Zune vs iPod

Walter Mossberg writes:

This first Zune has too many compromises and missing features to be as good a choice as the iPod for most users. The hardware feels rushed and incomplete. It is 60% larger and 17% heavier than the comparable iPod. It has much worse battery life for music than the iPod or than Microsoft claims — at least two hours less than the iPod’s, in my tests. Despite the larger screen, many album covers look worse than they do on the iPod. And you can’t share music libraries between computers like you can with iTunes.

Zune’s online store offers far fewer songs, just over two million, compared with 3.5 million for the iTunes store.

Social Networking Numbers

GigaOM writes:

Some interesting figures from social networking company executives here at the Web 2.0 Summit1. Cyworld and MySpace are, more than ever, heads and shoulders above the competition.

SK Communications CEO Hyun-Oh Yoo reports Cyworld2 has 20 million subscribers in Korea, which is 40 percent of the total Korean population, as well as more than 3 million users in non-Korean countries. He claims 96 percent of 20- to 29-year-old Koreans use Cyworld regularly, which is kind of fuzzy, but it implies that all of them are members of the service, which is impressive on its own. The site has 22 million unique visitors per month, 20 billion page views per month, and $300,000 in daily sales of digital items.

A few minutes later Fox Interactive president Ross Levinsohn got on stage and bragged about a couple of MySpace3s numbers. The site had 320,000 new profiles created around the world yesterday.

Like.com for Visual Image Search

Techcrunch writes about an offering from Riya:

Like.com is image search. There are lots of other image search engines on the web today. But all of them only take queries as text, and compare those text queries to the meta data attached to an image file. This data is notoriously thin, and companies like Google are resorting to using human labor to attempt to add descriptive keywords to images stored on their servers. Even specialty image search engines like Pixsy have fairly thin meta data for images. And all of the existing search engines allow only text for search queries.

The Like.com engine takes both text and images as queries, something no one else does. To return results based on an image query, Like.com compares a visual signature for the query image to possible results. The visual signature is simply a mathematical representatioin of the image using 10,000 variables. If enough variables are identical, Like.com decides the images are similar.

Amazon’s Utility Services

Dan Farber writes:

Amazon’s digital utility charges the equivalent of $70 per month for the equivalent to a 1.7 gigahertz x86 box or $70 per hour for 700 boxes, Bezos said.

Tim O’Reilly quizzed Bezos about why Amazon is providing utility services. “The answer is we been doing this for 11 years. We take the things we are good at internally and figure out how to expose those and charge for them. We are good at it, we know how to do it and it is an attractive business,” Bezos said. “We are in this business to serve developers. We are in the mode now of listening and trying to figure out how to make the services better.”

Forbes on India

Forbes writes:

Indias new status as a high-tech powerhouse is creating headaches that could soon cause India to look a lot more like any prosperous Western country wrestling with complacency, obesity and all the other ailments of the well-to-do. That doesnt mean Americans can kick back and chill. But as the monetary costs of doing business internationally level out, new opportunities for clever capitalists will appear.

When I returned to the U.S., a Silicon Valley friend glumly asked if I too was convinced that American businesses would soon be hollow shells, mere marketing fronts for legions of harder working Indian engineering enterprises.

Not quite, I said.

On the one hand, there is plenty of evidence of the energy and smarts of the Indian workforce.

TECH TALK: Two-Sided Markets: Examples

A 2001 paper entitled Platform Competition in Two-Sided Markets by Jean-Charles Rochet and Jean Tirole gives a number of examples of two-sided markets. One such example is the videogame market. They write: A platform cannot sell the console without games to play on and cannot attract game developers without the prospect of an installed base of consumers. In its thirty years of existence, the video game industry has had four leading platforms, Atari, Nintendo and Sega, and finally Sony. The business model that has emerged uses consoles as the loss leader and draws platform profit from applications development. To be certain, history has repeatedly shown that technically impressive platforms (e.g., Mattel in 1981, Panasonic in 1993, and Sega in 1985 and after 1995) fail when few quality games are written for them. But attracting game developers is only a necessary condition. In fact, the business model currently employed by Nintendo, Sega and Sony is to charge software developers a fixed fee together with a per-unit royalty on the games they produce. Microsoft releases in the fall of 2001 the Xbox in competition with Sony’s dominant PlayStation 2. Interestingly, Microsoft manufactures the Xbox console and uses it as a loss leader. While courting the developers21 by using the familiar X86 chip and Windows platform and by not charging for the Xbox Prototype kit, Microsoft has stated that it intends to draw revenue from royalties.

Another example they provide is from the payments industry. Historically,
the business model for credit and debit cards has been to attract cardholders and
induce them to use their cards. Visa and MasterCard are not-for-profit associations owned by over 6,000 bank (and non-bank) members. The associations centrally set interchange fees to be paid by acquirers (the merchants’ banks) to issuers (the cardholders’ banks). These interchange fees are proportional to transaction volume. A higher interchange fee is, via the competition among issuers, partly or fully passed through to consumers in the form of lower card fees and higher card benefits, which encourages card ownership and usage; and, via the competition among acquirers, partly or fully passed through to merchants, who pay a higher merchant discount (the percentage of the sale price that the merchant must pay the acquirer), which discourages merchant acceptance. The associations’ choice of interchange fees have typically favored cardholders over merchants who kept accepting the card despite the high level of the merchant discountsAmerican Express, a for-profit closed system, works on the same business model, with an even higher degree of cross-subsidization. Traditionally, it has charged a much higher merchant discount. It could afford to do so because the Amex clientele -in particular the corporate card clientele- was perceived as very attractive by merchants.The gap between Amex’s and the associations’ merchant discounts has narrowed in the 1990s as more and more Amex customers got also a Visa card or MasterCard. Such ‘multihoming’ by a fraction of cardholders made it less costly for merchants to turn down.

Wikipedia provides a few more examples: Although recently developed in terms of economic theory, two-sided networks help to explain many classic format battles, for example, Beta vs. VHS, Mac vs. Windows, CBS vs. RCA in color TV, American Express vs. Visa, and more recently Blu-Ray vs. HD-DVD. In the case of color TV, CBS and RCA offered rival formats but initially neither gained market traction. Viewers had little reason to buy expensive color TVs in the absence of color programming. Likewise, broadcasters had little reason to develop color programming when households lacked color TVs. RCA won the battle in two ways. It flooded the market with low cost black-and-white TVs incompatible with the CBS format but compatible with its own. Broadcasters then needed to use the RCA format to reach established viewers. RCA also subsidized Walt Disneys Wonderful World of Color, which gave consumers reason to buy the new technology.

Tomorrow: Business Application

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