There has been much hand-wringing in the media and on social networks over the announcement that Borders is going out of business. A lot of talk has been centered around the death of printed books and how the closing of Borders is a sign of this trend. Let me tell you a little secret: eBooks didn’t kill Borders

Mismanagement killed Borders

Lack of vision killed Borders

Failure to adapt killed Borders

It is clear that eBooks are changing the book publishing world just as digital music changed the recorded music business and the Internet changed the news publishing industry. And certainly businesses must adapt to the changing landscape. However, it doesn’t mean that eBooks are a certain death for printed books or stores that sell them.

While the growth of eBooks drove the final nail in the coffin for Borders, it wasn’t the eBook itself that killed Borders. Borders could have adapted to eBooks and even could have used eBooks to save the company. However, missing the eBook train was the last in a long line of mistakes the company made dating back to the early 1990′s

I read two articles back in January (one from Newsweek, the other from The Washington Post) that relayed the story of Borders, detailing the mistakes that took down the company, especially their lack of both Internet and eBook strategies.

The story of Borders is a case study in how technology can either create a business or destroy it. Borders came to prominence because of their technology. Their innovative software allowed the company to better predict which books consumers would want to buy and what to stock. This allowed Borders to create the model of a book superstore, offering not only bestsellers, but a plethora of harder-to-find titles. It is therefore ironic that what ultimately killed the company was the failure of Borders’ management to identify emerging technology and how it would change the competitive landscape.

Take the time to read the articles if they interest you. But ultimately, the moral of the story is that the bad guy isn’t technology. Change is inevitable. It is the inability or unwillingness of companies to adapt that leads to their failure. It is the story of Blockbuster. It is the story of Ultimate Electronics. It is the emerging story of RIM (Blackberry) … and maybe even the not-too-distant future story of Microsoft.

If anything, I believe the emergence of eBooks opens the door for smaller, local bookstores to successfully cater to those who seek printed books. They can provide services and the personal touch that big-box or Internet stores simply can’t. Perhaps, instead of mourning the death of Borders, we should be looking forward to the opportunity small business has in front of it.

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April 1, 2011

In an unprecedented move, Microsoft will be giving away free notebooks today in an effort to slow the bleeding the low profit market segment has suffered since the release of the iPad almost exactly 1 year ago. Working with vendors who have seen many of their netbooks sit on shelves or warehouses over the last few months, Microsoft will give away the netbooks at their retail store locations to those lucky enough to qualify for the promotion.

In order to qualify for the free netbook, customers who arrive at the Microsoft retail store must show a printed copy of the e-mail sent out by Bill Gates offering the free netbook, along with all the people they forwarded the message to. Once they show this proof, they will be allowed in a secret back room of the Microsoft store where they may choose their netbook.

When asked about the offer, Steve Ballmer said, “I was in a meeting with a netbook vendor who said that ever since the iPad came out, they can’t give these things away. I didn’t believe him so I figured we would put it to the test. Plus, we need the space in our secret back rooms for all the Zune devices we didn’t sell.”

Questioned why Microsoft decided to promote the offer using chain e-mails from Bill Gates that seem suspiciously like hoax messages floating around the Internet, Ballmer turned a bit red and sweaty and stammered, “Uhh … People love getting e-mail from Bill.” Asked about the fact that Apple can’t make enough iPads to meet demand while netbook vendors must resort to giving them away caused Ballmer to turn brighter red and begin to wave his hands frantically. While attempting to answer, he was pressed to explain if Microsoft really thought that April Fool’s Day was the best timing for the promotion. This caused Ballmer to erupt in a undecipherable tirade as he stormed out of the room.

For more info on the promotion, check your spam filter for any messages forwarded from Bill Gates.

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It has been reported that Microsoft is killing their ill-fated Zune player, allowing the company to focus on other devices. For those of you that didn’t know about the Zune (I’m not surprised), it was Microsoft’s attempt at an iPod. First released in 2006, it never was as easy to use or had the integration with a service like iTunes that made the iPod such a success. It could also be argued that younger demographics see Microsoft as a brand their parents used, not a brand they identify with.

The Zune is just another in a long line of digital media players from a variety of well-known and not-so-well-known companies to fall by the wayside in the last 10 years since the iPod was introduced. The question to ask is if Microsoft couldn’t crack the iPod market, can anybody? And the follow up question is what about the iPhone and iPad markets?

For what it’s worth, the fact that Microsoft couldn’t make inroads against the iPod may be as much of an indictment against Microsoft as it is an indication of Apple’s strength in the market. But the demise of the iPod has been predicted nearly every year by so-called experts in the field and it has yet to happen. So the failure of the Zune isn’t just due to any incompetence on Microsoft’s part, especially when companies like Sony with their Walkman brand had no better results.

Let this be a wake-up call to anyone who is sitting on the sidelines, hedging their bets on the iPhone and iPad. If this story teaches us anything it is that Apple certainly is not a flash in the pan. Those who are waiting (hoping?) for the market to catch up with Apple are letting their competitors who are already leveraging these technologies gain the upper hand.

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So the FCC voted to implement some “rules” in the name of “net neutrality”. Note that these FCC “rules” are not “laws” because they were not passed by elected representatives. But even though just 3 unelected bureaucrats voted for these rules, they can be enforced by government agents with guns. Just a little food for thought.

In typical political fashion, the passing of these rules managed to please almost no one except the politicians that backed the rules. Those opposed to government regulation of the Internet are obviously displeased. But even proponents of government regulated net neutrality aren’t happy with these rules, claiming they don’t really do anything. Yet, of course, those on the FCC that proposed or voted for these rules claim that they’ve just saved the Internet. This is even though most people have never heard of net neutrality or have any fear of the terrible things that the FCC claim were threatening the Internet.

So note this day in history. It is either the beginning of the end of the free Internet as we knew it – or the start of a revolution against government regulation.

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According to news reports, the FCC is set to pass a controversial (and likely unconstitutional) set of “rules” regarding the regulation of Internet access in the name of protecting “net neutrality”. As I wrote about in my previous article, I find that any regulation of the Internet will begin a slide down a slippery slope of ever increasing government intervention. However, a quote by an FCC commissioner shows just how out of touch some politician/bureaucrats are.

Michael Copps, said FCC commissioner, stated that he wanted to ensure that the Internet “doesn’t travel down the same road of special interest consolidation and gate-keeper control that other media and telecommunications industries — radio, television, film and cable — have traveled.” He concluded, “What an historic tragedy it would be to let that fate befall the dynamism of the Internet.”

Interesting. I wonder why radio, television, and cable have not been so “dynamic”? Could it be … oh, I don’t know … GOVERNMENT REGULATION? So this guy wants to “protect” the Internet from the fate of the other media by regulating it in the same way the other media was regulated? Yeah, let’s take something that has flourished just fine without regulation and smother it with government “protection”.

I think we all need to protect the Internet from brainiacs like this guy.

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The issue of “Net Neutrality” is one that I’ve been personally grappling with in my mind for a long time now. For those of you not familiar with the term “Net Neutrality”, a very quick explanation is the idea that Internet providers should not be able to restrict their users from any content on the Internet. For a more thorough explanation, please search Net Neutrality on Google.

I certainly agree in principle with the idea of Net Neutrality. I personally want complete and unrestricted access to the entire Internet. I would not appreciate an Internet provider restricting what I can see on the Internet, or prioritizing traffic in a way that negatively affected my experience. However, I can not agree with the idea of having government enforce Net Neutrality on Internet providers. Especially if the regulations were created by an unelected bureaucracy such as the FCC.

The danger in having government regulate the Internet should be apparent. Unburdened by the suffocating interventions of government, the Internet has simultaneously become both the greatest marketplace in existence and the most extensive source of information the world has ever witnessed. It is this free-flow of information that makes the Internet what I believe to be the greatest tool of freedom mankind has known. It is precisely this freedom that Net Neutrality proponents want to protect. But in a panic to protect these freedoms, some Net Neutrality proponents believe they should try to use the brute force of government to achieve this goal. They may not realize however, that once you let the government fox in the hen house, you’ll likely never get him out.

Asking the government to regulate Internet providers, even in the attempt to keep the Internet free, opens the door for further regulation. That future regulation may not serve to keep the Internet free. Net Neutrality proponents may not see it that way now, but rarely does any group take the time to consider that the tide of big government rolls with those who control it. Once we’ve allowed the government to regulate something, we’re allowing anyone with future control of government to regulate it in any way they see fit. Their agenda could be directly opposed to our intentions. And once the government has begun regulating something, rarely will they willingly give up their regulatory power.

The struggle in my mind has been satisfying my desire to ensure a free and neutral Internet but doing so without the involvement of government. It took me quite a while to fathom a way to do this, but a recent article gave me some clarity.

The company OpenDNS, which I personally use and recommend to many of my clients, was featured in an article where they claim the Internet provider Verizon is already blocking their service. I’ll allow you to read the article to find out the details of what OpenDNS is claiming, but basically OpenDNS believes Verizon wants to block their service so they can monetize DNS queries for themselves. They want the FCC to stop ISPs like Verizon from being able to do this. Verizon claims they are not blocking OpenDNS, however, so this makes for a very unclear situation.

What I don’t understand is why companies like OpenDNS can’t see that preserving Net Neutrality is something that can be done in the same spirit of freedom as the Internet itself. Hardly does a single, heavy-handed government “solution” work well. However, free people working together can develop many ways to solve problems. I can think of a few options just off the top of my head.

One very simple thing that OpenDNS can do to preserve themselves is to make their service so valuable that their customers would fight on their behalf. Any company that is trying to give their customers the best products and services possible is already 90% of the way there. If customers depend on a company’s services, they aren’t likely to sit idly by if someone tries to stop them from using those services. If certain ISPs start to block external DNS services like OpenDNS, then their customers might take their services to other ISPs.

OpenDNS could also partner with ISPs and share profits. There could be so many ways to do this that I’ll leave it up to the imaginations of the companies involved to figure out the details.

I really think that Net Neutrality proponents could do a lot more good by devoting their energy towards public education. Ultimately if customers are educated enough on the concept of Net Neutrality, they will demand it from their ISPs. Watchdog groups could monitor the ISPs and provide the public with reports on their openness. It really doesn’t seem all that hard. Worst case, if ISPs really believe they could gain additional revenue from offering non-Net Neutral services, they could offer those services at a lower cost. The market would then decide which services they want, not some bureaucrats in Washington.

The good news is that the status quo is currently Net Neutrality. It would take quite an effort for ISPs to undermine this, even more so if Net Neutrality is a concept that most customers have been educated to adopt. I believe it would take the cooperation of nearly all the ISPs in the country to decide to simultaneously undermine Net Neutrality. This would be highly unlikely. First, I can’t see where the ISPs would think that the effort required to undermine Net Neutrality would be profitable for them. Second, the level of trust and cooperation required would need to be so precise and well-coordinated, it is hard to believe that so many companies could pull it off. If any ISPs wouldn’t cooperate in this grand conspiracy, they would have the advantage of being able to offer Net Neutral services to their customers. I don’t think ISP’s trust each other enough to believe this wouldn’t happen.

In summary, the rush by some Net Neutrality proponents to have government save the Internet looks a lot like a tempest in a teapot. The greater crime would be to get Big Brother get their foot in the door now and get used to the taste of Internet regulation. I’d much rather take my chances with the multitude of privately-owned ISPs that have an incentive to keep competing with each other, than to let big government get their hands around the neck of the Internet. Don’t let the snake inside the proverbial garden. We all know how that turns out.

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Apple recently hosted their yearly “music event”. As expected, they introduced new iPods. However, this particular event had a lot of little nuggets of tantalizing information. Now that I’ve had some time to digest it all, I’ll be writing a series of articles on these nuggets. However, I thought I’d quickly touch on a few topics.

Steve Wozniak was in attendance. Steve Jobs seemed genuinely surprised and delighted. Does this have any significance? When was the last time Woz attended any official Apple events?

It’s interesting that Apple introduced printing into the upcoming iOS 4.2 update for November. My guess is they got enough complaints about the iPad not being able to print, especially from business users, that they added it into this update. I felt that by not including printing originally, Apple was trying to make a point that the iPad was in many ways a replacement for paper. Perhaps the world just isn’t quite ready for that yet.

Steve Jobs made it a point to emphasize that an iPod Touch is an iPhone without a contract. Why would he do this? If he was simply trying to make clear that the iPod Touch is an iPhone without the phone, it seemed like overkill. It also seemed like he slowed down and wanted to really drive this point home. Was Steve taking a jab at AT&T? Or was he swinging at the entire wireless industry? Or perhaps he was foreshadowing something else altogether.

Apple finally revived the Apple TV at this event. Which is somewhat interesting because Apple calls this their yearly music event. Everything else discussed at this event was music related, yet the Apple TV is obviously geared towards movies and TV shows. It simply could be the fact that this was good timing for Apple to release an updated Apple TV prior to the holiday shopping season. But it could also be a sign that Apple has finally figured out how they want to position the Apple TV. And maybe they feel the mainstream market is now ready to receive the Apple TV in earnest. The next few weeks and months should tell if Apple is really ready to take the Apple TV out of “hobby” status.

Steve Jobs also took a subtle swipe at competing devices. While discussing what consumers have taught them about the Apple TV thus far, he said, “They don’t want a computer on their TV. They have computers. They go to their widescreen TVs for entertainment, not to have another computer. This is a hard one for people in the computer industry to understand. But it’s really easy for consumers to understand. They get it.” This is a good point that I believe has relevance beyond the home media market.

When Netflix announced their app for the iPhone a few months back, I was a little surprised that Apple allowed it, since it seemed to compete with their iTunes movie service. So you can imagine my surprise when Apple themselves announced Netflix support in the Apple TV. Suddenly it seems Apple is very cozy with Netflix. What could this mean?

Finally, there seems to be some tension between Apple and Facebook over Apple’s new Ping social network. I noticed during Steve Job’s speech that Ping showed that you could log in with your Facebook ID. I even mentioned to my wife that this was a great move on Apple’s part. Yet the next day I read reports that this feature was not available. Sure enough, this feature was not available, even though it still mentioned FaceBook on Apple’s web site. Something interesting is going on behind the scenes and I can’t wait to find out what that is.

So stay tuned as I tackle some of these topics in more depth very soon.

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With all the talk about the iPad and the iPhone, it is easy to forget another technology device that shook up the established markets just a few short years ago. An article I recently read reminded me of this fact. The Wii, rather than catering to the traditional “gamer”, created a device that would appeal to the mainstream. Similar to the way so-called experts downplayed the iPhone and are downplaying the iPad, many gamers chided the Wii’s relatively weaker graphic capabilities and simplified controllers. Of course, their viewpoints were narrowly focused and didn’t take into account that the Wii would redefine the gaming market. The rules of the Old World don’t apply in the New World. The following quote from the article, “Is casual gaming destroying the traditional gaming market?”, sums this up:

The big videogame console makers and developers catered to performance-oriented customers who demanded more and better and who were repeat buyers. Then in 2006, Nintendo’s inexpensive Wii console came along, emphasizing accessible game play over elaborate scripts and point harvesting. So far, Nintendo has sold 28 million units of the Wii in the U.S., while Microsoft (MSFT) has sold just 19.4 million Xbox 360s and Sony (SNE) 11.7 million Playstation 3s—despite both launching before the Wii.

The parallels between the Wii and the iPhone (and it seems with the iPad) are almost eerie. New World technology shakes up the Old World markets and most of the people who are experts in the Old World seem completely caught off guard.

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I just thought this widget from the Vancouver Olympics web site was cool and I wanted to share it with everyone. That is all. Move along now.

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I overheard my wife talking to a friend of ours on her cell phone and she said something like “just text it to me”. Then I heard, “oh your phone doesn’t do texting?” I about did a double-take. No texting? What the heck!? Then I settled down. But I thought it was just another funny example of how far technology has worked itself into our lives that not having texting is such a big deal.

Is there anyone (else) out there who does not regularly use texting? Is it because your phone doesn’t have a “regular” keyboard, is not a smartphone, or for some other reason?

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