Buyers, beware!

Recently I 've come across a company named Demand-Tec. They've caught my attention probably because in my so called "previous life" I dealt a lot with enterprise management software, and especially with business intelligence. While not as gadgetry - oriented as telecoms, enterprise management was still able to create several areas where I was able to free my imagination and play with some unconventional ideas that were eventually leading to some concrete business benefits for our customers. And what Demand-Tec does is exactly both unconventional and logical and lets them exploit the power of software to give serious business advantage to their customers.

The idea is to use advanced business intelligence and modeling to set retail prices for products. Normally it works like that: a retailer takes the cost, adds his markup and comes up with the price put on a product sticker. Fixed markups do not require much of a [business] intelligence. And there is always a question - should we lower the markup and count on increased volume of sales or should we bring it up trusting the customers won't notice and will buy the product regardless. Airline industry seems to be the most advanced when it comes to price manipulation to maximize their profits. Tickets are most expensive when you try to book your flight six months in advance or six days in advance. The former is for those who plan far ahead (agreeing to pay the premium for feeling safe when they book as early as possible), the latter is for those who have some unexpected events forcing them to fly regardless of the price. Then depending on the route popularity, season, and some other factors, the fare price falls to a low several weeks before the flight, when most people prepare for their journeys and shop for the best deals. Similar variable pricing techniques may be potentially applied to retail stores and this is where the price-optimization software, like Demand-Tec, kicks in. Fed with several years worth of history data, the software predicts how much of something will sell at a given price. Then - simplifying a little bit - all the decision maker has to do is to set the time period when the profits should be maximized, and what comes out is the retail price to be set.

Price setting has a lot to do with consumer psychology. The moods we are in can sharpen or block our sensitivity to loud promotions or hidden price increases. We love to be smart, trying to pick the best value with our independent, well-thought decisions. Unfortunately the truth is, statistically we are very predictable. The model reflecting our behavior is by no means complex, but as the software tracks more of what we do, our "independent" and "smart" decisions may by just manipulated by clever price engineering techniques.

Brian Bergstein brings an interesting story in his recent article on pricing software.

A large retail chain had a problem. It sold three similar power drills: one for about $90, a purportedly better one at $120 and a top-tier one at $130. The higher the price, the more the store profited. But while drill know-it-alls flocked to the $130 model and price-fretters grabbed its $90 cousin, shoppers often ignored the middle one. After analyzing an array of variables, including sales history and competitors' prices, the software suggested cutting the middle drill to $110. That might have made the top drill seem more expensive. But drill aficionados still were fine shelling out $130. Sales of that drill didn't change. However, now that the $90 version seemed less of a bargain, the store sold 4 percent fewer low-end drills - and 11 percent more of the mid-range model. Profits rose.

So the next time you make a decision to buy something at one of these stores, remember, your decision is not really 100% yours... most likely you are being manipulated!

Processors: universal or dedicated?

Two weeks ago Interactive TV Today published an interview with Kenneth Lowe, VP of Business Development and Strategic Marketing at Sigma Designs. I wrote about Sigma a year ago, and for those of you who do not remember, Sigma Designs makes SOC (System On Chip) integrated circuits for next generation, high definition media players. Building their lead they managed to capture a significant piece of the market, from IP-TV set top boxes to Blue-Ray players, and have even secured a place inside the recently launched Apple TV.

Going through the Ken Lowe interview I found an interesting paragraph:

"when Microsoft moved from an all-software platform to a SoC-based platform using our silicon, it was a big paradigm shift. It required their software to adapt from a paradigm where everything runs on a big Pentium processor to a paradigm where a little software runs on a smaller processor and then a bunch of hardware subsystems perform each individual task."

Smells like a paradigm shift? For years we have been listening to Intel telling us all we needed was a general purpose, universal CPU (ie Pentium) to handle everything we needed, from network packet routing to application code handling to audio and graphics. And now Sigma talks about Microsoft moving their code away from Pentium down to a bunch of task - optimized programmable subsystems. What is happening? Wouldn't we like just one CPU to handle everything? Why is that? The answer is... power consumption. Generic CPUs are never effective. But they are powerful. Reaching gigahertz clocks they use plain brute force to crack everything. Unfortunately the brute force requires a lot of power. And power is what we used to have in abundance some twenty years ago (remember any power consumption issue in 1990s?) and what is the great scarcity of 21st century. Of course Apple could use the top Pentium CPU to decode high definition video in real time. But they would have to put a fan or two in the box to prevent meltdown. And we love the noise of fans when watching TV, don't we? So they opted for an application - specific processor like the SMP8634 from Sigma. Are they alone in their choice? Look at your mobile phone. It has two or three or more processors inside. One of them is generic and runs applications (like an address book or Java game). The other run several specific tasks. One does network connectivity, there may be more for WiFi, Bluetooth, stereo sound... Application specific chips do not use brute force. They use many clever shortcuts and "helper" circuits designed to make the processing lighter. They are far less flexible (it would be hard to implement a game of chess purely on the graphics handling chip), but are extremely efficient running tasks they are designed for.

The other day somebody asked me if generic Pentiums would some day make the network processors (like LanOptics [LNOP] or NetLogic [NETL]) obsolete. The answer is... probably not. I mean... even if one day Pentium will be able to process network packets at 10GBps wire speed, the brute force approach used in generic CPUs will have very hard time trying to compete with task - optimized processors in terms of power consumption and heat dissipation. And with power / heat being the growing issue across all areas of silicon devices, dedicated applications will require dedicated processors for a very long time.

Samsung SGH-i600

I am back. Back to the mobile phone, after a PDA-phone adventure lasting for several months. As you may remember, I have written here a number of times about Windows Mobile phones by HTC. The first (not mentioned here) was the iMate SP3i, two years ago (before the blog was started). I was very happy with the SP3i. It was small, yet powerful, had a very good Windows Mobile "phone" user interface. I traded it half a year later for the SP5m, touted as the best music smartphone ever. Indeed the Sp5m with its dedicated music buttons, gorgeous screen and mini-SD storage was a great phone. Unfortunately I lost it... So being a fan of Windows Mobile machines, and lacking QWERTY keyboard (to be honest this was the only drawback of SP3i and SP5m phones) I decided to go with the HTC Wizard, soon upgraded to the HTC Hermes (known as TyTN). Both Wizard and Hermes share the same slide-out QWERTY keyboard concept, while the TyTN has a more powerful processor and UMTS (W-CDMA) radio for faster data transmission and video calls. And both are more PDAs then phones, lacking a numeric keypad and requiring a stylus to run certain functions.

Looking back I must say I have been extremely frustrated with the TyTN for several reasons. First, it was completely unstable. I don't know if it was just my particular phone or TyTNs in general are unstable, but it used to freeze completely even a couple times a day (requiring taking the battery out to reset) without any pattern. Over five months period it spent two months being repaired, while the HTC service kept on claiming it was perfectly OK. Now it is waiting in a box for its lats trip to HTC while the legal department is working on papers that will accompany the shipment.

But even if the TyTN worked without a glitch, I would not be a very happy user. The slide-out keyboard is great for messaging. I live on email and having a QWERTY on a phone is a must for me. But the ordinary phone functions, operated by a touch screen have been far from perfect. The touch screen Windows Mobile user interface is a mess (BTW this is a warning to Apple - you better do it right with the iPhone). With a big screen and powerful operating system beneath you would expect something at least decent. While even things like numeric keypad are not directly available during a call (I often call various IVR systems, like my bank for example, requiring me to punch in several DTMF codes). Not to mention various simple things like switching from normal to silent mode, that require using two hands and a stylus (I remember the first Treo had a dedicated ringer switch and this was one of its unique selling points; Microsoft surely has overlooked this feature).

In contrary to the above, the "non-touchscreen" Windows Mobile experience is simply great. The same OS, the same applications, just somebody (so called User Experience team) spent a while on things like menus that are never longer than a screen (to avoid scrolling), every command being accessible with a single hand and a press of just one key. So when my TyTN finally died two weeks ago, I knew I needed something like the SP3i/SP5m - non touch screen Windows Mobile, but with QWERTY keyboard and preferably UMTS for video calls and fast data. And just in time the Samsung SGH-i600 arrived. What a relief! I have to admit I was using an "ordinary" phone for a couple of days when my TyTN was being repaired, bit life without ActiveSync for contacts and email has been uneasy.

So...the SGH-i600 is a gorgeous piece of a phone. The design, style and build quality is at least on par with Apple iPod (used by many as a reference level...). The case cover is a little soft when touched, giving a nice feeling, the screen is great, the keyboard feels very well and it is so thin and light, I can wear it all day in a shirt pocket. The phone does not have a touch screen, meaning you can easily clean the glass with a piece of cloth and the user interface is what it should be. May be just a little steep learning curve, but after getting used to, is extremely intuitive and fast, clearly designed for one handed operations. There are several nice surprises as well. Taking advantage of horizontal screen layout, Samsung has enhanced the standard Windows GUI with a very intuitive carousel/card plugin, described in details here. The built-in camera, while "only" 1.3 megapixel, makes decent pictures, at least on par with SonyEricsson 3.2 megapixel models, as the limiting factor here is the lens resolution and sensitivity (that will be that way until Foveon makes some inroads into the mobile phone space). As it is the case with other camera phones from Samsung, the sensor has very good sensitivity, easily able to shot pictures in dark rooms without flash. There is stereo Bluetooth A2DP on board, so no more headphone madness here and Bluetooth dialup profile has been replaced by Bluetooth PAN (Personal Area Network) connection, much easier to set up (no more dial strings and "modems") and no need to disconnect the on-board Internet session when connecting a laptop - just use the phone as a personal wireless access point. The only thing falling a little short of expectations is the battery life. With HSDPA data transmission (I averaged 600kbps downloads riding on a train, probably limited by the Bluetooth "last foot"), the battery barely lasted for a day. With just occasional data bursts it goes on for two to three days, which is not bad, and for data-busy days Samsung conveniently supplies a second battery enclosed in a matchbox - size mobile charger, just in case you run out of juice.

All in all - thumbs up, looks like I have a great phone for the next year or more and with QWERTY on board I will watch all those iPhone fans entering contact names and http:// addresses :)

Open TV platform

Scanning through RSS feeds from last week I found a good number of them referring to Apple TV hack. Apple TV (ATV) was officially released two weeks ago and it has been attracting attention of home brew developers since then. This is just a proof how attractive a platform like ATV can potentially be. Why? Because ATV is a very well designed home computer / media station. It has WiFi connectivity (a must at home). It has a high definition TV output (no yet another screen to mess with). It has local storage (factory mounted 40GB drive can be upgraded to 200GB and more). It has an USB port for potential expansion and a remote control (very important for home use). And it is very compact in form, has cleverly built-in power supply and no noisy fan.

The pity of the original ATV design was its narrow scope - basically coming down to an iTunes media extender. Now it is very refreshing to see how opening the platform can put a new life in the ATV box, by means of independent software creators. I have used two similar (but older generation) products - a Dreambox (Linux - based satellite tuner) and an XBOX (the old one, equipped with the XBMC software). They are both great products, and even greater examples of what a multimedia / entertainment platform can be when opened for developers. But they both lack WiFi (I hate cables!) and - most important - lack high definition output. ATV fixes both issues and brings much more powerful platform to the table. I hope we will soon get a serious open - sourced software platform designed to run on the ATV hardware. Dreambox is just a prelude of what software can do with a proper hardware. Of course there is a question about Apple - will they allow the hacks to exist or will they try to close the platform (as Sony did with PSP 2.0 and later)?

I think Apple should seriously consider leaving the ATV platform open, or even support the open source community. Provided they are already making money on the hardware itself (this is not the case of game consoles, where "Gillette razor" business model sells the hardware at a loss to make money on the "blades"). This could even be a new "iPod" opportunity for Apple. I mean a new product / new business driving the revenues. Just imagine ATV as a platform for Google services. Entertainment (YouTube), personalized news (RSS Reader with video streams), personal Picasa photo albums, messaging / email on TV - a market far extending the reach of traditional personal computers. There are millions of people who do not use PCs, but would spend hours sitting in front of their TVs and navigating the Web with a remote control. Or think video conferencing - ATV has a USB port to plug a microphone / web camera (Skype, are you listening?). Imagine watching your favorite reality show and being visually online with your friends, able to chat and comment... The TV / entertainment is more than just game consoles for kids.

All this and more will not be reached with another PS3/XBOX360/whatever-closed-platform you name. We need a new "open" IBM-PC for the living room. With ATV Apple seems to be close...