The Reach - Podcasting and other Portable Media Strategies

Eliot Van Buskirk writes an interesting post regarding Big Music and MP3 technology on Wired News yesterday.  His contention is that Big Music is being forced to adopt MP3 technology just as a weapon against iTunes.  He believes that Big Music will ultimately not allow Steve Jobs to run their lives.  They’ve played reasonably nice together so far, but maybe Steve has outlived his usefulness to them?

Eliot lists 7 reasons why MP3 has to be seriously considered.  I’d tend to agree with him.

So, relative to the title of today’s post, why is that relevant to podcasting?  Well, since MP3 is the audio techology that drives the recording and playback files in this podcasting world, it is critical that other peripheral uses stay alive so as to support a standards based audio delivery technology.  So, kudos (assuming Eliot is correct) to Big Music for keeping this corner of new media alive!

Finally, some real numbers regarding these threats are shared in an article in the WSJ Online today (subscription required) by reporter Li Yuan.  Sony Ericsson has sold 16.5 million Walkman phones in 14 months (not bad!), Motorola has sold 15 million MP3 enabled phones to date.  Nokia is projecting that in 2006 they will have sold 80 million music phones, which means that in 1 year, they will have outperformed the cumulative sales of Apple iPods (approxmiately 70 million).  So, between the 3 largest cellphone handset manufacturers, that means that there are approximately 110 million MP3 enabled phones on the market today and growing rapidly.

Will Apple roll out the iPhone soon?  One would expect they cannot ignore these numbers  - it certainly is momentum that will not stop.

In the article, the Yuan mentions that Motorola states that about 50% of the MP3 enabled phones are used for music playing purposes - so true penetration and use of a multimedia phone is still some ways off.

As we’ve said here many times - the end game portable media device is the cell phone - not the iPod or other MP3 player.

This comes under the heading of “the customers don’t get it yet, so let’s make them pay”.  Reuters has this article which is posted on Yahoo! News this morning regarding Alltel’s launch of a “new” service that allows downloads or streaming of podcasts directly to your cellphone.

While I agree that one has to develop a business model to support the use of new technologies, I’m concerned that the window of success here is about 6 months.  Why not download the podcasts to your computer using a podcast client/reader and transfer the content over to the phone (Smartphone, etc) that will play the media?

Now, to Melodeo’s credit, they’ve built a podcast client that loads on the phones - but are people dying to get their mission critical podcasts to the second on the fly?   In my opinion, we won’t be using this model a year from now.  Just my 2 cents.

Engadget has a write-up here on a Blackberry 8100 which will be consumer-like in its feature set. Cameraphone, audio and video playback capability, etc - due to be out this fall. The site rumors that T-Mobile will be the first carrier selling it - my sources confirm that. T-Mobile has typically been the first to launch the more slim versions of the Blackberry product line, which uses predictive text for typing, instead of a full QWERTY keyboard.

This continues to confirm our opinion that the phone handset will be the media player of choice.

The real plus, with Blackberry coming out with this device, is that BB has had the best battery management of phones compared with other manufacturers. This will enable the media play capability to have some life along with the phone functionality. As a friend of mine said recently - if my iPod runs out of juice, that’s no big deal. But, if because of my media playing on my phone, my phone dies - I’m dead. Business-wise, that is. I assume….

Saturday, July 29, the NY Times had an interesting article that generated some buzz. You might look at the title of this post and wonder the connection between the three. Well, let me explain. There has been a lot of discussion both here and other blogs, articles, etc. regarding phones as media players. As a matter of fact, as many of you may know, I believe it will ultimately replace the autonomous mp3/mp3 player market.

3G wireless systems have been the buzz in the U.S. for 6 years or more. Will WI-FI or WIMAX over mobile handsets make 3G irrelevant? In the short term, probably not. In the long term? Maybe so. By demanding access to multi-media files on the handsets, consumers will definitely be pressing for this ability. I don’t think 3G has the download speeds to satisfy over the long haul.

As podcasting becomes more mainstream, this too will increase demand from consumers for true broadband (1.5 MBps download speeds) over their wireless systems that support their phone calls. I believe the downloads/portability drives this, rather than “streaming live” in the short term - in that too many things have to be perfect to support that. I can’t always get a perfect live streaming experience over a wired broadband connection today - I think the frustrations would be disastrous in today’s U.S wireless market.

That being said, Japan has been watching live video on their cell phones for 6 or 7 years now. South Korea appears to have at least 1 million receivers (as of June 2006) that have been sold to utilize a system that allows this.

Everyone is trying to get everyone else to adopt their standard. Standardization gets to be a problem when pride gets in our way. On top of that, we have business models that “guaranteed” a certain return to investors - they’re not going to be happy about watching that change. That is a macro discussion that will affect Wi-FI, podcasting, and phones. If the current wireless carriers push the consumers to accept less speed for downloads by lobbying against WI-FI or WIMAX adoption, then the consumer will suffer and the related adoption of media downloads of all types to phones will be delayed. Hmm. Big potential problem, don’t you think?

Well, this is not necessarily timely, nor is it very earth-shattering.  July 19th, in announcing Apple’s Q3 earnings, Peter Oppenheimer makes a subtle, yet strong statement.  He admits that phones will be the media player of choice eventually - but that for the time being, the iPod is player of choice.  Can’t disagree with him there, at least in terms of U.S. adoption.

He teases the audience by insinuating that Apple will have a phone on the market that will be the best media player too.  Will it be a good phone, though?

Nielsen/NetRatings gets us excited with a report showing robust growth in podcasting and then qualifies it in subsequent conversations when asked questions by, well, people who can ask questions. The right ones, that is.  Frank Barnako pops the balloon here.  Many interested parties are incredulous, such as Robert Scoble.  I, on the other hand, think the report shows such a high degree of fascination with podcasting and therefore the need for speed in releasing the report that a lot of approvals got rushed.  Facts didn’t get checked, appropriate comparisons were not made.  I know none of us have ever made mistakes like that. 

Let’s look past the obvious errors, though and consider what makes a report like this hit the streets a review or two early.  Something is going on in podcasting and everyone knows it - even Nielsen/NetRatings.

This is great news, as ESPN delivers a story about the Colorado Rockies baseball players using iPods and in-house video to improve their games.  I believe that stories like this will finally begin to expand the current thinking about what podcasting can become.  As we’ve discussed here before, podcasting is more than grass roots new media contributors - it’s another distribution channel for radio and tv content, and certainly is effective for training and education for people that would rather not be shackled to their computers.

Great news!  Congrats to the Rockies for being early adopters.

Pronounced Shenshen, this is a city that 10 years ago was little more than a fishing village, on the other side of the China border from Hong Kong. Now, it is a crowded city of 10 million. Bigger than Hong Kong.

The city is sprawling - from the suburbs to downtown is at least an hour in traffic. And that’s in the middle of the day! It took us a full day to visit two factories.

We met our trading partner in Hong Kong about 9am and took the train from Festival Walk (a very Western mall in Kowloon) up to the border of China. After going through customs, we then traveled by another train up to the end of the subway in the suburbs of Shen Zhen where a company car and driver from the MP3 player factory picked us up for the meeting and tour of the factory. Given the train, customs, another train, and ride in the car, we showed up at the factory at 12 noon, when most of the factory workers were at lunch.

The sales manager of the company suggested we go to lunch as well, so back into the car, for a 2 block, 40 minute trip to a true Chinese restaurant. (They asked if we wanted Chinese food - my wife and I looked at each other as if - what else would we be eating here?! - so we said of course!). I’m not sure if any anglos had ever been to this restaurant - great food, tremendous experience. Our Chinese hosts were very gracious and tolerant of our ignorance of Chinese customs and original food, but we learned quickly and they seemed surprised that Laura and I were eating with chopsticks.

The factory itself was a great assembly process to watch, with good quality control - they can churn out 300,000 units per month, in terms of capacity. They have exciting new products, of which one of them is a 7 inch video display, battery powered, using an SD Card for the source content. This will play any digital audio/video file - MP3, MPEG4, WMA, WMV, AVI, etc. Should be fun to see the applications. it’s certainly not pocket sized, but easily portable - much smaller and lighter than a portable DVD player.

The second factory we sent to was near downtown, in a much older section of town. Dark back alleyways and up a dark stairwell and then you find an entire custom circuit board manufacturing company with Yamaha automatic circuit board pressing equipment. That day, they were making Lenovo webcams. We buy our FM transmitters (similar to the iTrip) from this manufacturer. It’s run by a 30-yr old capitalist who apologized for the appearance of his factory - but, with a grin, he said “We’re profitable” (in only Mandarin to our trading partner). We were impressed - not with the looks, but how determined he was as an entrepreneur to grab hold of opportunities.

We got back to our room in Hong Kong about 7:30pm and then went to dinner to think through our day and what had happened. Our conversation centered around the phenomenal growth of Shen Zhen, the traffic, the new relationships that we had established and the thankfulness for this opportunity to have our eyes opened further to how flat the world really is.

Steve Rubel, on the Micro Persuasion blog, asks if podcasting is evolutionary or revolutionary. He compares it’s impact to blogging, for which he is a professional spokesperson and model, so to speak. He ends up in the evolutionary camp on podcasting, revolutionary on blogging, to no great surprise.

His argument is that podcasting is not very social, and blogging is. A lot of discussion around Web 2.0 is around the social aspects. I agree that podcasting is not social, but then again, neither is broadcasting. It certainly has more social possibilities than traditional podcasting ever did, but social is probably not at the top of the list. On the other hand, just because a trend is not social does not mean it’s not revolutionary.

Podcasting is revolutionary! It is revolutionary because of the perfect storm of portable hard drives with headphones (known as iPods, MP3/MP4 players, portable digital media players ), cheap bandwidth, RSS, and consumers being fed up with poor programming choices from media giants.

Some people have expectations of miracles in this trend of podcasting and the world to change overnight. If it (a new trend) doesn’t satisfy instant gratification needs, it is deemed a losing proposition. My experience says that sea change comes like a Tsunami. It starts with a violent crack way down below the surface. You don’t see it coming until it’s almost too late. Unfortunately, often it is too late for some.

But, the change comes….