Economics is the study of markets [...], the science of choice under scarcity.

Said Adam Smith, a pioneer of political economy, who lived from 1723-1790. So if we actually would have an abundance of computational power there would be no scarcity, and the economics of Clouds would end at this point.

ut let me take you back to early 2007, where I sketched the following timeline into my notebook:

From Thorsten's Notebook: The Cloud stack timeline, as seen in 2007

which is exactly the same picture I now – 2.5 years later – commonly use for presentations touching the Cloud space:

Cloud Stack by Thorsten Claus from 2007, now revisited 2009

2002 to 2005 – Web 2.0

Overview of Web2.0 service classes used in 2002/2003 to create an Internet TV station within three days

Mas 2002 I sat in a coffee shop with two friends during the three days following XMas and created an Internet TV station with 8 channels. At this time there was no talk about the “Cloud”. Everyting was Web 2.0, and Ismael Ghalimi [LinkedIn] started his Office 2.0 Database. We used about 20 or 25 Web2.0 applications, mashups, threw in some code, hijacked some services, and created the Station with about $300 CAPEX and $1,000 OPEX versus $30,000 revenue per month at its short-lived four month lifetime – before we took it down because of copyright concerns. We used some services that you would now call “Infrastructure-as-a-Service”, but at that time this was not called “Cloud Computing”, but rather “virtualized rack space”. But these things developed quickly, and Amazon started in 2002 famous “AWS – Amazon Web Services“… I’m not quite sure actually when they started to offer EC2, I think maybe mid 2006, but this is just a blog post, not a journalistic article, and I’m sure you can look this up on Wikipedia if you’re interested ;)

2007 – Cloud Platforms

n 2007 we the saw the first platforms emerging.  People tried to get away from the red ocean of Web 2.0 services and from the discount commodities of computing Clouds. Instead, companies tried to offer more “intelligent” services and to become luxury item discounters. Cloud Platforms were born that were more than just yet-another-service, but rather platform enablers for better services. Here are some recent examples of these developments:

he list could go on, but I wanted to stress the different types of platforms that emerged between “simple” Cloud services and Cloud computing, creating a new complex ecosystem. And whenever a secondary market starts to emerge, every existing Cloud services and Cloud computing company has to ask itself whether its industry will become a commodity, much like gas or water or energy — and whether becoming a commodity is a good thing (because everyone will use your service) or whether you have to differentiate yourself with specialized offers to climb up higher in the value chain; basically serve both services and computing and platform elements disguised in any one of these layers. Examples for differentiation are:

2008 – Network Clouds and Relationship Clouds

y forecast might have been a year off, with major Twitter and Facebook gravity really taking off this year, 2009.  A couple remarkable things happened. First, hardware vendors tried to jump on the Cloud band-wagon, beyond just providing computing hardware. They were joined by a couple of companies that were either not successful in creating gravity in their respective Web2.0 service, platform, or infrastructure Cloud layer, or who found these layers already being a red ocean. As a result, network Clouds emerged:

econd, a whole bunch of players tried to solve the identity puzzle. Most of them tackled the problem from the identity side – I provide you a service that you can use as identity. Of course there were (and still are) many of them. But even though Google also jumped in the game, the identity itself was nothing that was really valuable for users by itself – using one identity provider over another didn’t really make any difference. Early adopters started – oh paradox! – to use several different identity providers, some open (OpenID), some easy to use with pictures to click, etc.

It took a Facebook with its network of relationships tied to little social network centric applications to create the next Cloud layer of a “Relationship Cloud”. Relationship information and identity is extremely valuable in a land of two-sided business models and localization, and Facebook created an ecosystem of relationship-centric applications and services that makes it even more attractive for end users to use their Facebook ID to log into services than creating yet another username and password. I guess the reason why a “Twitter Login” isn’t taking off is the lack of applications around Twitter. Maybe not a bad thing, but let’s not get side tracked ;)

Other companies such as TuneWiki foster ad-hoc, informal relationships without explicit Identity to create value for end-users and their business relationships and advertisers, but they are still a relationship cloud player.

2010 and 2011 – Real-Time Information Logistics

he problem with all of these layers – from network Clouds to relationship Clouds – is that you have to make sense of all the information that you collect and process, especially if you have a two-sided business model. Moreover, the latest trends of viral videos will have an impact on your network and transcoding load, and when people hit your website, you would probably like to know what they were doing before that made them come to your site (more than just the HTML referrer header). It’s like Woopra’s “what’s happening now” dashboard, but think plus viral plus networks plus computing plus social. Plus “right now”. Now add M2M communication to the mix, and with it about 3.5 billion mobile info devices, 1,2 billion static info devices, 1,75 billion smart sensors, and 50 billion microprocessors and microcontrollers, and “right now” might be hard to achieve. Even with the “abundant computational power available through Cloud computing”, as many claim, it will be hard to make sense out of the information for various reasons:

As we can see, the information Cloud is by no means just a sub-problem of computing Cloud, because resources are not a problem, design is! All that comes back to the economics of the Cloud: We have a scarcity of well designed resources, and that will give us plenty of opportunities to create an economy around Clouds for a long time.

lot of companies are aware of this. Just search the VentureBeat deals for real-time information and you can see a whole flood of recent investments (Q2+Q3 2009). Factor in the expected average return on these investments, and you know that the created wealth in four years just out of the last quarter’s deals alone will create an industry by itself. Innovations reach from real-time information on mobile, to M2M, to website information, social networks, recommendation, location, local events, traffic, in-car Internet, …. If you address one single problem of real-time information logistics, you can probably get clients from 20+ industries, just as computing Clouds address many industries, or service Clouds address many industries. This is not a pure-IT-player game.

Even more, at the very “edge” of these innovations – quite literally – are large players like Cisco’s Medianet, Alcatel-Lucent’s Application-Assured VPNs, ArrisNet’s edge services, PeerTV, BigBand, NetLofig, Camiant, Procera, … the list goes on. P2P communication gets new attention because of the potential information and intelligence in the Cloud instead of expensive centralized data centers, where all information first has to be transported to as well, before even the first guesstimate can be taken. And in a few weeks you will read of a Tier 1 carrier, buying a peer-based distribution provider… Not because peer-based distribution is more effective than traditional Content Delivery Networks, but because this very Tier 1 carrier has understood the value of Relationship and Information Clouds that can be formed on top of its Network Cloud.

A simple average might not show the whole picture, so here are some ideas – of course based on the absurd idea that mobile carriers would get 100% of this mobile advertisement revenue:

So even if the top four carriers in the U.S. could realize these revenues right now, their revenue potential would look bleak compared to the current wins in App Stores, Machine-to-Machine (M2M), and voice and email services:

’m not saying that mobile advertisement per se is not a big opportunity for other players, as current application platforms level the playing field for smaller players such as myself. I also wouldn’t mind getting 0.1% of this revenue with a simple ad-sponsored application in addition to other business models. I also think that there are a lot of cool applications out there that I really like and would like to see growing. But for carriers simply selling one $0.99 application through existing application stores per month just to power users would outdo these numbers by far – and not only in 2013, but right now.

The bigger opportunity is of course the ecosystem around advertisement revenues, such as targeted advertisement platforms, peering (anonymized) information to data miners, adding converged solutions for other carrier channels that are more profitable, or managing spending behavior of subscribers (earn on the product advertised, not the advertisement). That again requires complex new platforms, billing and charging mechanisms, and has to satisfy regulatory and legal authorities. As these are still missing – or delayed in favor of other more revenue driving services – carriers have little incentive to invest into “innovative” fads.

s you might have noticed, Portland, OR, startup Iterasi has publicly launched its PositivePress™ service to capture and index web pages. The service let’s you monitor your online presence in press and social media. Every webpage found is archived and completely indexed and searchable. of course you can use Clipmarks or Evernote to store web clippings by hand. Iterasi is targeting the corporate user and let’s you create annotations and sharing with team members of clients by tags, topics, etc., very nifty. Because it’s targeting companies, the pricing starts at $99, with a 30-day trial. A knowledge management colleague of mine quickly commented:

We’ve tried to build the first part of Iterasi (collecting from RSS feeds in one place) via a mixture of Yahoo Pipes, opencalais and a semtantic Mediawiki. But we’ve just “run out” of students :-/ PWC build something similar (for a lot of money) for their internal use. But they are feeding not only publicly available web info, but also articles from services such as Lexisnexis and Factiva. They also use the service to broadcast new studies from their knowledge base. The really cool thing is the very similar reporting mechanism: they can see who read what.

[...]

I think, iterasis pricing is a bit stiff! Starting at 99 USD per month to index and archive a few websites is too expensive by a factor of 10 (storage, hardware and bandwidth all are ridiculously cheap by now).

Read the last sentence again: “storage, hardware and bandwidth are ridiculously cheap by now”. Sounds a lot like Chris Anderson‘s take on digital distribution and quasi zero-cost. But let’s take a closer look at that: Many students tried to come up with an internal “mix” solution (mashup would be the word here, I guess). What other billable work could these students have supported otherwise? Who would maintain this “mixture”, once in place? And why did we run out of students for such a project if it’s so cheap with such great benefit? Why did PWC built it for a lot of money, if storage, hardware, and bandwidth are so cheap? And why does Michael Arrington call Iterasi’s service “the must-have research tool”? In the face of these questions I don’t quite understand the barrier of $99 per month. What does a student cost us per month in supervision, management, healthcare, etc.?

orover, whoever started a Amazon S3 or Rackspace based web service with heavy download / upload / storage for consumer mass markets (which Iterasi does not target at the moment) knows that bandwidth, computing power, and storage is not that cheap to scale, especially not for a “free” model for countless web “hunter-gatherers”. Just look up Amazon’s S3 pricing. I’m helping to run another “freemium” service with a lousy 480k active users (users that did something in the last 3 months). The service allows users to upload and share content. Per month I’m paying about

Amazon S3 Costs of a Web-Based Freemium Service

Here’s the overview: In total we’re in about $22,400 per month right now. When we add another 250k users in about 4-5 months, assuming similar activity (and who knows!), we’re at about $52,000 per month. Scale can suck. Yes, per active user it’s really small, but the problem is getting people paying from $0.00 to $0.01 (Chris Anderson has a whole book on that, remember?!)

et’s say we don’t offer a premium subscription service, but are only advertisement based – that is, we don’t factor in a “soft” revenue from personal brand, cross-selling, or gain from being asked to sit on director boards and getting stock options, etc. Below is the anticipated cost per user per month.

Cost per user per month for a freemium consumer web service

Let’s also asume that only 65% of all page views are actually done through the web interface where we can display Advertisment (we decided not to have ads in mobile and desktop clients yet). And let’s also assume that 25% of the users have ad-blockers installed and activated for our page. At a $4-6 cpm revenue from ads you can do the math how many actual website visits you need to break even – and that of course is just for hardware, software, storage. Now you shouldn’t start getting into streaming, requiring a content delivery network (CDN).

(Sidenote: now get into porn and adult friend finders, preferably pseudo-amateur or gay content, and you have a game changer. Or romantic novels everyone is embarrassed to be seen with on the Kindle, for that matter.)

ottom line: Near-zero cost of distribution only gets you so far. The same way as customers are hard to transition from $0.00 to $0.01 fees, it’s hard to get from $0.01 to $0.00 costs. I also experience that Anderson’s books are misread as “You don’t really need a business model at near-zero digital distribution costs, just use two-sided business models!”.

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cAfee is advertising its ‘micro-site’ on TV, Internet, social media, print, radio. It is a highly interactive (mostly) HD-enabled Adobe Flash video site on “Hacking Commerce, a fast growing network of Internet criminals without boundaries”. It is episodically structured and copies traditional Internet TV stations (black20.com, strike.tv, etc.) – a year ago I didn’t imagine that I would actually say that “traditional Internet TV stations”.

What’s interesting about the site is its immersive nature, the excellent interactive features (on the right), and great navigation (videos stop and start where you left off, you can click a lot around and then pickup again, etc.). It also has a “Share Your Story” part, and a “Resource Center”, which of course points you to Buy-More-McAfee-Software.

rom a service perspective you need HD video streaming, targeted advertisement (the slogan’s changed for me the longer I stayed on the site), tracking, production, etc. Put this in a CE-HTML container, and you can see how more interactive Internet-based TV shows will emerge. On a larger scale, you need a platform to produce many of these “micro-“sites (“micro” is not really the right word for it anymore) for many different industries.

Brightcove is already offering a CE-HTML enabled video platform (that also includes distribution and of course a player), including marketing and advertisement. The question is what commodities a telecom can offer a Brightcove beyond transport.

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ran into similar problems when testing my deployment of 100 Asterisk servers last night and loading them with about 100,000 calls per hour. Lori Macvittie has a great summary on ports, load balancing, browsers, and polocies; here an excerpt (and read the full article!):

clipped from virtualization.sys-con.com A firm wanted to test their application and need 100 browser instances. In the old days it would have required 100 machines — that would be a massive undertaking. Even with hardware virtualization, you would need 5 to 10 machines, and there would be some complex configuration issues. However, by putting it all in the cloud, they were able to sync up 100 virtual instances of the browsers and take them down over a weekend at a dramatic cost reduction. It’s therefore important to understand what policies may be triggered by sudden bursts of traffic as well as what security policies may be triggered by the constant hammering of a single client at an application. It’s also important to understand the flow of requests and responses through the infrastructure and recognize the various touch points along that path. Doing so may ease the troubleshooting process greatly.

[This falls into the category “Old News”, btw.]

Mid February German chancelor Angela Merkel’s government unveiled measures to encourage the universal rollout of broadband internet, echoing Lord Carter’s recent Digital Britain report and Numérique 2012 in France. The German chancellor wants to eradicate all broadband “blind spots” by the end of 2010 and ensure that, by 2014, 75 per cent of all German households receive broadband speeds of at least 50 Mbit/sec.

Among the 15 measures outlined by the federal government is an intention to allocate some “digital-dividend” spectrum to broadband technologies, much to the chagrin of the broadcasters which have long argued that they need the frequencies to develop DTT (digital terrestrial television). But RTL, Europe’s largest TV, radio and production company majority-owned by German media conglomerate Bertelsmann,  threw its weight behind the country’s under-performing DTT platform – announcing both the introduction of pay channels and a move to MPEG-4. Other TV channels said they would not follow in RTL’s foot steps, saying that it saw MPEG-4 over DVB-T as an unnecessary intermediate step before DVB-T2. Whether DVB-T 2.0 will succeed will also depend on MPEG-4 devices becoming available quickly, and at attractive prices.

I was curious about how Germany would get 50Mbps (up- or downstream, btw?) Internet – what would be the business model behind it, when the boost of video would be delivered over DTT? Are we all having advertisement-based models? Is the DTT television becoming the next version of current public TV stations, a relict of former times? Is everything going to interactive? Is 3D TV coming to every home by 2014 – are 3D TV screen devices going to be that affordable within 5 years?

I talked to Giles Cottle, who is an Analyst, Broadband and Internet IC, at Informa Telecoms & Media. Informa has a great Informa Intelligence Centre that we regularly ping for a first glance at telecom market numbers.

Thorsten: Giles, Thank you for taking the time talking to me.

Giles: My pleasure, thank you for having me here.

What kind of services is the German government envisioning in five years over that network and Germany’s digital infrastructure by 2014?

Giles: Members of the German chamber of commerce have said that they would like e-learning, e-health and e-government services to take place over the network. But it has not qualified whether it wants these services to take place over the high speed network or not. As part of Germany’s national broadband strategy the government is also aiming for universal coverage by 2010. These types of services are likely to occur in rural areas, because it is here that they are needed the most. But these areas will also likely be the last in Germany to receive speeds of 50 Mbps, because of the cost of rolling out high speed networks in these areas. Many similar initiatives in rural areas across broadband take place on conventional DSL networks and do not make use of large amounts of bandwidth.

In the long run, high bandwidth will improve e-learning/health/government services will be improved by high bandwidth. This will be part of the German government’s thinking at a local/rural level. But nationally and more generally, the desire for universal 50 Mbps is being driven not by services, but as a means to fuel economic recovery, attract investment, make sure their network is “future proof” and stay ahead of other countries.

As you hinted, there are few viable services that make full use of the bandwidth of FTTH, and even fewer that would benefit a government/country as a whole. Professor Leonard Waverman, fellow of the London Business School, when presenting his annual Connectivity Scorecard report (sponsored by Nokia Siemens Networks) concluded that the main beneficiaries of FTTH in the country, which has been available for several years, was the country’s thriving online gaming industry. Similarly in Japan, one of the main benefits of fiber for consumers has been cheap VoIP rather than anything that uses greater bandwidth.

Currently the most tangible legitimate users of bandwidth are more channels, in higher definition, greater on-demand viewing, PVR usage (which requires three separate streams and 3DTV). There are applications beyond this that operators are starting to look at. High definition tele-conferencing and more complex home security systems are two. Surewest already offers a home security service that, it says, does not work as well over its ADSL network as it does over FTTH, because it uses video. More services like this will emerge and develop around FTTH, but for now they are not there and are not a big driver for uptake.

What was the growth rate of traffic within the last five years, is that consistent?

Giles: This is a controversial area. There have been some fairly wild claims made that an “exaflood” of data is going to make the internet grind to a halt and adversely affect the performance of everyday web applications. But those measuring growth say that the exaflood has been overstated. The University of Minnesota, a foremost authority in this area, estimates that, in the US, traffic was doubling every year in around 1998, but that this has now declined to around 50/60% growth per year. This is backed up by Cisco, which has forecast a global annual growth rate of 47% compounded between 2007 and 2012.

Are we just going to see more P2P services eating up bandwidth, and who is paying for that?

Giles: Yes and no. There is a lot of anecdotal evidence that, in the absence of legitimate high bandwidth services, illegal peer to peer usage remains one of the biggest activities on high bandwidth access networks. This is particularly true of upstream traffic, which has even fewer legitimate applications. This mirrors the situation seen when the first wave of broadband was launched and Napster was one of the greatest uses of DSL. Some providers in Central and Eastern Europe are even explicitly advocating the usage of peer to peer sites such as eMule and Limewire as a reason to upgrade to higher bandwidth services.

However, in terms of downstream usage, peer to peer’s share is also being reduced by an increase in rich media usage seen first by the use of services like YouTube, and latterly Hulu and iPlayer. As more users watch more, longer form and higher quality online video, this will increase. Drivers of this increase are already starting to occur-YouTube will start to offer HD soon, for example.

However, operators will limit the effect of peer to peer usage by managing their networks with the help of vendors such as Sandvine. We believe that even FTTH operators will do this. As you probably know, peer to peer by its nature is a “greedy” protocol that aggressively maximizes as much bandwidth usage as possible, so it can adversely affect a FTTH operator, even though bandwidth will be at less of a premium.

In terms of who pays for it, it’s likely to continue to be the operator. There is a debate surrounding whether legitimate content providers should be charged for the strain they placed on an operator’s network. Last year several ISPs, such as Tiscali, revealed that the BBC’s iPlayer service was placing a disproportionate strain on their networks and that the BBC should foot the cost. A few operators are also looking at working with third parties to offer a quality, managed version of the service. But operators are unlikely to be able to extract revenue from peer to peer providers for the excess traffic they foster on a network.

What is the end device that will consume that bandwidth in home?

Giles: For the foreseeable future, it will continue to be the PC and TV. Bandwidth continues to be dominated by peer to peer usage and online video, and the PC is still the device on which this takes place the most. TV will consume more bandwidth as IPTV penetration increases and operators start to offer greater DVR functionalities, dual TV screening and so on. This will also be the case with devices that stream 3rd party services to the TV – web-enabled TVs, games systems (Xbox Live), set-top boxes providing Netflix and so on.

Fridges and other devices in the home will be increasingly IP-connected, and operators are starting to roll out femtocells. But these developments are at an early stage. They are also likely to consume less high-bandwidth data – such as video – than the TV and PC, although video may be integrated into devices such as fridges in the future. And mobile backhaul for femtocells is a also a much-touted additional service for standard access (xDSL or FTTH).

End of last year I was allowed to observe the same struggle at two different tier 1 carriers between the advertisement department of the carrier’s portal business and the carrier’s operational “content delivery guys” (both carriers are differently structured, but for the sake of simplicity, there are some dudes that are responsible for the CDN structure and congestion). Now there’s some research why prediction of popularity of online content behaves differently from the prediction of its advertisement revenue. But here’s the story:

The ad guys are using the usual platforms to determine and fill ad space pricing. The content delivery guys have to operate their platform as cost efficient as possible and would like to see revenues at least covering their costs, but also have to deal with different campaigns and different portal businesses for different target groups. Here’s their dilemma:

The ad guys were discrediting the content guys that their prediction methods must be not up to par, as for them ad revenue prediction worked out pretty nicely. The content guys were complaining about the ad guys how they could charge always similar amounts for completely different content management lifecycles and efforts. They also pointed out the unfair fact that the ad guys treated “popularity” of written content or user-submitted links the same way as video content — they were interested in click-through rates and ad-prices — while for the content guys video and text have very different cost mechanics.

Fortunately for me, I could present some research from November 2008 of Gabor Szabo and Bernardo A. Huberman at HP Laboratories, titled “Predicting the popularity of online content”. They offer a method to accurately predict the long time popularity of online content from early measurements of user’s access on the examples of Digg and YouTube. While the research presents many great findings how to improve or establish prediction models on different user and presentation behavior, here is the part that helped me understand the discrepancies between the ad guys and the content guys:

If the popularity count is tied to advertising revenue such as what results from advertisement impressions shown beside a video, the revenue may be fairly accurately estimated, since the uncertainty of the relative errors stays acceptable. However, when the popularities of different content are compared to each other as commonly done in ranking and presenting the most popular content to users, it is expected that the precise forecast of the ordering of the top items will be more difficult due to the large dispersion of the popularity count errors.

and earlier:

The mechanism that gives rise to these two markedly different behaviors is a consequence of the different ways of how users find content on the two portals: on Digg, articles be- come obsolete fairly quickly, since they often most refer to breaking news, fleeting Internet fads, or technology-related stories that naturally have a limited time period while they interest people. Videos on YouTube, however, are mostly found through search, since due to the sheer amount of videos uploaded constantly it is not possible to match Digg’s way of giving exposure to each promoted story on a front page (except for featured videos, but here we did not consider those separately).

At the end, the research gives some exciting pointer to related areas of interest, which I recommend to explore:

In related works video on demand systems and properties of media files on the Web have been studied in detail, statistically characterizing video content in terms of length, rank, and comments [6, 1, 19]. Video characteristics and user access frequencies are studied together when streaming media workload is estimated [11, 7, 13, 24]. User participation and content rating is also modeled in Digg, with particular emphasis on the social network and the upcoming phase of stories [18]. Activity fluctuations, user commenting behavior prediction, the ensuing social network, and community moderation structure is the focus of studies on Slashdot [15, 12, 17], a portal that is similar in spirit to Digg. The prediction of user click-through rates as a function of document and search engine result ranking order has over- laps with this paper [4, 2]. While the display ordering of submissions plays a less important role for the predictions presented here, Dupret et al. studied the effect of document position in a list on its selection probability with a Bayesian network model that becomes important when static content is predicted [10]; a related area is online ad click-through rate prediction also [20].

Opening Day of The Cable Show '09 (Source: The Cable Show @ Flickr)

I was sick over the weekend and well into Monday. Bound to the bed and resting from my day job, I finally have time to review a couple of conferences I went to. Like the National Cable Show in Washington, D.C. beginning of this month. “Now why would a telecom guy go to a cable show?” people tweeted back to me. “Are you helping to dust-off cable networks with a bunch of old crumpled Murdochs of this world?”

I guess these comments came from people emerged in the IT and Internet or telecom world. The Cable Show was actually a hit (In think) in terms of attendance, at least compared to the CTIA. While they expected about 10,000, the Washington D.C. location drew more than 12,000. I guess the Cable Show was buzzing and the CTIA with albeit great access to senior executives at their stands was kind of slow just because of the general amount of innovation and growth that takes place in the cable industry right now – despite all economic downturn (maybe all the people who got fired now have a lot of time to watch TV…).

Well, here a few other obvious things about the cable industry in the US in general, and at the bottom a few not-so obvious things why I think that the Cable industry is interesting.

Telecoms only have a 41% market share of broadband markets in the US in 2008.

Broadband Market Share USA 2008 (Source: Parks Associate Research)

56% of current broadband access infrastructure in the US is (yet) cable-based in 2008.

Broadband access technologies in the US, 2008 (Source: Estimated by Screen Digest)

Cable has higher and quicker growth potential

Cable video and high-speed Internet homes passed (Source: SNL Kagan/NCTA)

Cable industry invested 16.9% ($14.6 Bn) of their revenues in CAPEX for infrastructure development, second highest in history HS Cable. Internet homes passed increased by 32.2% from 2003 to 2008. The number of homes passed by high speed Internet services is approximately the same as the number of homes passed for video. The potential of pushing voice or digital video subscribers is largely untapped. Furthermore, the number of digital video subscribers are approximately the same as the number of high-speed Internet subscribers. Which of course is the ideal breeding ground for the so called “entitlement-authentication” discussion.

Entitlement-Authentication

The idea is that cable video subscribers (the “entitled”) can get automatically access (= are “authenticated”) to the same content over other devices or channels, like on a PC or on a mobile / nomadic device. Obviously programmers are very interested in a secure access of their content which enables them the get a more coherent user experience for both subscriptions and Internet advertisement, versus Internet advertisement alone.

I think that the match between high-speed Internet subscribers and digital video subscribers as well as their similar growth rates are ideal targets for such an approach. I also think that none of the cable companies wants to pass the opportunity to be present on mainly IP-connected devices in the home and living room. I guess no one wants to become the next newspaper industry in this game, especially not with a rocketing 12.5% market share of Internet advertisement in 2008 (up from 10.9% in 2007) and a slightly declining television market share of 36.5% (down from 36.9% in 2007). I am sure that CableLabs will take a swing at that in the very near future.

Product and Technology Innovation

Beyond the rather obvious stated above, there are lots of technology innovations as well as new products and services coming up. Here is a loose list of things that I learned about at The Cable Show, and that I might be compelled to blog about in the future (ping me!):

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