I just watched a series of short videos from the Wall Street Journal's Digital Network. The series is called the "End of Wall Street". It is a short oral history of the past year since the demise of Bear Stearns and the current crisis. It ends with a part called "What Happens Next," yes the biggest question in the world, right next to the last cyclon on Battlestar Galactica. It's a nice piece of journalism even with the mood-inducing sad piano.

Follow this up with another WSJ story on Morgan Stanley written by Denis Berman: "Answering Morgan Stanley Riddle" about the possible successors to CEO John Mack. The two top contenders are James Gorman, longtime brokerage guy, and Walid Chammah, the institutional securities guy. Both of these guys represent what Wall Street has always been about: Sales, Trading, Research and eventually core Investment Banking. I think we have witnessed (first understatement of the year) the end of financial alchemy of complex assets with neat model risk assumptions passed to investors as securities. Those days, to some degree and as long as memory holds, are over (whew!). It is one of the questions I will look to ask Bill Janeway and Richard Bookstaber at Money:Tech as they continue their conversation from last year.

In fact a return to fundamental investing (with some help from the Internet, RSS & social media) is upon us. As sell side firms reduce the number of companies they cover, being able to do 'real' research and find proprietary data is an advantage, again.

Back to Morgan Stanley as a barometer for the Street as a whole, the final sentence in the article is the money quote:

"The CEO pick will say a lot about the firm's vision of itself. And whether Wall Street has, at last, died or survived."

If the choice is between a brokerage guy and a markets guy -- that should tell you where we are going -- clients and trading.

The good news is that Wall Street never really dies, firms go under or get acquired, but creative destruction always takes place. Just because Morgan Stanley and Goldman Sachs are bank holding companies doesn't mean they are going to stay that way forever. My own hunch is that this is a holding action to provide stability, as we all start to understand the new rules. In the next few months and years, the shackles of stability and emerging competitors will give way to prudent risk seeking and higher profits. It's just human nature.

As long as people seek to do something more than earn a risk-free return and have capital to invest, Wall Street survives. If it didn't die after '29, tariffs, and a World War, the Great Panic of 2008 isn't going to kill it.

I grew up on the idea that humanity would grow out into space, and that resources were for all practical purposes infinite. It may well be that in some possible worlds, that could still be true, but it's increasingly looking like we're going to be stuck here with only one world's resources to draw on. And while most reasonable people are aware that we're using up much of our children's inheritance, and handing them debt in exchange, I don't think as a society we've really come to grips with the consequence of that knowledge.

We're rather like the investors who were complicit in Madoff's scheme, playing along while the getting is good. At least some of us know that the game is rigged, but we're not going to be the first to blow the whistle.

Former World Bank economist Herman Daly wrote a vivid piece on the subject of the Ponzi economy back in October, entitled The Disconnection Between Financial Assets and Real Asssets:

The current financial debacle is really not a “liquidity” crisis as it is often euphemistically called. It is a crisis of overgrowth of financial assets relative to growth of real wealth—pretty much the opposite of too little liquidity. Financial assets have grown by a large multiple of the real economy—paper exchanging for paper is now 20 times greater than exchanges of paper for real commodities. It should be no surprise that the relative value of the vastly more abundant financial assets has fallen in terms of real assets. Real wealth is concrete; financial assets are abstractions—existing real wealth carries a lien on it in the amount of future debt. The value of present real wealth is no longer sufficient to serve as a lien to guarantee the exploding debt. Consequently the debt is being devalued in terms of existing wealth. No one any longer is eager to trade real present wealth for debt even at high interest rates. This is because the debt is worth much less, not because there is not enough money or credit, or because “banks are not lending to each other” as commentators often say.

Can the economy grow fast enough in real terms to redeem the massive increase in debt? In a word, no. As Frederick Soddy (1926 Nobel Laureate chemist and underground economist) pointed out long ago, “you cannot permanently pit an absurd human convention, such as the spontaneous increment of debt [compound interest] against the natural law of the spontaneous decrement of wealth [entropy]”. The population of “negative pigs” (debt) can grow without limit since it is merely a number; the population of “positive pigs” (real wealth) faces severe physical constraints. The dawning realization that Soddy’s common sense was right, even though no one publicly admits it, is what underlies the crisis. The problem is not too little liquidity, but too many negative pigs growing too fast relative to the limited number of positive pigs whose growth is constrained by their digestive tracts, their gestation period, and places to put pigpens. Also there are too many two‐legged Wall Street pigs, but that is another matter.

Growth in US real wealth is restrained by increasing scarcity of natural resources, both at the source end (oil depletion), and the sink end (absorptive capacity of the atmosphere for CO2). Further, spatial displacement of old stuff to make room for new stuff is increasingly costly as the world becomes more full, and increasing inequality of distribution of income prevents most people from buying much of the new stuff—except on credit (more debt). Marginal costs of growth now likely exceed marginal benefits, so that real physical growth makes us poorer, not richer (the cost of feeding and caring for the extra pigs is greater than the extra benefit). To keep up the illusion that growth is making us richer we deferred costs by issuing financial assets almost without limit, conveniently forgetting that these so‐called assets are, for society as a whole, debts to be paid back out of future real growth. That future real growth is very doubtful and consequently claims on it are devalued, regardless of liquidity.

There is an alternative that Daly, in another piece, calls A Steady State Economy, and that others call "ecological economics". Here's Daly:

A failed growth economy and a steady-state economy are not the same thing; they are the very different alternatives we face. The Earth as a whole is approximately a steady state. Neither the surface nor the mass of the earth is growing or shrinking; the inflow of radiant energy to the Earth is equal to the outflow; and material imports from space are roughly equal to exports (both negligible). None of this means that the earth is static—a great deal of qualitative change can happen inside a steady state, and certainly has happened on Earth. The most important change in recent times has been the enormous growth of one subsystem of the Earth, namely the economy, relative to the total system, the ecosphere. This huge shift from an “empty” to a “full” world is truly “something new under the sun” as historian J. R. McNeil calls it in his book of that title. The closer the economy approaches the scale of the whole Earth the more it will have to conform to the physical behavior mode of the Earth. That behavior mode is a steady state—a system that permits qualitative development but not aggregate quantitative growth. Growth is more of the same stuff; development is the same amount of better stuff (or at least different stuff). The remaining natural world no longer is able to provide the sources and sinks for the metabolic throughput necessary to sustain the existing oversized economy—much less a growing one.

It's clear that getting to a steady-state economy will be hard, perhaps even impossible (although it's worth noting that living systems have accomplished that feat.) But what a challenge! How do we keep the dynamism of modern capitalist economies without borrowing from the future? What does it mean to keep the real costs of what we consume on the balance sheet? Will the economy of the future be built on aesthetic value exchange (the whuffie of Cory Doctorow's imagination), with renewable energy in harness and physical materials seamlessly recycled. Great questions, great opportunities for us to invent the answers!

1. Techies: Volunteering to Save the World - article on NGO work being the new black for technology. In particular, this caught my eye: "Earlier this year, IBM launched a program called Corporate Service Corps to send 100 employees to Romania, Turkey, Vietnam, the Philippines, Ghana and Tanzania to work on projects that combine economic development and IT. And the response was impressive: More than 5,000 employees applied to participate."
2. Laurence Livermore Lab releases Stack Trace Analysis Tool - debugging tool for code running over 20k processors. We need new tools like this to handle the complexity thrown up by a multicore world.
3. Spinning Silkworm Cocoons into Biosensors - interesting article in MIT Technology Review about bioengineer Fiorenzo Omenetto who is using silk to build optical devices that can be used as sensors in the body. "In the devices that ­Omenetto and Kaplan are developing, proteins embedded in the optical material efficiently bind to a target such as oxygen or a bacterial protein; when they do, the light transmitted by the sensor changes color."
4. La Rochefoucauld Quotes - lots of thought-provoking quotes. For example, on the freemium business model: "What seems to be generosity is often no more than disguised ambition, which overlooks a small interest in order to secure a great one." On Twitter: "As it is the characteristic of great wits to say much in few words, so small wits seem to have the gift of speaking much and saying nothing." On social network sites: "However rare true love may be, it is less so than true friendship." On Google/Microsoft/Apple/[insert big company here]: "There are heroes in evil as well as in good."

This year, Gates made an important and potentially difficult transition at age 52, leaving Microsoft as CEO and devoting more of his time and energy to the Bill and Melinda Gates Foundation. It's a shift in focus, moving from defining strategy for Microsoft to a broader strategy for improving the lives of the world's poor. Bill Gates exemplifies what Tim O'Reilly is talking about when he says that those of us in the tech industry should increasingly "focus on stuff that matters."

In many ways, Gates represents the "best of us" -- it's not just what he's doing but how he thinks about what he's doing. He's a curious geek. He wants to find interesting problems to solve. He believes that smart, self-motivated people working together can make a difference. Bill Gates reflects the best qualities of a generation that has grown up finding the innovative ways to apply science and technology to impact our everyday life in mostly positive ways.

These thoughts about Gates were sparked by watching Charlie Rose's interview with Bill Gates this week. What comes through in this interview is the optimism of Bill Gates and his belief that technology is a kind of magic. Good magic. Powerful magic. Software is magic that allows people to do things they dream of doing. What's most telling is Gates's belief that the best is yet to come, that we're still in the early stages of realizing what can be done with this technology.

The second half of the interview is the best part, when Gates is talking about his life after Microsoft and his interest in the work of the Foundation. (Many will find the first half of the interview about Microsoft's past and present product strategy and Gates's belief that they can compete with Google in search uninteresting or irrelevant.) The primary focus of the Gates Foundation has been to explore ways to reduce common diseases such as malaria and rotavirus that affect the world's poor. Here's a section from a letter from Bill and Melinda Gates.

More than a decade ago, the two of us read an article about the millions of children who were dying every year in poor countries from diseases that were long ago eliminated in this country. One disease we had never even heard of—rotavirus—was killing literally half a million kids each year. We thought: That's got to be a typo. If a single disease were killing that many kids, we would have heard about it, because it would have been front-page news. But it wasn’t a typo.

We couldn't escape the brutal conclusion that—in our world today—some lives are seen as worth saving and others are not. We said to ourselves: "This can’t be true. But if it is true, it deserves to be the priority of our giving."

In the interview, you can't miss how committed Gates is to the efforts of the Foundation. He realizes that he's in a special position to see problems like the one above and formulate a plan backed by resources to do something about it. Yet he doesn't come across as a do-gooder. What excites him about the non-profit world is similar to what he enjoyed at Microsoft -- finding and working with smart people who are really engaged in issues and problems.

As much as I appreciate the goals of the Foundation, I found myself admiring Bill Gates as a person during the course of the interview. The truth is that while he was busy developing software, he's also worked on developing himself. He is the self-made American who has matured into a role model and leader. He is thoughtful and tactful where a younger version would have been brash and impetuous. Like Windows, improvement for Gates has required multiple iterations but the insistence on getting it right won out eventually. The newest release of Bill Gates is the best yet.

When he talks about improving education, he's not just analytical. He appears to be moved while describing his interaction with highly motivated teachers who see their profession "as a higher calling." Gates also tells us that he's watching courses on DVD while he exercises. He highly recommends "Big History" a series of lectures by David Christian, available through "The Teaching Company." I found it inspiring that he was "watching three hours on Modern Economics" over the course of a weekend while on a treadmill. That's lifelong learning in action. I just wonder how many present or former CEOs are that inquisitive.

Gates gives me hope at a time when I've grown tired of reading how the short-sighted schemes of Wall Street's top brass and other American executives have brought ruin to American business and our economy. They aren't leaders worth following. Gates is different. He deserves genuine admiration, in my view. He's more than a technologist. He's both a realist and an optimist. He's become a world leader worth listening to.]]> 1/5/2009 4:26:36 PM http://radar.oreilly.com/2008/12/admiring-bill-gates.html Regular Radar contributor Linda Stone sent this in to be posted today.

As each year winds to a close, John Brockman, a literary agent representing some of the finest minds in science and technology and the founder of Edge (a 501c3), poses a provocative question to an international community of physicists, psychologists, futurists, thought leaders and dreamers. Brockman is a master convener, both online and in real life. This year’s annual Edge question, What will change everything?, generated responses from Freeman Dyson, Danny Hillis, Martin Seligman, Craig Venter, and Juan Enriquez, to name a few. Here are a few highlights.

With the recent election there has been a lot of talk and enthusiasm for the possibility of a more open, modern government that operates with transparency and makes data available for remixing by it’s citizens. People have their eye on government to change…This is a worthy goal to push for but don’t hold your breath. The government of the United States is a behemoth that, all told, employs 12 million people and is preternaturally territorial and risk averse…


Pressing government to change is necessary but is not the only bet we should place. Mike makes the point in this video that we don’t need to wait for data that can improve civic life or increase transparency in government.

If you know of other examples of citizens improving civic life that deserve mention, please share them in the comments.



Part one of this interview is available here.

The last major announcement from Palm was the Foleo in May 2007, a device that was cancelled only a few months later. While the device itself was a failure, the concept was not. Netbooks are quickly becoming a sizeable market with universal appeal. Palm's experience with the Foleo has left much of the tech press skeptical of Palm's coming announcement. Personally, I think this is going to be one of Palm's most important announcements in its history, following its two prior acts - the rise of the Palm PDA in the mid to late 1990s and the company's transition to smartphones after the acquisition of Handspring in 2003. A hit will resurrect the company. A flop will likely lead to its demise.

This is an interesting time for Palm. On December 22, the company announced that it had secured $100 million in an equity investment from Elevation Partners, just four days after a disappointing Q2 FY09 earnings announcement with a substantial net loss for the quater. Palm's CEO Ed Colligan called this an "undeniably difficult period." Indeed. With so much of the smartphone narrative and consumer excitement focused on iPhone, BlackBerry, and Android, Palm has largely been left out.

The far more intriguing Colligan quote from the Q2 FY09 earnings release concerns Palm's upcoming announcement - "We are on track to deliver a breakthrough new platform and products that will bring a truly differentiated smartphone experience to our customers and reestablish Palm as a leading innovator in the mobile industry."

Breakthough new platform...
Truly differentiated smartphone experience...
Reastablish Palm as a leading innovator in the mobile industry...

Sure, press releases are full of language like that, but if you're Palm, you can't make these statements with the smartphone market conditions the way they are and expect to be taken seriously ever again unless there is some shred of truth in these words.

I think Palm has a chance. Not a very good chance, but a chance here and I think it's unfair to be dismissive until we know exactly what Palm has to show us. For Palm to change the smartphone market dynamics at such a critical time, the company needs a hit on January 8th. Anything less than that will turn its third act into its final act.

The essence of Berry's argument is that we as a culture need to get away from single-issue movements to fix this or that, and instead embrace holistic thinking about how society as a whole should be organized to achieve our goals. As a farmer, essayist and poet, Berry's focus, is, of course, not on political organization, or industry, but on the more fundamental issue of where our food comes from and how best to produce it. In this time when the broader public is becoming aware, through a variety of economic shocks, that "the way we live now" is unsustainable, Berry's thinking, once perhaps regarded as a relic of the idealistic back-to-the-land movement of the seventies, is finding new relevance in an era in which comparisons between the collapse of the Soviet economy in the 80's and today's collapse in the American economy become a topic of discussion on high tech mailing lists. (I take particular note of the fact that Dmitri Orlov's piece, which provoked that discussion, makes the case that Russia's economy was in many respects more resilient than ours, with one callout being that most Russians still had some ability to grow their own food.) Even the BBC is noting that Food needs 'fundamental rethink'.

What I like best about Berry is his insistence on a holistic approach. He writes:

...if we are concerned about land abuse, we have begun a profound work of economic criticism. Study of the history of land use (and any local history will do) informs us that we have had for a long time an economy that thrives by undermining its own foundations. Industrialism, which is the name of our economy, and which is now virtually the only economy of the world, has been from its beginnings in a state of riot. It is based squarely upon the principle of violence toward everything on which it depends, and it has not mattered whether the form of industrialism was communist or capitalist or whatever; the violence toward nature, human communities, traditional agricultures and local economies has been constant. The bad news is coming in, literally, from all over the world. Can such an economy be fixed without being radically changed? I don’t think it can.

The Captains of Industry have always counselled the rest of us to be “realistic”. Let us, therefore, be realistic. Is it realistic to assume that the present economy would be just fine if only it would stop poisoning the air and water, or if only it would stop soil erosion, or if only it would stop degrading watersheds and forest ecosystems, or if only it would stop seducing children, or if only it would quit buying politicians, or if only it would give women and favoured minorities an equitable share of the loot? Realism, I think, is a very limited programme, but it informs us at least that we should not look for bird eggs in a cuckoo clock.

...we need diversified, small-scale land economies that are dependent on people. Therefore, we need people with the knowledge, skills, motives and attitudes required by diversified, small-scale land economies. And all this is clear and comfortable enough, until we recognize the question we have come to: Where are the people?

Well, all of us who live in the suffering rural landscapes of the United States know that most people are available to those landscapes only recreationally. We see them bicycling or boating or hiking or camping or hunting or fishing or driving along and looking around. They do not, in Mary Austin’s phrase, “summer and winter with the land”. They are unacquainted with the land’s human and natural economies. Though people have not progressed beyond the need to eat food and drink water and wear clothes and live in houses, most people have progressed beyond the domestic arts — the husbandry and wifery of the world — by which those needful things are produced and conserved. In fact, the comparative few who still practise that necessary husbandry and wifery often are inclined to apologize for doing so, having been carefully taught in our education system that those arts are degrading and unworthy of people’s talents. Educated minds, in the modern era, are unlikely to know anything about food and drink, clothing and shelter. In merely taking these things for granted, the modern educated mind reveals itself also to be as superstitious a mind as ever has existed in the world. What could be more superstitious than the idea that money brings forth food?

I AM NOT SUGGESTING, of course, that everybody ought to be a farmer or a forester. Heaven forbid! I am suggesting that most people now are living on the far side of a broken connection, and that this is potentially catastrophic. Most people are now fed, clothed and sheltered from sources toward which they feel no gratitude and exercise no responsibility. There is no significant urban constituency, no formidable consumer lobby, no noticeable political leadership, for good land-use practices, for good farming and good forestry, for restoration of abused land, or for halting the destruction of land by so-called “development”.

We are involved now in a profound failure of imagination. Most of us cannot imagine the wheat beyond the bread, or the farmer beyond the wheat, or the farm beyond the farmer, or the history beyond the farm. Most people cannot imagine the forest and the forest economy that produced their houses and furniture and paper; or the landscapes, the streams and the weather that fill their pitchers and bathtubs and swimming pools with water. Most people appear to assume that when they have paid their money for these things they have entirely met their obligations.

Money does not bring forth food. Neither does the technology of the food system. Food comes from nature and from the work of people. If the supply of food is to be continuous for a long time, then people must work in harmony with nature. That means that people must find the right answers to a lot of hard practical questions.

I know that there are those who will counter that with the right technology we can grow our way out of anything. I used to believe that, but I'm not sure I do any more. I don't know that Berry has the right answer to the challenge we are facing, but he definitely has the right framing for the questions we need to be asking ourselves:

The proper business of a human economy is to make one whole thing of ourselves and this world.

I get frustrated when I see people highlighting use of social media--blogging, wikis, twitter, customer feedback systems like Dell IdeaStorm or MyStarbucksIdea--as if they were exemplars of what has come to be called "Enterprise 2.0."

As I said in my keynote at the Web 2.0 Expo NY (and in a followup radar post), WalMart is a better example of Enterprise 2.0 than any of these more trendy examples of user contribution systems. If Google's key innovation with PageRank was to recognize that a link was a vote, which could be counted and measured to get better search results, so too, WalMart recognized early on that a purchase was a vote. Each company built real-time information systems to capture and respond to that vote. WalMart built a supply chain in which goods are automatically re-ordered as they go out the door, with algorithms based on rate of sale controlling the reorders. Google built a better search engine, in which pages that were "better linked" were given priority over the ones produced by pure keyword matches. They went on to build real-time systems to measure what John Battelle called the database of intentions, as expressed by people's queries and subsequent clickstream data, as well as an ad auction system that prices ads in real-time based on the predicted likelihood of the ad being clicked on.

I came to see just how closely MyBarackObama.com emulated these ideas of the real-time enterprise in accounts of the Houdini project, a bold program in which poll watchers eliminated the names from voters who had actually made it to the polling station from the "get out the vote" call lists:

While the hot line was too overwhelmed to be of much use, the source said the program itself still proved a smashing success....the campaign was able to clean 1.6 million voters from the call lists they distributed to canvassers that afternoon, making those lists 25 percent shorter on average.

Consider MyBarackObama.com as a kind of vast machine, with humans as extensions of the programmatic brain: volunteers log in to get their get-out-the-vote call lists. They place their calls, then use the web to report back their results. Those results modify the call lists for the next volunteer. At the other end, the Houdini volunteers are taking note of who is actually coming out to vote, allowing the system to dispatch additional attention to hot spots, for example where there is an undervote compared to the campaign's projections. Meanwhile, the pruned call lists make the volunteers more effective. Inside the machine, programmers are tuning the algorithms, while top campaign staffers are making key decisions to adjust the resource mix.

Now put these three examples, Google, WalMart, and MyBarackObama together, and ask yourself what they tell you about the future of business, military operations, or any large organization.

Sensing, processing, and responding (based on pre-built models of what matters, "the database of expectations," so to speak) is arguably the hallmark of living things. We're now starting to build computers that work the same way. And we're building enterprises around this new kind of sense-and-respond computing infrastructure. In this sense, you can argue that Microsoft's term "Live Software" is the best name yet for the kind of software-infused enterprise we're building.

It's essential to recognize that each of these systems is a hybrid human-machine system, in which human actions are part of the computational loop. Back in 1998, when I was trying to understand just how people were using Perl and other scripting languages on the web, I came to recognize that web applications, unlike desktop applications, still have the programmers inside them. Perl was called "the duct tape of the internet" precisely because it was used for programming that was only expected to last a short time; the programmers were still there, constantly tweaking the application. (I first began using the image of "the Mechanical Turk" in my talks about this aspect of web applications in 2003.)

What became clear in the ensuing decade is that humans are not just part of the programming, but also sensors and actuators for computers. Our aggregate behavior is measured, monitored, and becomes feedback that improves the overall intelligence of the system. That is why I've said that the defining characteristic of Web 2.0 applications is that they "harness collective intelligence."

Aside: I seem to have lost the battle to define Web 2.0 as" the use of the network as platform to build systems that get better the more people use them. Perhaps its the lure of the obvious: companies and products that harness explicit user contribution are easier to recognize than those that pursue the more subtle and difficult task of harnessing implicit contribution. Or perhaps it's the persistent gravitational tug of the idea that the heart of Web 2.0 is ad-supported business models; therefore, enterprise features that look like those of well-known companies featuring user contribution and ad-supported business models must by definition also be "2.0." For me, the far more profound and powerful systems come from harnessing both explicit and implicit human contribution.

Again, consider MyBarackObama.com. It definitely harnessed explicit contribution, providing a platform for volunteers to organize and host local calling parties, to blog, or perform other campaign activities. But ultimately, Obama's ground game--old fashioned precinct-level organizing, amped up to a new level by an army of distributed volunteers armed with mobile phones and coordinated via a web application--was the key to his victory. The "explicit" social media elements of MyBarackObama.com paled in impact compared to the development of a next generation electronic nervous system, in which volunteers were trained, deployed, and managed by a web application who used them, in John Sean McMullen's memorable phrase, as "souls in the great machine."

Official O'Reilly account:
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Many of you have probably seen some or all of these accounts in my retweet stream. For better or worse, my personal account (@timoreilly) has garnered the most followers, and so I've become a switchboard for passing on the best of the news from others in the company.

I do find this to be an interesting exercise in managing corporate social media. I don't follow every O'Reilly employee, as we have no formal method for tracking them, but often, people who have posted something they want to bring to my attention send me an email requesting a retweet. (So do lots of outsiders. My habit of retweeting has ended up building a great extended information network!)

The fact that I don't automatically pass on company propaganda, but require it to be interesting, makes for a great teaching opportunity with employees. As I explain to them what I consider retweetable and why, and how to write tweets that make me want to share them, we improve the overall social media marketing IQ of the company.

But don't doubt there will be some very interesting biological understanding that emerges from engineering experimentation in SB. Probably some very helpful insights. But to make it truly open? It simply won't happen. There will be too many dominating patents that can stop an SB implementation that never even contemplate SB.

In a recent conversation with my daughter Arwen and son-in-law Saul Griffith, Matt Webb remarked that he'd like 2008 to be remembered as the year of "peak consumption." Saul pointed out, though, that the term "peak waste" is perhaps more accurate. In an analogy to peak oil, he suggested that maybe we've reached the pinnacle of waste in our consumer culture. I do wonder if we will look back at the past few decades as a kind of sick aberration rather than a golden age, with good times we want to get back to. Like Saul, I'm hopeful that we can get rid of the waste, and get back to creating things of lasting value.

I've so often been struck by the incongruity of vast Chinese factories producing millions of truly useless goods, from tourist tchotchkes to marketing gimmickry. (I've often wondered: "What do they think of us, so rich that we can afford to spend money on so much that is useless!" And now we find that perhaps our wealth too was rooted in illusion.) And even when it comes to consumer electronics, we've built a throwaway culture rooted in waste. As Saul likes to say, you can't imagine handing down "your grandfather's iPod" the way you could your grandmother's watch, or tools, or furniture, or books. It doesn't have to be that way. Yes, technology improves and old devices get left behind, but there are so many innovations that could reduce waste, improve usability and create lasting value, things like standardized power adapters, open source hardware that is re-usable, modifiable, and repairable, as well as technology that is simple and robust enough to pass the test of time.

We've had a shock, yes, with more to come. But let's hope it wakes us up. Let's not lament it. Let's embrace it, and use it to change our priorities. As I've said before, the best response to the downturn is to work on stuff that matters!

Still shocked. So fucking brutal.

Within the sadness of that, however, comes some good news. Flickr group and George is taking heart from it.

I'm reminded of Google's philosophy around groups. They were so happy with the way that the Google Maps community rallied to support apps developers, they've rolled out a similar "help-less" support system for their other developer products. The thinking is: if we hold their hands then the work for us will grow faster than we can meet it, so it's better to stand back even at launch and let the community form and do the work. From other experiences I've had (Google Docs, I'm looking at you) this community support is sketchy at best, and Google may well have learned the magic ingredient that creates a vibrant helpful community as opposed to a question-filled answer-free ghetto. With the passion for Flickr Commons that I saw at National Digital Forum last month, I'm sure the community's on the right track.

(hint on the magic ingredient: Maps apps were public works, so the reward for helping was seeing another cool app appear. Google Docs are generally private, so there's rarely any direct reward for helping someone with their DNS configuration or email client setup. Flickr Commons: very public)

It wasn’t quite the same lively Macworld keynote without Steve Jobs, but it looks like self-deprecating Phil Schiller, Apple’s VP of worldwide product marketing, did an admirable job of introducing a whole slew of products, including the new Macbook Pro (17-inch version) and the new DRM free iTunes music store, without so much as mentioning Steve Jobs. Of all the product launches, I was most impressed with Apple’s new software – iLife ‘09 and iWork ‘09. In this day and age, when it is widely assumed that all apps are moving to the Internet, Apple has done the opposite and given its desktop apps a big boost. What I was impressed by is how the company has brought the Internet into these applications. The new version of the iPhoto application now allows you to seamlessly upload photos to Facebook and/or Flickr. Without much effort, it also allows you to geotag the photos, helping bring “location” into the desktop.

• iPhoto ‘09 automatically scans photos to detect people’s faces, and when you assign a name to any face iPhoto will automatically find more pictures of that person in your desktop library. It also lets you easily publish photos to Facebook or Flickr. The Places tool automatically imports photo location data from a GPS-enabled camera or iPhone, and you can manually assign a location to any photo, group of photos or event.
• iWeb ‘09 allows publishing to any hosting service, and it can also automatically send updates to your Facebook profile.
• On GarageBand, you can download music lessons from famous artists like Norah Jones and Sarah McLachlan, using the new GarageBand Lesson Store, available inside the GarageBand ‘09 application.
• Apple also launched the in public beta of iWork.com, a new service Apple is developing to share iWork ‘09 documents online.

Essentially, Apple has adapted its applications to accomodate new user behaviors that involve web services like Flickr and Facebook. In doing so, it is giving people a reason to keep using their desktop applications longer, for tasks that are more complex than, say, typing out a quick document. With these upgrades it has stayed true to its philosophy of focusing on user experience and usability.

This Internet-in-the-desktop approach is something we have talked about for a long time — probably too long. Microsoft’s Ray Ozzie, in an interview with me, extolled the virtues of a hybrid environment and said that in the future, Microsoft Office is going to live both on the desktop and in the cloud. Apple’s new iWork.com is an attempt to do just that for the iWork productivity suite.

In bringing Internet into its desktop apps, Apple is also trying to overcome its lack of web savviness. A case in point is iWork.com, which carries the beta tag but is more like an alpha. For now, you can’t edit other people’s docs; you can only leave sticky notes on them or chat about them. On the issue of collaboration, as hipsters would say, iWork.com is an epic fail, considering that even tiny startups are able to offer those features. It seems that, in order to actually edit the document, you have to download it and make change offline. If they want to be taken seriously, they’ll have to get it up to par with Google Docs; I hope they do.

That said, Apple’s newest upgrades show that, with enough creativity and the right functionality, desktop apps can still live on. As Tony Bennett sang to close the 2009 keynote, “the best is yet to come.”

With reports from Josh Pigford and Liz Gannes at Macworld in San Francisco

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Today, Clearwire unveiled the WiMAX network in Portland, Ore., that we covered last month. Portland is the first city to get WiMAX service under the Clear brand since Clearwire closed its WiMAX spectrum merger with Sprint last month. Portland joins Baltimore, Md., as Clearwire’s only pure WiMAX network in the country.

Clearwire plans to upgrade its 46 pre-WiMAX markets in the coming years. Meanwhile, it looks like other pure WiMAX deployments, such as Chicago, are getting pushed back. Clearwire has said it may slow its WiMAX deployments in response to the financial crisis, but CEO Ben Wolffe said in December that decision would be made at a January board meeting, the date of which has not been set as of today. Pricing for the Clear service in Portland runs from $30 per month for 200 MB to $50 per month for unlimited data for wireless service and from $20 per month for 768 kbps uplink to $40 per month for up to 6 Mbps up for home service.

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Israel’s strikes into Gaza continue apace, and news stories are pointing out that the conflict is being fought online as well — Twitter, YouTube and hacking web sites are playing a role, as ways to get information out of the country and dispense propaganda. There’s no need to drop pamphlets when you can post video of soldiers destroying a government building on YouTube or send threatening texts. The delivery mechanism is new, but propaganda isn’t.

Neither are the efforts to take out the delivery mechanism and means of communications. However, with Hamas using the same technology as citizens, the scope of such destruction is much wider. On Sunday, Palestinian mobile operator Paltel said that 90 percent of its infrastrucutre in Gaza was down, potentially cutting off communications via cell phone. Warning that the Gaza strip could be “disconnected from the outside world,” Paltel issued a statement that read:

Paltel Group has several alternatives and means that can allow connecting Gaza Strip with the outside world, however only one alternative is still functioning as all other alternatives have been totally damaged as a result of the air strikes and ground assault.

Other reports detail challenges in landline communications and Israeli news sources report that communications among Hamas leaders have pretty much been limited to walkie-talkies. This communication disruption is a scorched earth policy that goes beyond just disrupting the communications of military leaders, and it disadvantages the entire population — civilians included — by cutting them off from the benefits of the information economy. The use of civilian technology and communications by military and terrorists groups makes that infrastructure a bigger target (as was the case in Iraq), much to the detriment of everyone else on that network.

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CTERA Networks, an Israeli startup, has launched a storage service that combines network-attached storage with online backup. CTERA, which has raised an undisclosed amount from Benchmark Capital, sells an appliance that turns any external USB hard drive into a NAS device with automatic backup. This gives people copies of their data on their backup drive as well as in the cloud. It has a few differences from the other storage options out there, such as being able to back up information while the computer is turned off, but it still will face a battle to differentiate itself and win profits in the crowded space.

Want to know more about the rapidly changing Cloud Computing landscape? Preview our Cloud Computing Briefing or purchase the full version.

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Will solar save chip companies? [Earth2Tech]
How to use Blackberry as a modem on your Linux computer. [OStatic.]
Everything you ever wanted to know about using 3G modems. [WebWorkerDaily]
People watching more NewTeeVee. Nothing wrong with that. [NewTeeVee]
What’s the best Netbook money can buy? [jkOnTheRun]
Is Filemaker Pro 10 worth it? [theAppleBlog]

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Freescale said Monday it would offer an ARM-based chip that could lead to a $200 Linux-based netbook, offering about twice the amount of usage on a single battery charge as Intel’s Atom processor allows. Freescale’s efforts are nothing new (only AMD has so far stayed above the netbook fray), but it did get me thinking about how Intel’s endless pushing of netbooks has, ironically, helped destroy the hegemony of x86 machines for personal computing.

Instead of being stuck with an x86 chip from Intel or AMD powering your computer, in the coming year you’ll see everything from netbooks to mobile internet devices running on ARM processors. Other machines will offload more processing to the graphics processor. This is great for consumers, who will soon be able to choose a computer that fits their lifestyle, much like a car buyer chooses between a minivan or sports car. Categories will likely evolve around the type of computing jobs someone plans for the machine, input devices, mobility and power requirements.

Our colleagues over at jkOnTheRun don’t believe smartphones are computers, but they’re discounting the fact that computing has moved beyond word processing and spreadsheets to encompass everything from social networking to commerce. As a reporter who spends her days typing more than 2,000 words, I love my full-size keyboard, but there are plenty of people who can survive using phones to access Twitter and their banking software. In the developing world, mobile phones are being used for everything from web access to setting pricing for their livestock. Computing has broadened far beyond the cubicle culture.

I only need to watch my dad, an electrical engineer, manipulate circuits in a CAD-style design program with his mouse all day to realize that a touchscreen device with intensive graphics processing power might be a better tool for his work. Freed from the x86 instruction set, it’s possible that computing in the coming years could become less of a one-size-fits all model and more personalized, while the use of other common processors such as GPUS or ARM-based chips can allow personalization without huge increases in the price of a gadget. The key will be fitting the pieces together in cost-effective products, and making sure users know exactly what their personalized machines can and cannot do.

In addition to more transparent marketing, there needs to be a focus on other input methods such as speech or even gestures, as well as a change in the way software is developed. Software companies have to port their programs to a variety of processors to keep up with the expansion of heterogeneous computing. Witness Adobe’s efforts to get Flash released on PCs (x 86 chips) and mobiles (ARM archiecture) at the same time. And Adobe has to address embedded efforts too, especially since electronics makers want to turn the TV into a web-connected device.

So, while chips such as those from Freescale may not end up in a consumer netbook, they could find a home powering a low-cost tablet for inventory managment. Instead of focusing on the ever-shifting definition of netbooks, perhaps we should be thinking about ways computing should and will change to fit our lives.

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I have been a frequent user of Truphone since it launched its mobile VoIP service over two years ago. What started as a simple VoIP client for Nokia Symbian S60 devices is fast becoming a unified client that does it all. You can make low-cost calls using Wi-Fi networks, utilize the wireless networks for call-back services and send SMS messages on the cheap.

The company is now taking a big step toward becoming an all-encompassing service by announcing support for Skype and other instant messaging. If you have Truphone installed on your iPhone or iTouch you can make (and receive) Skype calls and send instant messages to other Skype users by downloading the updated software on Jan. 12. So far, accessing Skype on an iPhone/iTouch has been hard. (According to our commenters, you can use Fring for iPhone or Nimbuzz iPhone apps to access Skype.)

I had tried to wrestle Skype CEO Josh Silverman on when he was going to release a client, but failed to get an answer from him. So, from that perspective, this is a welcome upgrade by Truphone. The company is also adding support to other messaging services as well. You can also access Twitter using the Truphone client. The offering is exclusively for iPhone and iTouch for now. 

Geraldine Wilson, who was recently appointed as the chief executive of Truphone, told me in a conversation earlier today that Truphone wants to “offer our users a comprehensive communications experience. We started out as a voice app but now we are broadening it to other applications.”

By doing so, Wilson and Truphone founder James Tagg believe that they will give Truphone users a reason to stay insider the application longer, creating more opportunities to make phone calls and bringing in much-needed revenues. “In a mobile environment it is hard to switch between different applications, and that is why we are creating a single application environment,” Tagg says.

As we have noticed previously, iPhone and iTouch have been saviors for Truphone. Wilson told me that the company has more than 100,000 subscribers who use an iPhone, and iTouch has started to see an quick ramp as well. “Since the iPhone introduction, we are seeing our subscriber base double every month,” she said. In Fall 2008, I spoke with Truphone’s CTO, Alistair Campbell, who told me:

Truphone for iPhone now accounts for about one-half of the total number of Truphone users. And while he wouldn’t disclose the total number of downloads, he did say that the company is focusing more of its resources on Apple’s platform.

OK, now I have another reason to use Truphone.

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As part of a CES related briefing, I was turned on to a product Motorola is pushing that combines a CDMA femotocell with a software-based phone and a digital picture frame. The femotocell will connect with a user’s existing broadband connection and boost cellular coverage in the home. The picture frame shows pictures and also has a video camera embedded in it. For those of you wondering why this hodge podge of functionality exists, I thought it would be fun to take a look at the trends Motorola is trying to address with this Swiss-Army type device.

1. Femtocells: They were hot last year, and this year they may actually see some widespread deployments as carriers cop to the fact that people want decent cell phone coverage in their homes after dumping their landlines, and that means offloading some of the network traffic onto a DSL or fiber backhaul network makes sense. The Moto version is CDMA, meaning it will work with Verizon (a VZ) and Sprint’s current 3G networks in the U.S. Other players offering CDMA femotcells are Airvana (which provides the silicon for the Motorola femtoframe) and Samsung.
2. Design: Last year saw more folks complaining about their ugly routers; now, apparently, the consumer electronics industry is finally taking a page from Apple and trying to gussy up our gadgets. Turning a femotcell into a digital picture frame is one way of making an ugly black box with lots of blinking lights into a slightly less ugly black box that also shows pictures. As devices migrate out of home offices and into the living room near our aesthetically pleasing flat screen TVs, they’d better look better.
3. User Generated Feedback Goes Beyond the Web: Sure, the web has plenty of ways for users to customize their experiences and offer feedback, but in the coming year, businesses are going to be looking even deeper. In a talk at our NewTeeVee Live event, David Verklin of Canoe Ventures detailed how service providers will use interactive IP communications to make advertising more relevant for consumers, and more lucrative for service providers. With the Motorola frame, a user can voluntarily offer details about their home (such as the number of windows, building material, etc.) to the service provider to help optimize coverage — a less invasive use of interactivity that can still benefit businesses.

Motorola wasn’t able to tell me how much this device will go for or even how much it might cost to make, but Rob Malnati, a senior manager at Motorola, said it would likely be offered through the carriers as part of the current subsidized model for consumer premise equipment. It will be available for trials in the first part of this year. I can’t see Verizon or Sprint choosing to offer something like this if it costs a lot more for them. On the other hand, I might pay a slight premium for one less box of blinking lights on my desktop.

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With literally hundreds of events, presentations, keynotes and parties, it can be pretty hard to keep up with everything you’d like to see and do at Macworld this year. But fear not, this year, TheAppleBlog has teamed up with SCHED to bring you the Macworld SCHED. Use it to plan out your entire Macworld schedule and to see which are the most popular events and parties.
Some other features worth noting:

• Create custom schedules: Create an account and create your own personalized schedule that you can hook directly in to iCal.
• Search: There are hundreds of events. Using the search feature you can narrow that down significantly
• Most popular: Find out what events are most popular
• Group calendars: Create group calendars on the fly (here’s one of ours!)
• Mobile Safari Version: Just go to http://macworld09.theappleblog.com on your iPhone/iPod touch and get an optimized version.

Go check it out: http://macworld09.theappleblog.com

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Comcast, which got in trouble with the FCC for its P2P-throttling approach to network management, has now completed its plan that deals with bandwidth hogs by slowing all broadband traffic for heavy Internet users during times of network congestion. The nation’s largest cable provider has posted a chart on its network management page showing that, as of the end of the year, it stopped throttling P2P traffic across its entire service footprint. The most useful thing about the little Google Gadget, though, is that it gives a bit more detail on exactly which markets Comcast serves — data that’s sometimes hard to get from cable providers.

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Xobni, a San Francisco-based maker of software for email services, has raised $7 million in fresh funding led by Cisco Systems. Existing investors Khosla Ventures, First Round Capital, Baseline Ventures and Atomico also invested in this round of founding. In a blog posting, the company said that their Outlook add-on software has been downloaded more than 1.5 million times. They are currently conducting product trials with Fortune 500 companies.

Xobni has partnered with LinkedIn, Facebook, Yahoo! Mail, Skype and Hoover’s to bring their data into user’s Microsoft Outlook. Cisco’s investment in Xobni is part of its continuing tussle against Microsoft over the concept of collaboration, as I noted earlier. Cisco last year bought Jabber to compete more effectively with Microsoft, and it had also acquired email startup PostPath for $215 million.

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Apple co-founder and CEO Steve Jobs today issued a letter that outlines why he is skipping the Macworld: He has a hormonal imbalance that caused him to drastically lose weight, and he needs to take care of it ASAP. His weight loss had led to rampant speculation that he is dying, and the news has acted as a 10-ton stone around Apple’s neck, pushing the company’s stock lower.

There are some who will point fingers at Apple and Jobs for lying about the reason he was not going to present a keynote at Macworld 2009 in San Francisco. In the most technical sense, Jobs, by not coming clean, was lying to the community. But on a more emotional level, I totally understand why he didn’t tell us sooner.

As a public company, Apple needs to address the issue; its the company’s fiduciary responsibility. And perhaps more importantly, it was not fair to the Apple community, which has rallied behind the company in its darkest hour — why wouldn’t they this time around? Yet, at the same time, I can totally understand Steve’s need for privacy, especially over matters of health, which are extremely private. Therein lies Steve’s dilemma and Apple’s quandary.

Over last few weeks I cringed when I saw Jobs’ health become a bit of a football in the media. Whether it was on-the-scene reports from a yogurt salesperson  or big media outlets, everyone was dishing. God, that made me so angry!

I can speak from personal experience: When you are not well and spending a lot of time trying to repair your broken body, it is not easy to deal with any issue beyond you and your family. As a patient, it is especially hard if you really don’t know the cause, and if you aren’t sure you’re going to make it. It has taken almost a year for me to feel comfortable in my skin.

You, I and all who were speculating have no idea how Steve must be feeling, for he had to deal with a life-threatening pancreatic cancer a couple of years ago, before being struck by this mysterious  hormone imbalance. When you are unwell, you want to spend a lot of time with your family, and it is good to see Jobs do exactly that. In doing so, he is bringing home an issue that Silicon Valley has failed to come to grips with. Being a workaholic has its price — at the end of it all, you can pay with your life. Even supermen like Steve Jobs aren’t immune to it.

So, take a cue from Steve. Chill a little, spend an extra hour a day with your family, and work smarter, not longer.

And to Steve, just get better. What the world doesn’t need is another day of mediocrity.
–
Full text of Steve Jobs’ Open Letter

Dear Apple Community,

For the first time in a decade, I’m getting to spend the holiday season with my family, rather than intensely preparing for a Macworld keynote.

Unfortunately, my decision to have Phil deliver the Macworld keynote set off another flurry of rumors about my health, with some even publishing stories of me on my deathbed.

I’ve decided to share something very personal with the Apple community so that we can all relax and enjoy the show tomorrow.

As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors. A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my #1 priority.

Fortunately, after further testing, my doctors think they have found the cause — a hormone imbalance that has been “robbing” me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis.

The remedy for this nutritional problem is relatively simple and straightforward, and I’ve already begun treatment. But, just like I didn’t lose this much weight and body mass in a week or a month, my doctors expect it will take me until late this Spring to regain it. I will continue as Apple’s CEO during my recovery.

I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our Board of Directors if I can no longer continue to fulfill my duties as Apple’s CEO. I hope the Apple community will support me in my recovery and know that I will always put what is best for
Apple first.

So now I’ve said more than I wanted to say, and all that I am going to say, about this.

Steve

Photo of Steve Jobs at WWDC 2008 by Danny Novo via Flickr.

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As the Consumer Electronics shows opens in Las Vegas this week, the papers are awash in stories about CES being smaller this year, by about 11,000 attendees (about an 8 percent decline) and 300 exhibitors (a 10 percent decline.) Given that the Dow Jones Index has fallen about 30 percent, and the S&P 500 has dropped 33 percent since this time last year, such devotion to televisions, mobile phones, netbooks and other consumer gadgets is admirable. And there’s a silver lining to this cloud: consumer electronics may get easier to use.

Analyst Stephen Baker from NPD gave me hope, when he was quoted in a Reuters story saying, “In tough times, the emphasis maybe shifts from cool and neat to how do you make things work better.” But CES isn’t about making gadgets work better — it’s about hardware. And today’s ease-of-use problems are tied more to business model issues such as licensing content, protecting revenue streams and a lack of openness.

One of the primary ways I want my gadgets to work better involves watching web TV on my television. Unfortunately, that’s more of a business model and bandwidth problem, but broadband TVs may help. Other improvements on my wish list include open mobile phone networks, universal cables and chargers, and better battery life for my mobile devices.

Since CES deals in razzle dazzle, rather than the mundane, we’ll see 3-D movies and televisions, competing wireless HD video transmission standards and the compromise computers known as netbooks, rather than solutions for our ease-of-use challenges. So, let’s shelve those dreams of seamless convergence and better portable power for a week, and let the consumer electronics industry wow us. Then we can turn our backs on 3-D televisions and continue our quest for products we actually want, that actually work.

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Marrying web applications with voice has long been seen as the proverbial pot of gold: easy to dream about but hard to actually find. A few startups (and some large companies) are trying to solve the problem; some are using Voice XML, while others are betting on Adobe’s Flash. Today, TringMe, a Bangalore, India-based startup has thrown its hat in the ring by coming up with a way to marry VoIP with PHP, the lingua franca of the contemporary web. TringMe describes VoicePHP as an extension of PHP that now outputs voice instead of text and also takes input as voice instead of text.

Basically, VoicePHP is intended to do the same things as VoiceXML, but by using the familiar PHP programming methology. In doing so, it wants to attract a large pool of PHP-savvy developers and have them develop voice applications. (See how it works.) This is an even simpler approach than the one floated by Ribbit, a Silicon Valley-based company that was acquired by British Telecom in July 2008 for $105 million. Ribbit is betting on the large-scale adoption of Flash and hopes its Flash-centric solution would become the engine that powers web-voice applications.

The idea of VoicePHP seems disruptive in its simplicity. As TringMe puts it on the VoicePHP web site, “With VoicePHP, there’s no need to learn a new markup language, tags, attributes associated with VoiceXML. Widely and Freely available tools for developing, debugging PHP can be continued to use with VoicePHP.” It also means that an application written in VoicePHP can be accessed via Flash, instant messenger (like Google Talk), Mobile VoIP clients or even plain old phone lines. This gives TringMe an advantage over rivals that require Flash.*

VoicePHP also squares off against Twilio, a startup that allows developers to write apps that tap into Twilio’s backend to talk to any kind of phone. Twilio’s simpler version of VoiceXML allows developers to offer some core voice-related functions and helped it attact 1,000 or so developers during the first three days following its launch in late November 2008. Some of them are already using the service in an interesting ways. Voice(sneak) and Dwellicious are two such examples.

Twilio’s approach seemed simpler than the application programming interface (API) tactics that have been tried by others; VoIP companies offering APIs to their platforms have struggled to attract developers to their platforms. Although some VoIP services such as Phweet and iotum’s Calliflower are using TringMe’s API, the company is hoping that VoicePHP will remove all the complexity associated with API-based solutions.

VoicePHP goes well beyond the API paradigm and integrates voice into the language itself. One continues to use the same development, testing tools and implements PHP code as he is used to. There is no need to invoke special “vendor-specific” APIs.

Of course, TringMe isn’t doing this out of the goodness of its heart. It is betting that as VoicePHP grows popular, more and more web-voice application developers would use its VoIP platform, in turn helping TringMe earn money.

* If you are a VoIP developer and can offer your insights, I would appreciate your help. You can leave your thoughts in the comments area or email me using the contact form.

PS: GigaOM readers will get 50 beta invites for the hosted platform which will include one US phone number and phone credits to test the service. You can signup with TringMe & mention GigaOM. Their voice application will be immediately available from Flash, IM, Phone etc.

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At a time of economic downturn, saving jobs and securing economic activity is more important than ever. Investment in new forms of bringing entertainment to the public depends on legitimate sales of material, whilst lost opportunities of innovation is the tab picked up by those who do pay for content for those who refuse to do so.