One Flew Over the Cubicle's Nest

Murdoch & the Media

Below is an excerpt from the the July Wired Magazine article and thoughts from Rupert Murdoch about MySpace, the media and the future of television (note: Murdoch's News Corp. bought MySpace for $580 million)>

BROADCASTING VS. NARROWCASTING
Mass media will go on. Look at American Idol, with 35 million viewers and advertisers rushing to get on. Niches have a future, too. Look at our Speed Channel, which is mostly Nascar stuff. The middle ground – that’s where you don’t want to get caught.

THE FUTURE OF TELEVISION
The majority of viewing will continue to be in a living room on a TV screen – one that is far bigger and better than what most people have today. Sure, everyone’s going to have a small screen, too. It’s a convenience. But I don’t see people sitting on the beach and watching a movie on their telephone.

Rupert Murdoch, MySpace and the Power of Social Networking

Fascinating article this (July) month in Wired magazine about Rupert Murdoch's (News Corp's) media machine, with a focus on MySpace, which has emerged as the poster child of the new net generation (Wired Magazine) . Everyone in the news media or advertising--and corporate america for that matter--should be watching this company closely. What we're looking at is a new form of communications that may just be getting warmed up. PUndits have dubbed it social networking.

The numbers are staggering: some 280,000 new users every day, or about the equivalent of a large city newspaper. But this isn't any newspaper or old line media model. It's a highly interactive site buzzing with activity, where mostly kids and younger adults come to meet others and share personal stories (blogs), music, videos, and dozens of other features. In the old days, there was a big argument over content vs distribution--which is more powerful. But MySpace is really neither, and shares both (News Corp. describes it as a powerful, and adaptable media platform).   Its users aren't passive readers but "participants"--on one level, they are the content. And as the article puts it, MySpace's value isn't connecting people to content or  to products; it's connecting people to people.

The Future of Sun Microsystems, Post McNealy

So Scott McNealy has finally stepped aside as CEO of Sun Microsystems, handing over the keys to Jonathan Schwartz. This is a BIG DEAL in Silicon Valley, given that McNealy is one of the original industry pioneers and a lively character. Spin back the clock a decade and you'll see him on the covers of Business Week, Fortune and many other business publications, and oh, those Scott sound bites. Who else would describe the merger of Compaq and HP as "an image of two garbage trucks colliding" ? (Collection of Scott Zingers)

Now those same publications and a slew of critics are questioning whether Schwartz will bring Sun back to life Link: Sun's New Boss: The Same as the Old Boss?.  Schwartz, 40, is bright, analytical, and a quick study. He's an eloquent communicator and engages audiences like Steve Jobs, with a combination of intellectual ideas and smooth style. By comparison, when McNealy spoke, we never quite knew what to expect when I was working there as an executive communications manager--speechwriter--a little over two years ago. Once he went to Canada to make a speech and somehow blasted the SEC. A corporate clarification followed the next day.

McNealy was truly a visionary and his maverick management style served him well for many years.  His fault was allowing Sun to get "mispositioned" in the marketplace, as he puts it. He overexpanded during the boom and was slow to adjust to lower cost servers from rivals like Dell. He also waited too long to launch the Solaris computer operation system on low cost servers that run standardized x86 chips made by Intel and AMD, leaving it vulnerable to non-proprietary competition like  Linux open source operating systems. See Financial Times article.

Schwartz appears to be cut from the same cloth as McNealy. He comes from the the same confrontational, headline grabbing McNealy mode and he does seem close to McNealy, making people wonder if he can break from the past (see how he describes Scott in the  Jonathan blog) 

The Stunning Rise of Social Networking Sites

The rise of the social networking sites is a stunning trend even by Silicon Valley standards. Check out this Business Week article for a recent market snapshot. Just a year or so ago, this was just another interesting Internet fad. Now serious investors like Rupert Murdock's News Corp., which bought Myspace last year, are increasing their exposure. Facebook, another (Palo Alto, Calif) company started just two years ago by three Harvard students, has ballooned to 7 million registered users, ranking as the seventh-busiest site on the Web, drawing big name advertisers like Microsoft and Jeep. The site, geared for high school and college students, is raising another $25 million in venture capital funds. The owners supposedly value it at $2 billion. Another social-networking site Visible Path said it raised $17 million in venture capital.

The bottom line is the social networking sites are red hot, though no one knows how it will pan out. Will they transform the Net? Will they be embraced by the corporate world? Or will they burn out, like another Internet meteorite?
Stay tuned.

Taking on Microsoft

Very interesting presentation (actually Q&A) last night at the Silicon Valley chapter of ACG (Association for Corporate Growth . The topic: How to Take on Microsoft and Win. The speaker: Peter M. Redford, ceo and chairman of TV Interactive Corp. Redford is an inventor with a rich history. His roots go back to the 1970s with Xerox' Parc, where he was involved in with the development of the graphical user interface (GUI) and the mouse, among other things. In the 1980s, as CEO of RMP Corp., he developed the sound card technology later used by Creative Labs in its Sound Blaster cards.

But it was his invention of the so-called "autoplay" feature where he made his biggest splash, at least financially and legally. It's a long story, but basically Redford's TVi company had developed the autoplay and taken out a patent, only to find Microsoft throw it into the feature set at the last minute in Windows 95 in the mid 90s. It may have been an after-thought for Bill, but for little TVi it was the heart and soul. They were backed by several well-heeled investors, including Intel Capital. TVi web site

While many investors fled, TVi  had to revamp its entire company and take on a bold--some would say crazy--strategy: take on Microsoft in court. The good news was they had four solid patents and a powerful Minneapolis law firm behind them. The bad news was, well, they were tackling Microsoft, which wasn't about to back down after announcing the technology to the masses. This is akin to jumping out in front of a bullet train.

The suit wasn't filed until 2002. Three years and millions of dollars in legal fees later, Microsoft finally caved in and reached an out of court settlement in Oct, 2005--just before going to trial. Final settlement numbers weren't released, but the buzz around the cooler after the speech last night pegged it between $300 and $500 million, maybe more (Sramana, who did the Q&A last night, has a chronology of other Microsoft legal settlements--the largest of which was $761 million). TVi's was in the high range of the list.

The story was stunning in that anyone could dare take on Microsoft and win. Some corporate lawyers cringe over these cases, calling them patent "trolls," referring to companies that acquire or somehow get control of a patent, sit on it, and then sue when a legitimate company introduces the technology later. But in this case, the "little company that could" actually developed the technology and was preparing to go to market with it. Sometimes, the little guys do win.

More details on Sramana's blog.
Link: Sramana Mitra on Strategy

Knight Ridder Selling Out to McClatchy

Big story today: McClatchy will be buying Knight Ridder newspaper chain, including big name papers like the San Jose Mercury News, Miami Herald and Philadelphia Enquirer. Est. price: $4.5 billion.
Knight Ridder Story To non-journalists the deal doesn't mean much. But it means a lot if you're in the business, another sign that the age of newspapers and related publications is long over. There's a lot of lot of hoopla about the new online journalist, which may already be taking over some of the functions of the old fashion reporter. I can see the attraction to this new model. We now have multiple voices, and many sources of content. It's also nice to be able to take our messages "directly to the people." But there's something disturbing about the newspaper trend, and the plight of the journalist, as part of a dwindling profession. When I came out of journalism school and started working for newspapers, there was a big emphasis on investigative stories and going deep with the reporting. Having a big media company behind you doesn't hurt either. When the owner of a refinery in SE Texas threatened to sue me over one of my first Business Week stories in the early 1980s,