The current approach makes no more sense that limiting the number of light bulbs that enter the country. 
• Import duty and investment incentives. Capital investments are charged lower import duties. This is an understandable objective. However, the process of qualifying is extremely onerous and often arbitrary. It requires an investment license which creates enormous complexity as I've written about before. Once you start operations you have to switch from an investment license to an expansion license, which has a new set of requirements like minimum payroll etc. Each shipment has to be gruelingly reviewed and approved by the investment commission, by the ministry of finance, as well as customs commission. Besides the inefficiency, the uncertainty is huge. Imagine importing equipment not knowing if the import duty will be 3% or 40% until after it arrives. Any misstep carries the risk of huge penalties, and at worst, the equipment can in theory be confiscated. For a data center, capex efficiency is a life or death matter, so the import risks are high enough to scare away most rational investors. It makes it very hard for a company to grow investment progressively. It would be much better to simply have a constant low import duty, say 5%,  for all equipment and get rid of the investment license. The businesses would be happier, and the government would likely make more revenue from the boom.
• Customs. Besides security and investment approvals, you have to go through customs. These offices are notoriously inefficient and unfair. To make matters worse, the more they delay, the more revenue they generate. Conversely, if they clear stuff too fast and at a low price, the individual customs agent can be suspected of corruption. This creates a cruel incentive for them to become ever more inefficient. A crucial reform would be to a) introduce the following key performance indicator: total customs revenue divided by average time to clear shipments. Tie it to salaries and promotions of the customs officers and their managers. Those who get the most revenue in the least time would be rewarded. And b) create a public database of assessed value and duties paid for all shipments. (The public database shouldn't have the name of the importer, just the numbers). This combination would help eliminate unreasonable delays and  corruption, as both the importer and the customs agent would be incentivized to quickly agree on the correct value. 

For once, Ethiopia has something that the whole world really needs. It can be the Saudi Arabia of electricity.  (Ok the second time, if you count coffee. But as I've written about before a long time ago, it's tough for a producer to capture its fair share of the coffee value chain). Let's not mess it up! We need the best possible energy pricing and the best import process.

Update on Ethiopic transliteration in Gmail, Google Docs, Blogger, etc.

ሰላም ዓለም!

Transliteration is is the conversion of a text from one script to another. For example,  typing  something in the Roman alphabet, like "selam alem", and having it show up in fidel (Ethiopic script) as ሰላም ዓለም.  This is a really convenient way for people who want to write in languages that use non-Roman scripts, to write on an ordinary computer which has a keyboard with roman letters.  

A few years ago (it's hard to believe it's already been that long!)  Ethiopic transliteration in Gmail, Google Docs, etc. was launched.   With several user interface changes in Google products, the instructions ain that post are a bit out of date. Here's a quick update so there's an easy reference somewhere.

Transliteration as a standalone tool

To use it as a standalone tool, where you can just type text to copy elsewhere, go to google.com/intl/am/inputtools/try/ or google.com/transliterate/amharic (similarly for tigrinya) 

How to write Amharic or Tigrinya in Gmail, and in Google Docs:

To use Amharic transliteration directly while writing inside Gmail, Docs, Blogger, Sites, etc. you need to set it as an "input method" (all of the following works with Tigrinya as well as Amharic.  Just select Tigrinya instead in the settings).

1. Go to Gmail Settings (the little gear icon in the top right corner of the Gmail window) and click on Settings.
   
2. In settings, under the "General" tab, in the "Language" section, click on "Show all language options" and then click on the checkbox to "Enable input tools".
   
3. Click on the "Edit tools" link right next to it. A large window will pop-up with various languages on the left under Input Tools, select Amharic and move it over to the right column under "Selected input tools" using the big arrow, in the middle of the window, and click OK
   
4. Save the settings: back on the settings page, make sure you scroll all the way down and click on Save
   
5. Once you have done that, you will see the አ icon right next to the gear icon in the top right in Gmail. Just click on that icon whenever you want to switch to typing in Amharic 
6. Then when you type phonetically in roman letters, and as you finish each word, the corresponding text in Ethiopic shows up.  
    
7. You don't have to memorize any rules, just type naturally the words as they sound, and it will figure out the best transliteration. For example "negergn" becomes ነገርግን but "negeregn" becomes ነገረኝ.  Notice that "gn" gives different results in the two cases. The transliteration shows up as you type, showing multiple candidates, and when you hit space at the end of the word, the top one is automatically chosen.  You can also select the several other choices if the top one is not what you mean.
8. This also works in Google Docs, Blogger,  Google Sites and most Google products that have text input.

P.S. Ethiopic font

Note that before you can use transliteration, your computer must have an Ethiopic (Ge'ez) font installed. Most recent versions of Windows or Mac have it pre-installed so you can skip this part. If you can see the following text "ሰላም ዓለም" (or read the text on this web page, then you have an Ethiopic font installed. If you can't see it, then you need to install a font like this one for example.

Random matrix and phase shifts

I just stumbled across this great article on Tracy-Widom distribution. It talks about random matrices and phase shifts.  This reminded me of some work I did on resource allocation in network interconnection. We derived routing matrix conditions for "peering" and "dis-peering" (the latter a new term) to be equilibria in the decentralized resource allocation game. I wonder what a probablisitic approach with the routing matrix randomized would add to the game theoretic results. Large scale self organizing interconnections (or failure thereof).

Don't buy the second item on the menu

Yesterday a door to door salesman from Time Warner Cable came to our door. He was a nice guy so I listened to him even though I've been avoiding cable for a long time. Anyway here are the current options for Internet access from Time Warner Cable:

"If Internet is all you need, however, TWC offers its “Everyday Low Price” plan for just $15 per month. This includes 2 Mbps download speeds, 5 emails accounts and 100 MB of email storage. Need to go faster? Try Basic (3 Mbps and $30 per month) or Standard ($35 per month with 15 Mbps). If you’re an online gamer or download large files on a regular basis, the 20Mpbs of TWC’s Turbo plan ($45 per month) may be the best option, while home business users may want to try out the Extreme plan, which offers 30 Mbps download speeds at $55 per month. Finally, if you have a large family or Internet users or connect multiple devices on a daily basis, you may need the Ultimate plan, which provides download speeds of 50 Mbps, 30 email accounts and 10 gigabytes (GB) of email storage for $65 each month."

OK now consider the slope or marginal prices:

• The first 2 Mbps costs $7.50 per. Fair enough. 
• But then the next 1Mbps costs $15!
• The next 12Mbps cost  just $0.42 per!!!
• Then the next 5Mbps cost $2, 
• And the following 10Mpbs are $1,
• And then 20Mbps more at $0.50 each.

The first and the last three are totally reasonable. But notice the second item on the list is a horrifically bad deal.  Why does it exist, who in their right mind would pick that? It's like  a trap. Maybe some people will just ignore the Mbps amidst all the verbiage about storage and email etc (extras which really are insignificant in terms of cost) and think to themselves: "Hey, I'm not poor and "Everyday Low Price" that sounds like the plan for poor people.  And I don't understand the high end stuff, so let me get Basic, that sounds reasonable." And boom, they are paying an astronomical price. Even if not many people fall for it, it's very profitable.  It's also kind of unethical in my opinion. (This is not the first time I'm finding fault with Time Warner in these pages, and I don't even use them. )

A more innocent version of the same thing is wine lists at restaurants. Never order the second item! It's for suckers. To see why, imagine a naive and status-conscious customer who doesn't know much about wine: he will skip the first one to avoid looking cheap, but will hesitate to go to far down the list because they can't justify buying the expensive ones. So he will settle for the second one. The restaurateur willing to exploit this can profit by putting the cheapest wine at the second cheapest price.  Thus gouging the suckers without affecting others. The moral of the story is, even if you don't know about wine, you can still have a wine list strategy.

Net neutrality

"Net neutrality" a hot topic again these days. Plus ça change, plus ça reste pareil. Given the amount of confusion out there it seems like it won't be the last time.

When people say "neutrality" they could mean any combination of:
1) dominant access or backbone providers should not discriminate between customers, they should offer a similar prices to any buyer
2) all / most / many networks must exchange traffic free of charge with each other
3) all traffic must be treated the same regardless of application
4) all end users must pay a flat price for unlimited usage

My view, as regular readers... < crickets > ... can guess, is that 1) is the only good version.  2) I've written quite a bit about before, and I still think it's wrong,  but thankfully 2) is rapidly joining  3) which has been obsolete for years.  4) is fine when feasible but demanding it be a requirement of all forms of access is just silly.

But 1) is really important! I hope that somehow emerges as the dominant focus this time but I'm not holding my breath.

For example, in the US right now there's a real danger with Comcast: local access monopoly x continental scale + vertical integration with content. Huge issue. This is all about 1), but the general public thinks the issue is 4), which means "net neutrality" will be defeated as irrational whining.

Cognomics: what is the market price of your mind?

Last year, I came across a post about a very interesting study of CAPTCHA economics (in fact, this post is a slightly expanded re-post of an email I sent to a mailing list in Agust 2010).  CAPTCHAs are the little boxes you see on login pages across the web. They are meant to prevent software bots, run by spammers, crackers and other Internet bad guys, from pretending to be real users and abusing web services.

The key feature of a CAPTCHA is that it's a puzzle that is very easy for humans to solve but very hard for computers. So to defeat the CAPTCHAs, the bad guys have created online "farms", platforms where people are payed to solve the CAPTCHAs for them.

Leaving aside the nefarious nature of the application, it is fascinating to note that this is one of the first large scale instances of humans renting out their brains for a few seconds at a time. It raises the question: what is the market value of your mind? Or more precisely, of your ability to think? In a sense, of course, billions of people are renting out their brains every day by doing cognitive work in exchange for a salary. But normal employee/employer relationships are complex in ways that are not fully captured by price alone, in other words it's not a commodity. But with the CAPTCHA farm, you get as close as possible to cognition as a commodity.

Note that I said "one of the first" instances... There's another bigger one that's been around much longer: advertising. When advertisers pay for ad placement, they are paying for your attention, so in a sense they are renting your mind. Particularly with Internet advertising, the advertiser literally buys a few seconds of a person's attention, one person at a time. This was a big meme during the dot-com era, the "attention economy".

So, if indeed there's a market for cognition, how do the prices compare across these two sub-markets?

• Spammers* pay O($1) per thousand CAPTCHAs solved.
• Advertisers pay O($1) per thousand impressions

First observation: In both cases, they are paying to get your mind for O(10seconds). So the mind is really a commodity worth the same whether you are renting it out to store and propagate a commercial message or to do some computation!

Second, if you draw a little diagram of the flow of value, the cognitive supply chain as it were, the two are like mirror images of each other, with the same values circulating in opposite directions. Like electrons and anti-electrons in the same circuit! Here's what we get clockwise for the advertising business:

Advertiser → $1 → Publisher → (payload) → User → (profit from product) → Advertiser

And here's what we get, anti-clockwise for the web-spam business:

Spammer ← (profit from scam) ← Publisher ← (payload) ← User ← ($1) ← Spammer

Funny stuff. Spammers are like the anti-matter to the matter of advertisers, the evil twin from the underworld.   Fortunately, they are not quite symmetric in size. It's a lot harder for the bad guys to grow the same size as legal ads/content ecosystem!

Note: of course, the main difference between the minds rented for ads and the minds rented for solving CAPTCHAs is wealth... Rich people's minds are valuable to advertisers,  poor people's minds are useful to spammers. But despite this split along wealth lines, the prices are of the same order of magnitude.

Zen for my domain

After procrastinating about it for years I've finally switched this blog to be on my personal domain name (in case you're curious, here's how).. so adios nemozen.blogspot.com and hello nemozen.semret.org!
How long did I procrastinate? Suffice it to say, I've had that domain name since before blogger/blogspot or even the term "blogging" existed... Now maybe in another 3-4 years I will customize the templates! In the meantime, I hope this doesn't break the feedopology.

Mark Cuban's advice to Myspace

I made what turned out to be a rather lengthy comment on the latest post at blogmaverick.com wherein Mark Cuban gives advice to Rupert Murdoch. A quick survey of my readers (hey me!) indicated that close to 100% would like to have that insightful comment right here on their favorite blog. Hence this post.

The first part of Cuban's advice is kind of crazy. He wants news sites to block incoming links from aggregators. Block links! That's a surprising level of cluelessness from our good friend, who is getting all the flack he deserves for that idea from other people so I won't add to it.

The more interesting part of the post is on Myspace's potential future business model... I really think he's on to something. Here's what I had to say about it (Since Wave is not integrated with Blogger yet, I can only cut & paste):

Excellent advice for Myspace, Mark! I think being a music platform is the best business plan for them. They have the audience with the right demographics, and the artists. For now… But they can’t pull it off with the website they have today. So the big question is, do they have the technical capability to support that business plan?

It would take a significant breakthrough, a next generation web application. It would have streaming, download and playback, syncing with devices, all better or at least as good as todays iTunes client/server combo. It would also have to be a great authoring/publication tool for artists to easily create a good looking online presence, perhaps even some actual post-production music features to create special samples and mixes…

In short, they need a site that is as different from today’s Myspace pages as, let’s say, Gmail in 2009 is different from Hotmail of 1999. The ingredients are available and ripe: after years of stagnation, browsers and web languages are in a period of intense innovation. But can Myspace pull them together to create a cool and, as Steve Jobs would say, “insanely great” technology for the new web-based music universe? I doubt it. I just don’t see any evidence whatsoever, at Myspace or anywhere else at News corp, of the level of technical depth required to lead the world into this new — dare I say it? — “web 3.0″ music world. Still, you are right IMHO, it’s their best bet and they should at least try rather than wither away.

Chronicle of a death foretold

Sometimes little things are very telling. In the case of Facebook, one of those things is "Reply-to:"... or rather three of those things. To wit:

• When you receive a message on Facebook, it sends you a notification by email. Great. But then you can't reply! Why? Why don't they just set the reply-to in the email header to an address that will send it back to the person's inbox in Facebook? That way you and your friend are still communicating through Facebook but with the added convenience of email e.g. on your mobile. But no, they force you to login to the Facebook website to reply.
• Similarly, suppose you are logged in to Facebook, and you want to email your friend. You go to you friends profile, and guess what, you can't click on the email address to send them email! Why? Why can't they just make it a mailto link?
• So ok, you decide to just copy and paste the address, of course. But you can't -- it's an image! Why? Whyyyyy? Why can't they just leave it in plain text, why do they want to go through the extra expense of converting everyone's email into an image?

In short, they are really really going out of their way to discourage you from using your friend's email address. Why? Fear of spam is not the reason, we're talking about authenticated contacts. Obviously the reason is that their business model is such that when you visit their website, they make (or at least hope to make) money from advertising.

The technical ideal here is obviously flexibility: let users exchange emails, SMSes, IMs, everything they want with their friends, with Facebook being the hub of their online universe. Instead of re-inventing separate and more primitive versions of email and IM inside their closed world, they could inter-connect and inter-operate. They could also for example enable you to chat with your Facebook contacts directly even if only one of you is logged in to Facebook and the other is on AIM, Yahoo Messenger, MSN messenger, or Google Talk... If Gaim and Trillian could do that years ago, surely Facebook can. They could effectively unify all the existing message systems into a grand Facebook Open Overlay IM ("FOO IM"). It would be a great service to their users, and a manifestation of the core raison d'être of a social network. And of course, they already have plenty of employees there who are very smart and experienced with this kind of stuff, so they definitely could. But, instead of doing the right thing, their business model is forcing them to instead handicap their users' communications!

Every company must have a way to make money of course. Through some combination of good ideas, timing, environment, luck etc. companies end up with very different business models. Here it looks like Facebook is trending toward one which requires an "adversarial" relationship with the user. We're seeing hints that their need to reach profitability is starting to go against the best interest of their users. Sure you can still make money that way. But that road is ugly. Down that road you end up with health insurance companies whose profits rely on denying coverage to people who tought they had paid for it. Shady calling cards where they put obstacles in your way so you can't fully use the advertised number of minutes. Sleezy subscription schemes that generate profits by making it difficult to cancel even when you are entitled to. Everyone knows that world, those businesses you just hate, the ones you complain about. Those are simply businesses where the company's incentives are not aligned with the users'.

In that sense, Facebook today is eerily reminiscent of AOL in the late 1990s. Facebook is the king of social networks with something like 300 million users. AOL was the king of Internet access providers, with 30 million users paying $20/month! (Here's an interesting side question: I wonder how Facebook users as a percentage of total Internet users today, compares to AOL subscribers as a percentage of total Internet population in 1999? I wouldn't be surprised if it's roughly the same.) And at the very peak of its dominance, AOL was showing the same signs. Instead of letting their users just go to any website directly, they had this limited proprietary system with "rooms", "keywords", "channels", their own content, their own applications, etc. The reason was because they were stuck in a business model of a closed online service from the 1980s. So even though they knew the open network was infinitely better, they were devoted to a doomed goal of keeping the users inside their own closed world. Inevitably their users realized they could get more for less: pay $10/month to a no-name ISP, use a free browser and just surf the web... ("surf the web" sounds so quaint doesn't it?) And they started leaving AOL in droves. Even after merging with Time Warner, AOL couldn't capitalize on the shift to broadband. They remained desperately focused on trying to keep subscribers from leaving the old "America On Line", they became a monster that took adversarial customer relations to a whole new level, before finally giving up in 2006. (By the way all this has little to do with what AOL is today in 2009).

To be sure.... Wow for a long time, I've wanted to start a paragraph with "To be sure ...", and this is the first! But I digress.

To be sure, despite the dramatic title of this post, and despite the fact that I've picked on them once before, it's far from over for Facebook. They may yet decide to give the users the obvious flexibility, and make enough money with higher quality ad targetting when the users naturally come to the site anyway. Maybe they will find new ways to advertise as messages flow openly in and out of their network, or maybe they will figure out brand new business models. Whatever the case is, they do have one great thing going for them. Execution. They know how to get things done. You don't get to 300 million users by being stupid or lazy. They just need to make sure they are not smartly and expertly marching off a cliff.

The title of this post by the way is from a novel by one my favorite authors. Not his best novel, but a great title. And a pretty good movie too.

100% wireless

Continuing with the persotechnomobilephoto upload theme:

This past weekend, I finally completed the last step of a very gradual evolution...  to H. s. sapiens radionsis i.e. the all-wireless man.  It started with giving up the telephone landline years ago and just using the cell phone.   Then, after a recent move, I could get many high-def digital TV channels completely free... via good old fashioned broadcast.

So I decided to take the leap with Internet too.   I had a  Sprint broadband wireless modem I'd been using on a laptop, and one day plugged it into my 4-year old Mac mini. That worked no problem (after  I realized I had to put in the "phone number" #777).   So now, after procrastinating for weeks,  I was finally going to look into how to enable IP forwarding in OS X and what do you know, it's right there in System Preferences under Network, there's an icon for sharing, et voila!  Now I needed a DHCP server and I was just getting ready to download and install one when, lo and behold, I see there's already one in OS X.  Oh cool,  home network done.  Right now I am sitting writing this post from my laptop, which is connected to the Internet wirelessly via the Mac, which is connected to the Sprint cellular network.   It all just works! Sometimes you just have to say: cool! This is another one of those times.

The same little mac is also the host of  my music collection and old-fashioned CD player too. It's also plugged into the TV to serve as DVD player. And of course it's a computer connected to the internet, so with bluetooth mouse and keyboard, I can kick back and surf the net on big screen.  That goes very well with boxee.tv, which makes it really hard to miss cable TV (I never really cared much for it and barely ever had it anyway). 

Two cool things. First is that the little mac mini  has totally replaced the roles normally played by a DSL/cable modem,  a WiFi router,  a home computer, a set top cable/satellite box, and a DVD/CD player.  Not only has it replaced them all, but for the home environment, it actually does a better job in many of those cases! All in one very compact, well designed little box (HDMI for example, pretty far-sighted) where all the details just worked so easily I probably spent more time writing this post than setting it all up.  What can I say but: I love OS X and the mac mini.  

The second cool thing is that  I now enjoy home Internet, TV, and phone service all wirelessly, untethered! I could just as well be living on a boat... with a big battery. 

Always remember batteries. In this wonderfully convenient wirelessness, the weak link is  the battery.  Was it Napoleon who said something about how a whole battle could turn on a simple horseshoe? Today the same can be said about batteries.  

Meta social network

I'm forced to recognize that despite making fun of the social networking hype, I do use a number of web things which feed other things and involve people I know. So, jokes aside, here's an attempt at making sense of the feed topology, my personal feedological graphic if you will:

This is also my first attempt at a blog post from a mobile photo... I took the above a few days ago and synced it to picasa over the air. But you can't rotate!

Trouble in (AAPL) paradise?

Last year my beloved blackberry was stolen... at gunpoint! That was the single most lopsided cost and benefit equation (for all involved) I have ever been a part of in my life... but that's not today's story. The story is, I decided to replace it with a second generation iPhone (with 3G and GPS), which had just come out. I'm not about to write a product review, God knows enough has been written about the iPhone. I'll just sya it's a really cool device.

But there's one aspect that doesn't seem to be talked about at all. A few weeks later I went to Ethiopia, and coincidentally again, I got one of the very first 3G SIM cards in the country. Amazing, the coolest phone and the fastest wireless network, woohoo. Except... there was no crack to unlock the 3G iPhone! So I had to carry two phones, one to make calls, and the iPhone for my address book etc. Second, my MacBook pro doesn't have a modem! And of course, who remembers to take an extra modem with them? Thankfully I had an old IBM Thinkpad, which has a built-in modem, so I could get on the Internet. The point is that the two Apple products I had were unusable in the third world. Whereas their competitors products (IBM and Blackberry in this case) are perfectly usable in those same conditions.

When I came back, a few weeks later, I was given an HTC G1 Android. Again many people have written comparing the two, but the thing that immediately struck me as the most important in comparing the two is a very basic point. The Android doesn't assume you have a computer. Everything is over the air, your contacts, applications, OS updates etc. are all updated/synced wirelessly. Whereas the iPhone requires that you have a computer, and a pretty powerful one at that (it has to be able to run iTunes on Windows or Mac OS X). To use an iPhone, you have to not only buy the phone, you must also already have a $1,000-$2,000 computer at home. If you live in the first world, that's a perfectly valid assumption, no problem. But it means that Apple's total market is a few hundred million people in the first world. This is true of Apple products in general, but is even more true of the iPhone which is a hugely important piece of that company's future. For comparison, Android's market is those people, plus the other 3 billion people in the world who can afford a $200 phone but not a $2,000 computer.

Then few months ago I read a great blog post (unfortunately I can't find the url to link) which argued that because Apple's marketing has been based on "coolness" and "exclusivity", once a device reaches a critical mass of users, the marketing starts defeating itself. Same psychology which limits the lifespan new fashion or of "hip" nightclubs: exclusivity is key to success, and eventually when the B & T crowd can get in, it's no longer cool.

Add to that the phenomenal success of iPhone sales so far, and you can only conclude that pretty soon, it might, just might saturate its potential market, much sooner than you would expect. There's some evidence this is already happening with the iPod. And the iPhone has more formidable competitors and more complicated market dynamics than the iPod.

Recall what happened with personal computers, Apple invented the category and dominated it with a unique approach until the mid 80s. But as the overall market grew from millions to billions of users, they peaked and ended up stuck at well under 5% market share, as cheaper and uglier IBM PC clones took the other 95+%. On the other hand, in the last 10 years, Apple has pulled off several bet-the-farm miracles. Not just the invention of the iPhone, and the iPod, but also two earlier huge gambles: switching from PowerPC to Intel CPUs in the Mac, and switching from the old Mac OS to Unix-based OS-X, both were incredible successes of business and engineering that defied the conventional wisdom completely.

So this is a tricky one. It could go either way. But I'm going to go out and a limb and predict that 2008 was the year of Apple's peak. Short AAPL.

What happened to Kavo, Tizaa?

I want my
I want my
I want my DVRP2P


From the first time I heard about Tivo, I expected the obvious next step, which would be gargantuan, the biggest thing since the web browser. It was obvious; Tivo + Napster! But Napster was already dead so I started saying: Tivo + Kazaa! Kazaa just happened to be the hot P2P file sharing network at the time (circa 2002). It's not necessarily Tivo anymore either, now it's DVR a whole category. So to update the idea let's call it DVR+P2P.

It's obvious. The DVR is basically a computer with a big hard drive, and a fancy video decoder/tuner card. Tivo is essentially an application that runs on Linux, I believe. Moreover DVRs connect to the Internet. So if they just added a P2P software client on it, boom! Suddenly not only can you record your own TV programs, you can also search every other user's recorded programs. This means almost anything that has ever been on TV on any channel is accessible for viewing on demand by everyone! The benefit to users would be ... I can't find a strong enough superlative. It'd obviously be HUGE. And incredibly easy to do.

So why hasn't it happened yet?

• Copyright infringement? This is running on a closed device so they could easily restrict the software to only search "legal" videos from the same cable or satellite provider only.
  
• Advertising? They already allow fast-forwarding through commercials, it doesn't seem to have killed the ad revenue. In any case they could disable ffwd if they wanted to.
  
• Revenue? DVR+P2P would be so great they could charge any price for the service everyone would still sign-up for it.
  

Are they just extremely paranoid?

Here's what AFAIK is the conventional theory about this: Traditional laws relied on the physical form of books, records etc. to control the amount of copying, and now with digital media + data networks making copying exponentially easier the laws just don't fit anymore, and so there will be some major adjustments in the coming decades. In the meantime content owners are paranoid and are just blocking every new distribution method even if it's beneficial to them, like they tried to do when VCRs first came about. Scrounging through some links on my old homepage, I found a link to the first article I first read on this: "Who will own your next good idea?".

Today, I stumbled across a brilliant presentation by Laurence Lessig from 2002 entitled "Free Culture". In fact this post was supposed to be a quick link to that preso but it has released years of pent-up frustration on this subject in me. Anyway, "Free Culture" augurs a much darker cloud over the same field. He makes the point that digitization is expanding the scope of regulated use dramatically to the point of suffocating unregulated use. Which seems upside down because we are so conditioned to think of digitization as threatening regulated use. But when you think about it, it's absolutely true! Brilliant!

<irony>
That link on the word Brilliant which I've used before was to the hilarious Guinness commercial where they keep saying "Brilliant!"  Now it says "This video has been removed due to terms of use violation." What a perfect example of legal protection of creativity!
</irony>

The more I think about it, the more amazed I am by the truth,  simplicity, and importance of that fact: digitization is expanding the scope of regulated use. Unregulated use which used to be 90% of the activity, like simply reading a book or lending it to a friend, is being replaced by regulated use: reading a web page is technically a regulated activity, there are restrictions on what you can or can't do with those bits of content whether they are in your computer's RAM or HD, or pixels.  "Fair use" is just a minor sideshow. Unregulated use is the 800lb gorilla. I don't think most people realize that and they really should.  Lessig is a giant.  

"Free societies enable the future by limiting the past" -- Laurence Lessig.

Nemo, Zen and the art of 20%

One of the cool things about my employer is the concept of 20% time. Basically it's a license to spend a chunk of your time working on things that you think are good, useful interesting, etc., but otherwise might not get done. Recently I finished a small 20% project, and it was officially announced today. Read all about it, and then go and try it!

Note: If you can't see Ethiopic fonts on your computer, here are some links to Ethiopic fonts to download and install.

Microsoft files pay-per-use PC patent

Note to self: Microsoft files pay-per-use PC patent... What about Amazon's EC2 and S3 services? I assume they were able to patent some of it before launching. Is the only difference here that the MS patent applies to "personal computers" whereas Amazon's is for "servers"? Eeeeeenteresting. This may be relevant to me....

eBay: fall of an icon

I have always been huge fan of eBay. Actually not always. At first I was a fan of Onsale, the first auction site on the net! In fact I bought my first laptop in an auction on onsale.com, in late 1997. Later I bought their stock. Then they merged with egghead.com and then went out of business ages ago... While writing this post, I noticed there's a current website at onsale.com which seems to have nothing to do with the original. So anyway when I heard of eBay, I dismissed them as a copycat. But having a more than casual interest in auctions, inevitably I realized the main difference between onsale and ebay was huge.

Ebay had sellers! It's hard to appreciate today just how revolutionary that was kids.  Let's just say, in addition to the use of auctions, it presaged long-tails, user-generated content and many other things that we consider fundamental to the Internet today. Even amidst all the dot-com hype, eBay was definitely one of the truly revolutionary things about the Internet. And it was profitable! During the dot-com bust, and for years afterward, eBay shone ever brighter.

But for the last couple of years, I've become convinced that eBay has entered it's John Sculley era. Like Apple in the late 1980s, faced with a new wave of challenges, they have responded with a misguided strategy. I think they are neglecting their strengths and fighting from weakness, which  as we've known since Sun Tsu, is a path to likely defeat.  

Thus, in accordance with my rights and obligations as a blogger that no one reads, I hereby charge eBay Inc. with failure to fulfill it's destiny as an Internet icon, in ways that include but are not limited to:

1. Website suckage: Every time I've tried to buy or  sell stuff  on ebay in the last couple of years, I've been shocked by how cluttered, messy and unusable the site is. Three years after Ajax became the norm, ebay.com pages look like they are from cgi shell scripts written in 1996. 
   
2. Concentration on the fat head instead of the long tail: they changed the fee structure in a way that was widely interpreted as anti-small seller, anti-auction, pro-fixed-price.  They even shockingly removed the ability for sellers to leave feedback on buyers!
3. New management whose arrival coincides with moves betraying a  profound misunderstanding of their core value as a two-way marketplace.

To make a long story short, short EBAY, long AMZN.

NOTE: This post was first drafted in July 2008 but not posted until December.  Things have changed in the financial markets since but all of the above still applies IMHO.

Karma Tycoon

Due to a recent ahem... incident, I stumbled across some old press coverage for Karma Tycoon. Cool! Not just because it's a fun and educational game which anyone can play free (check out the the rave reviews), but because yours truly wrote the game server.

It was a one-off contract for Do Something. 9mmedia, developed the client-side and outsourced the server-side to me at IHN, back in 2006 when IHN needed some cash. It ended up being a pretty cool project... 9mmedia guys are great to work with. I highly recommend them.

The game was fun and interesting to design and implement (but not the schedule -- that was rough especially since I was also busy with some other stuff). We used red5 to interface between the java server and flash client. I was also able to use some components of Merkato too, which was nice.

Canary in a coal mine

pulse, naymz, doostang, fastpitch, ...

That is the list of new social networks I've received invitations to join just recently. Some are new, some are old websites recylcing themselves as social networks. Before that, there was ning, facebook, linkedin, geni.com, myspace, friendster, hi5... This is crazy. Have we reached the boo.com stage of facial neworking? (Oops. I just realized I wrote facial instead of social. That's hilarious).

Meanwhile, Blog Friends -- the one thing that I found most promising on Facebook (at least as an example of a feature that I could make use of, not necessarily a general killer app that would change the world) -- died an ominous death. Ominous for Facebook that is. But in it's last gasp, it inspired a useful cliche. The day it died, my status message: wondering if Blog Friends was like a canary in a coal mine.

Why that analogy? See what Blog Friends themselves said: "... we have been at the mercy of Facebook's frequent modifications of their Platform specifications, and that has also been another disabling factor for us." So I remain firmly in the camp of Facebook skeptics -- at best, it's the next AOL (which is still huge).

I remain however a huge fan of Geni.com. That one that should be good for generations.. literally.

Overall, I hope social networking becomes something that's not quite a separate app, and not just a feature, but a service/capability as ubiquitous, useful and unobtrusive as ... email! (Hey check that out: 3 "U"s! Now I sound like a cheesy business book). Somebody should create standard api and ... yeah! Something called Open Social... That would be pretty promising!

Of course, I've been wrong before on this kind of stuff.

Golgool -- Custom Ethiopian Search Engine

Golgool is my quick little exercise in creating a Google custom search engine. Check it out at www.semret.org/golgool.

For example, a search for [seeds export] on golgool yields more interesting results than a search for [ethiopian seeds export] on google.com.

Volunteers welcome! Send email to the address at the bottom of the Golgool pages and I'll send you an invitation to contribute (so you can add sites, search refinements, etc.)

Wisdom of crowds revisited: intrade

Aha! Search engine futures by Intrade. One year after Google and wisdom of crowds, the idea is catching on.