Friday, March 15, 2002

Ellis on Blogging

My column on blogging is now posted on the Fast Company website. You can read it by clicking here.

Camera Cell Phone

A couple of people emailed this morning to ask about the Treo item (posted below). Specifically, they asked whether I thought Treo would be a "hit." My answer is "yes," but within a quite small market segment (road warriors and business types).

Fearless prediction: The next "killer ap" in the wireless device category won't be Treo or any other product like it, it will be cell phones with built-in cameras. These will enable you and I to take pictures and then send them off to friends and family via wireless Internet. Camera cell phones were a huge hit at the recently concluded Cebit technology trade fair. And Nokia is more or less betting the farm on camera cell phones, which means that the company that makes 7 out of every 10 cell phones will put all of its marketing muscle behind these products. There's a good report on all this in the new Economist, which you can read (subscription required, I think) by clicking here.

Tipper! Not!

Drudge today headlines a story from The Nashville Tennesseean that quotes "sources" who say that Tipper Gore is mulling a bid for the Democratic Senate nomination in Tennessee. Senator Fred Thompson, the popular (60% in the 1994 special, 61% in 1996) incumbent, recently announced that he would not seek re-election this year, thus creating an "open seat" election.

The gang at ABC News emailed this morning to say that they would largely knock down the Tennesseean's story. You can access their report at this address. As I've written before, the ABC News Political Note is a good site to bookmark if you're into political news.

Andersen R.I.P.

You can read the Federal indictment of Arthur Andersen by clicking here. (subscription to the WSJ required). The indictment seals Andersen's fate and the Big Five become the Bigger Four. As virtually everyone has said, this is not good news.


About a year ago, I participated in a panel discussion at MIT about the future of wireless communications. To illustrate the wireless market's confusion, one of the panelists took out all of his wireless devices from his pockets and his briefcase and laid them on the table. When he was done, there were four devices next to his microphone: a cell phone, a pager, a Palm pilot and a RIM Blackberry wireless email device. The pager was there because his wife was pregnant. His plea: "I want all this in one package."

That package has arrived. It is Handspring's Treo, a smartly-designed combination cell phone, PDA, wireless email device and pager. Treo was created by the men who invented the original Palm Pilot and the reviews have been nothing short of glowing. The question now is whether consumers will pay $400 for the privilege of owning one or will they stick with the gadgets they have. It's a question that has big implications for a number of companies, including Research in Motion, Nokia and Motorola.

Wednesday, March 13, 2002

Blogosphere Raspberry

Every so often, the Blogosphere stirs to slay a particularly idiotic columnist or correspondent. Today's target is Robert Kuttner, contributing columnist for The Boston Globe, who is thrashed by, among others, Instapundit and Andrew Sullivan. And rightly so.

Gore Redux

Robert Teeter, the great GOP pollster, used to say that presidential politics was all about getting into the raft. Teeter's theory was that in order for a candidate to be president, voters had to perceive that candidate as someone capable of handling the most severe national security crisis. If a candidate couldn't meet that standard, then he or she would never be elected president. Or as Teeter put it, if a candidate wasn't on the raft, the sharks would eat him or her alive.

Roger Ailes, the former GOP media consultant, had a different test. He used to say that if you woke someone up at 2 a.m. and told them that, say, John Kerry was president, the test of Mr. Kerry's candidacy would be whether the person awakened from slumber went right back to sleep or spent the next three hours experiencing an anxiety attack. The point of both men's maxims was and is straightforward: In presidential politics, experience matters above all else. And this is particularly true when voters believe that the nation's security is at risk.

Ever since former Vice President Gore lost what most professionals regarded as the unlose-able presidential race in 2000, elite opinion in Democratic circles and the media (which may be the same thing) has been scathing about Mr. Gore's prospects should he choose to seek the 2004 Democratic presidential nomination (which, of course, he will). It's over and he's over has been the Groundhog Day refrain. As is usually the case when media/Democratic elite opinion converges into conventional wisdom, this assessment of Mr. Gore's prospects is almost exactly wrong.

First of all, Gore has huge advantages over his prospective Democratic opponents. He is universally known among Democratic primary voters. He is fairly well regarded. He is especially well-liked among Southern Democratic primary voters. He's a proven fund-raiser and organizer of political campaigns. He speaks with authority on a range of popular Democratic issues (health and pensions, the environment and arms control). But most important, because of his long experience in government and his 8 years of service as vice president, he is perceived by most voters to be "on the raft." He is someone they can imagine as president.

Unlike, say, Sen. John Kerry. I covered the Kerry-Weld race when I worked at The Boston Globe and I can say with certainty that Senator Kerry will never be president. He's the saddest sack there ever was.

Unlike, say, Senator Hillary!. I covered a bit of her race (against Rick Lazio in 2000) and can say with certainty that her ability to "go national" is constrained. Let's leave it at that.

Unlike, say, Sen. John Edwards, the lightweight trial lawyer from North Carolina. Unlike, say, Senate Majority Leader Thomas Daschle (D-SD), whose political instincts run to the trivial. Unlike, say, all of the other wannabe Democratic presidential candidates who denigrate Gore at the first sight of a microphone.

The political world, which is so insular that it imagines that presidential campaigns are all about TV and spin, has yet to take note of what the 11th of September meant to the 2004 presidential campaign. First, it means that the War on Terror (Operation Enduring Freedom) will be ongoing. Second, it means that in the great issue triad of American politics (the national security, the economy and the culture), national security will, for the first time since 1988, be a voting concern. Third, it means that whoever is going to be the Democratic presidential nominee will have to meet the Teeter/Ailes test.

The only one who does now is former Vice President Al Gore.


The telecom debt crisis is rapidly becoming a meltdown, with panicked investors dumping shares of WorldCom and Sprint and Qwest and even Regional Bell Operating Companies. WorldCom's woes have been exaxerbated by an SEC inquiry into its accounting practices and it seems possible that the company may have to seek protection from creditors. Sprint has found to its dismay that the commercial paper market has dried up. And on and on it goes.

Keep in mind that unlike in Europe, all this is happening before the auction for wireless spectrum. The Wall Street Journal has an excellent page one survey (subscription required) of the carnage to date and the carnage to come.

Tuesday, March 12, 2002

Strategic Big Think in the Internet Age

I'm a big fan of Philip Evans of the Boston Consulting Group and an even bigger fan of his book, Blown to Bits, which he co-authored with HBS Professor Thomas Wurster. If you haven't read it, get thee to and purchase it. It may well be the best book written on how Internet technology transforms business strategy.

Mr. Evans has a good article on this same subject which is now posted on the Boston Consulting Group's website. It's well worth reading.

Taking Yourself Hostage

Arthur Andersen, which is on death's doorstep, has resigned account, because its management is unhappy with remarks made by TSC founder and board member Jim Cramer on CNBC. This story would be funny if it weren't so sad.

One A Day

My Fast Company colleague Dan Pink has a blog to which he posts "just one thing" every day. It's worth reading. One thing that caught Dan's eye was a website that chronicles the decline of free content on the web. Check it out. It's like watching something end in slow, slow motion.

Smaller is Better

That appears to be the lesson learned from a McKinsey analysis of high school education in Minneapolis, Minnesota. The study is written up in the new McKinsey newsletter, which is free but requires registration. (The link is now fixed, he said hopefully.) Here's a quick summary:

Today's public high schools are the legacy of an era when economies of scale and prevailing educational philosophies suggested that bigger was better. Evidence continues to mount, however, that breaking up large, anonymous high schools into small learning communities can dramatically improve outcomes for students. Schools that have tried this approach have raised their test scores and graduation rates and minimized the behavioral problems that plague larger institutions.

After All That

He still came in third. According to Rush Limbaugh, the overnights are "in" for last night's late night programming and the winners are Jay Leno (4.5) and Ted Koppel (4.2). David Letterman ran a close third (4.0), but third nonetheless. As Limbaugh pointed out, no one has ever had the kind of publicity that Letterman got last week. Last night marked his triumphant return (from a St. Barts vacation; presumably CBS flew him back on the corporate jet). And with all the hype and all the supposed suspense, he finished behind Koppel.

On the other hand, the headline of this item could just as easily be: "Letterman Laughing All The Way to The Bank."

Ending States

"Well, I think the president's words are pretty good, so let me say, these people try to hide, but they won't be able to hide forever. They think their harbors are safe, but they won't be safe forever. I think one has to say it's not just simply a matter of capturing people and holding them accountable, but removing the sanctuaries, removing the support systems, ending states who sponsor terrorism. And that's why it has to be a broad and sustained campaign."

-- Deputy Secretary of Defense Paul Wolfowitz, two days after the attacks of 11 September.

Monday, March 11, 2002

Andersen's End

What happens to the greatest auditing firm in the world when its integrity is compromised? Read on:

Andersen is in last-ditch rescue talks with two of its largest rivals as the scandal-hit professional services firm fights to save itself from collapse.

The world's fifth largest auditing group is attempting to thrash out a possible merger with rival audit firms Ernst & Young and Deloitte Touche Tohmatsu amid fears that it is poised to splinter into smaller parts.

Under the terms of the proposed deal, Andersen's US business would file for Chapter 11 bankruptcy protection. The merger partner would then buy Andersen's US assets, leaving the bankrupt US business with cash to settle claims against it.

Andersen's US partners are working furiously in an attempt to announce an agreement with one of the prospective partners in the next two days. However, there is a strong chance that the talks will collapse and, even if a deal is announced, many of the details would still need to be hammered out.


Like everyone else we know, my wife and I watched the CBS broadcast last night. Tonight, I'm taking the kids down to see the towers of light from upriver.

Six months later, it seems like yesterday, but the War is going very well. When the kids go to bed tonight, we will say a prayer for the US Special Forces people who are conducting this war around the world. God bless them all.

The Buffett Letter

Warren Buffett's annual letter is always worth reading and this year is no different. The discussion of General Re insurance is especially sharp. The link to the letter is now fixed.

Designer Babies

The most pressing social, political, national security and moral issue of our time is genomics, which gives mankind (for the first time) control over the evolution of all living things. Francis Fukuyama addresses the issue in an important piece in Foreign Policy magazine, arguing that global regulation of genomics and biotechnology is necessary, indeed, urgently required. Following is an excerpt:

It is easiest to object to new biotechnology if it yields a botched clinical trial or a deadly allergic reaction to a genetically modified food. But the real threat of biotechnology is far more subtle and harder to weigh in any utilitarian calculus. Biotechnology offers the potential to change human nature and therefore the way that we think of ourselves as a species.

The debate on biotechnology must move beyond....polarization. Both approaches—a completely laissez-faire attitude toward biotech development and the attempt to ban wide swaths of future technology—are misguided and unrealistic. Certain technologies like reproductive human cloning should be banned outright, for moral and practical reasons. The moral reasons have to do with the asymmetric relationship of a cloned child with his parents: the child will be a twin of one and not related to the other. Practically speaking, cloning is the opening wedge for a series of technologies that ultimately lead to designer babies. If cloning is allowed now, it will be harder to oppose germ-line engineering to enhance babies in the future.

But for most other emerging forms of biotechnology, a more nuanced regulatory approach than outright bans is necessary. While everyone has been staking out positions on various technologies, almost no one has been looking concretely at what kinds of institutions would be needed to let societies control the pace and scope of technology development.

The Web Services Battle

Between the client/server model and a pure peer-to-peer architecture lies something called Web Services. This is where software giants and computer services companies are waging their next great battle. For a quick primer on Web services, pick up a copy of the new BusinessWeek or click here (subscription required). Following is the two paragraph gist from the BusinessWeek story:

It's the Web at your service. For consumers, this means handing off some of the pesky details of life to your computer. A Web site can keep your personal calendar and automatically arrange such things as doctors' appointments and meetings with the school guidance counselor. In early March, travel Web site (EXPE ) is launching electronic alerts that find you wherever you are via your computer, cell phone, or pager when your flight is delayed--and tip off your family or friends when your plane is about to land. Corporations are tapping Web services to do everything from getting internal computer systems to share information to tightening links with business partners.

People in the computer industry have been talking up this technology for more than two years, but now it is finally arriving. Tech kingpins including Microsoft (MSFT ), IBM (IBM ), and Net software specialist BEA Systems (BEAS ) are delivering products they expect to be the building blocks of Web services. To software makers, this looks like the most important thing to happen since the Web reared its head in 1994. One market alone--software that helps computer systems interoperate--is expected to amount to $15.1 billion worldwide next year, up from $9.3 billion last year, says market researcher Kinetic Information LLC. In anticipation of a bonanza, Microsoft Corp. is retooling its entire product line to foster Web services--what it calls its .Net strategy. "We are betting the company on Web services," vows Microsoft Chairman William H. Gates III.

So is Sun Microsytems. Which may well be the reason the company sued Microsoft last week, seeking treble damages on a $1 billion claim. There's an excellent capsule summary (subscription required) of the suit in today's Wall Street Journal, which is worth quoting at some length:

Sun Microsystems Inc. is once more entering the courtroom against Microsoft Corp., this time with a 71-page antitrust suit taking aim at some of the Microsoft products that are increasingly hurting Sun's core business and future growth plans.

It is Sun's second big suit against Microsoft and could become a multiyear headache for the Redmond, Wash., software company. Though Sun is making a series of new allegations that might not be easy to prove, some legal experts say the computer maker seems to be in a strong position to seek damages based on past Microsoft business practices that courts have already deemed illegal.

I'm not sure Sun is "in a strong position to seek damages," since it gives its Java programming code away (for free). If you give something away for free, how can you be economically harmed? But that's not the point of the suit. The point of the suit is to leverage Sun's legal advantage (Microsoft comes to court as a convicted monopolist) into some kind of settlement that enables Sun to better compete in the emerging web services marketplace.

The Private Jet, The Public Image

What do talented, highly-paid television performers think about as they survey their circumstances? According to Time Magazine, David Letterman thinks about the difficulty he has commandeering the CBS corporate jet, when he's not fretting about his public image. I'm not kidding. To the text:

"The entire history between Dave and CBS is negative. From Day One, they never treated him importantly," a former Letterman associate says. "He needs people to talk to him, and Les (Moonves, CBS President) went the other way and ignored him. I'll give you an example of stupid CBS tricks. Dave's people used to try to get a company plane to take him to St. Bart's. He's their No. 1 guy, but getting the plane was like pulling teeth. You'd think they'd take him down whenever he wanted to go." On the other hand, Letterman is said to worry about the appearance of job hopping. "By trying all three networks, won't he appear too mercenary, too insatiable or just too weird?" asks a Late Show staffer. "Believe me, David thinks about these things constantly."

You can read about the rest of Mr. Letterman's woes here.

The Natural

The name on the door at 52nd Street and 6th Avenue is Batten, Barton, Durstine & Osborn (BBDO), but the man who made it the greatest broadcast television advertising agency in the world is Phil Dusenberry. After four decades of frequently extraordinary work for clients like General Electric, Pepsi, Fedex and President Ronald Reagan's 1984 re-election campaign, Mr. Dusenberry is retiring, effective 31 May. Stuart Elliott has the story and a fond appreciation.

Sunday, March 10, 2002

Does Anyone Defend the Bush Administration on Steel?

Yes. His name is Paul Magnusson and he lays out the case for Bush's decision on steel tariffs in the new issue (subscription required) of Business Week. To the text we go:

It was a bold but seemingly contradictory move. A tax increase on imports from a President who promised that taxes would be raised only "over my dead body." A protectionist move from a Republican who claims to believe in the free market. An inflationary action that can only hurt U.S. exporters struggling against a strong dollar. And a diplomatically risky gambit when America is trying to keep her allies in the war on terror in line.

Certainly, politics played a role in the decision: Getting an edge for Republicans in steel states is important for the midterm elections and beyond. Yet, despite the risks and besides the politics, the White House did the right thing. After all, economic abstractions such as free trade have to be mixed with practical politics to create a realistic trade policy. And Bush's ultimate goal is laudable--persuading the rest of the world to do away with a century of government intervention in steel production. For that, he'll have to get all steel-producing nations back to the bargaining table for some no-nonsense talks. The tariffs will demand the attention of countries balking at serious capacity-reduction.