Mark Fleischmann

The CEO of Philips Electronics North America seems to be having a midlife crisis. Or at least, his company is. Asks Paul Zeven: "Have we gone too far? Are we in step with the needs of today's American consumer?" Philips research suggests that manufacturers have gone astray. "My company has studied the relationship between technology's complexity and consumers' attitudes and found that two out of three Americans have lost interest in a technology product because it seemed too complex to set up or operate. We also found that only 13 percent of Americans believe technology products in general are easy to use. The study concluded that only one in four consumers reports using the full range of features on most new technology products. If these findings aren't enough of a wake-up call, the study also found that more than half of Americans believe manufacturers are trying to satisfy perceived consumer needs that may not be real." It's telling that Zeven looks not to the hardware sector for a new role model, but to the likes of Google and Craigslist. The solution, he says, is "design, manageability and functionality."

How much bad news has analyst Rob Enderle got for the Blu-ray camp? On top of all that other bad news? Let me count the blows:

By a 3-2 vote, the Federal Communications Commission's Republican majority voted yesterday to supplant local regulation of television delivery services with their own rules. The move is expected to speed the entry of Verizon, AT&T, and other telcos into the turf of cable and satellite providers. Congress had been about to enact legislation with new video franchising rules until the regime change of the November elections. Now Democrats like Reps. Ed Markey (D-MA, new chair of the House Subcommittee on Telecommunications and the Internet) and John Dingell (D-MI, new chair of the House Energy and Commerce Committee) are pledging to take a close look at the FCC action in 2007. Along with the U.S. Conference of Mayors, other local-government associations, and various media watchdogs, they question whether the FCC had the statutory authority to change the rules. FCC chair Kevin Martin says telco TV will increase competition and lower rates for consumers, pointing to his agency's 2005 study on cable rates, which showed they had increased 93 percent over the previous decade. Not so, says Harold Feld of the Media Access Project: "The other guy just gradually raises his price...rather than having the higher price come down to the competitor's level." Overshadowing the cost issue is the equal-access issue: Can the telcos be counted on to "build out" to every home in a community under the new rules, as the old framework of local franchising and regulation had required them to do? The telcos have their own good cop, bad cop routine going on this subject. There's your hot topic for the New Year.

If you want to predict the future of the music industry, don't just talk like a pirate. Think like a billionaire. According to Mark Cuban, owner of HDNet and the Dallas Mavericks, the music download business may be in for a major consolidation. Forget about iTunes and the Zune Marketplace, he says. Instead look at what Google has just done in the video file sharing realm: Pay $1.65 billion for YouTube and offer the television networks an estimated $100 million for the right to use portions (as opposed to all) of their programming. Cuban likens it to the moment when Microsoft took over the desktop by selling Office as a $99 upgrade back when word processors, spreadsheets, etc. sold for $500 each. Then he crunches the numbers: If Apple sells a billion tracks a year for 99 cents each, and pays 70 cents per song to the music labels, the music industry gets $700 million, and the biggest labels get $575 million of it. But what if deep-pocketed Google offered that same $575 million to the major labels for the right to use just some of their content free--not their whole catalogues, just hot songs and clips? After all, music executives are already openly rebelling against Apple's rigid pricing. Cuban finishes with an intoxicating rush of speculative questions: "Would it be worth it to Google to pay $575 million and up per year to completely turn Apple upside down? To completely pre-empt their ability to sell iPods? To potentially introduce a new hardware device, or partner with someone who has one? To sell advertising around the music rather than the music itself? Is there a traditional Google arb here of 70 cents per song vs. 70 cents of advertising around the song? Could it sell that much advertising online to justify giving the music away?... Could [Microsoft] position the Zune as the de facto winner by spending $575 million per year with the music labels and giving the first billion songs away to Zune owners?"