Skype is now the undisputed market leader in international voice traffic with a 12% market share. More info here.
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  Books I have co-authored |
With the arrival of the New Year, trend forecasting firms have compiled lists of trends to watch during 2010. JWT Intelligence (the research arm of the American marketing communications giant JWT) has compiled a list of 100 things to watch in 2010. A similar compilation is available from the Dutch firm Trendwatching.com. I think they both covered it well. There is a mixture of tech trends, cultural value shifts in society, consumer trends, food trends, gadgets, rising celebrities, and some macro trends. What is interesting to note is that several trends are overlapping and sometimes contradict each other. But I assume that is a consequence of our multi-faceted society, rife with contradictions. The ongoing backlash against the bubble of greed and the adjustment to a more frugal, energy efficient lifestyle will dominate even in 2010. Traditional luxury is out. It might be replaced by products in limited editions sold in a few temporary pop-up stores in one city (products you can’t buy on the web). Greenery and health conscious food choices have been on the rise for over a decade. Demand for accountability of corporations will be stronger and even more pronounced in the mainstream culture of 2010. Will we see a wider ban on plastic shopping bags? More cities that ban bottled drinking water? Strict quotas on blue fin tuna? Some trends are related to China and India. Conspicuous luxury consumption might be on its way out in the West but is a rising force in China. For example, as China replaces Japan as the world’s second Economy it is a growth market for global auction houses. The Chinese athlete cum entrepreneur Li Ning has his own brand of athletic shoes with the potential to challenge Nike. In 2010, international buyers will discover contemporary art from India, etc. A strong trend is the real-time web, the tracking and alerting of everything, instant gratification, and immediate product feedback. At the same time, the trend watchers also talk about opposite trends such as a renaissance for handwriting, slow communication, and calming soft drinks (the opposite to Red Bull). Another contradiction is that both the anti-copyright Pirate Party and Paid Content are listed as two trends for 2010. Social media will continue to be a tidal wave in 2010. It will not isolate us by keeping us glued to our computers but will rather open up new opportunities for meeting others in real life. This trend has been labeled “mass mingling”. Some tech trends are: electric cars, 3D in the home, web/TV integration, LED light bulbs, and rivals to Kindle. A couple of products to watch are dry shampoo and waterless washing machines. If your job is in futurism or market horizon scanning, trend agencies such as JWT and Trendwatching.com are useful tools. They use a very wide net to compile their information and some findings might be highly relevant to your own business. I also believe that these trend maps can pick up part of the zeitgeist and cultural shift of our time. However, it is important to be aware of their limitations. My impression is that their focus is too much on mainstream consumer culture in the US/EU with a rather short time perspective. Most of these trends have been out there for years before they were strong enough to be identified as a new trend by the trend agencies. It is possible to identify these trends even earlier. If you want to identify weak signals for emerging fundamental change early; listen to and embrace fringe phenomena, contrarians, and counter cultures. It is the neglected, ridiculed and suppressed viewpoints that might have important insights and perspectives that you are oblivious to if you only read mainstream media and focus on the mainstream market. This is the somewhat forgotten lesson from Peter Swartz in his classic book on futurism and forecasting from 1990 (The Art of the Long View). Here is an example: during the height of the bubble in 2006-2007, one would have been better prepared for the storm by immersing oneself in anti-capitalist counter cultures. The dissenting voices that criticized US style financial capitalism and compiled facts for the case that the economy was heading for a crash were right on. They should have charged a consulting fee. Another Dutch information agency worth mentioning is Springwise that tracks new business models and business ideas. They have a network of 8,000 paid trendspotters who scan the globe for smart new business models. (Trendwatching.com uses a similar model with a large network of trend-savvy individuals in 170 countries who report what they find. Accepted tips are rewarded with gifts.) Eventually the mouse and keyboard will be replaced as our primary way of interfacing with the digital world by something else. Voice input, and pen/finger based touch screens are the most well-known candidates but there are several other more advanced technologies being developed. One example is I-Tech’s Virtual Keyboard (introduced in 2005) with a red laser that projects a keyboard on to any surface. You type and the sensors will detect the key that got the light blocked. The $170 price tag has prevented this product from entering the mainstream market.  Virtual Laser Keyboard Another example is multi-touch screen technology. An amazing demo at TED from 2006 shows envisioned ways of using it on a high end computer with a large screen. A more simple version of multi-touch has been included in the iPhone since 2007. The coffee table sized Microsoft Surface is a high end multi-touch product that has been on the market since 2008. The horizontal screen can identify what objects you place on the surface. If you put your smartphone on the screen and drag pictures to the mobile with your finger they will be uploaded to the phone (and vice versa). As long as the price tag stays at $13,500 the market will be limited to casinos, hotels, and eye catching marketing events. Visually compelling video demos from Microsoft are here and here and another from Popular Mechanics is here.  Microsoft Surface: multi-touch flat screen Competing products are the DiamondTouch Table from Mitsubishi, the Malaysian SmartSurface, and the iTable from PQ Labs. A less advanced product with multi-touch is the high end PC model TouchSmart from HP. In the six figure price range the Multi-Touch Collaboration Wall from Perceptive Pixel has customers such as the U.S. military and CNN (they used it in their studio during the presidential election).  The Multi-Touch Collaboration Wall These new technologies are amazing and should inspire creative thought about new and unexpected ways of using them. You might find some demo applications silly but the point is to demonstrate the opportunities. It’s up to you, me, and others to discover the killer apps for this technology. However, the most mind-boggling prototype has been developed at MIT Media Lab by the genius inventor Pranav Mistry in his project SixthSense. He has a similar vision of blurring the line between the digital world and our physical surroundings and making it possible to access and interact with computers without dedicated input/output interfaces. He uses standard products, and assembles them into a seamless experience with a wearable system connected to your mobile. He uses a mini projector to display text and images on any surface and a camera to scan your hand gestures and objects in front of you. The software for the system will be released to open source developers any day now. Sit back and enjoy this fantastic presentation from TED India. Google has the Midas touch and never fails – right? What if they made a Google Phone (gPhone?) and disrupted the global phone market? They already have a smartphone OS and aggressive plans for the market. Rumors about a Google Phone have been floating around for some time but gained momentum yesterday with tweets claiming that Google employees had been given a test series of a HTC phone equipped with Android 2.1. Google’s CEO Eric Schmidt will give a keynote speech at the Mobile World Congress in 2010. Connect the dots? Yes, today Google confirmed. Google launching their own smartphone is a significant move for this pure play internet and software company. However, I doubt that Google will be a serious threat to the major players in the market. Apple is already too entrenched as the smartphone market leader. Android is still immature compared to the iPhone OS. Nokia is unbeatable in the mass market of less advanced models. The major operators are wary about Google’s growing ambitions and will most likely be less than cooperative. Google might be best positioned to work with second tier and disruptive players such as 3. To sum up, a gphone is notable news but will most likely not overturn the industry – at least not in 2010. Update: The phone will be called Nexus One and here is a picture (it looks exactly like a HTC Passion). What will happen to society and the individual if everything is remembered forever and nothing is forgotten? This thought-provoking question is addressed by Viktor Mayer-Schönberger (information policy professor, National University of Singapore) in the book “Delete: The Virtue of Forgetting in the Digital Age” (Princeton Univ. Press 2009). His pessimistic answer is that: “Perfect, comprehensive digital memory denies human beings the ability to grow, to change, and to evolve over time. That is deeply worrying.” His argument is similar to that of the privacy advocates’, though he approaches it from a new angle. In a world with perfect retrievable memories people can be haunted and destroyed by something from their past or from their private lives at any time. What is innocent information today can be incriminating evidence in an uncertain future with another government, a changed cultural value system, or if the person moves on to a new phase in his or her life. In such a world people would self-censor, refrain from expressing their opinions, and be fearful about sharing their thoughts, words and photo albums with their friends. Mayer-Schönberger illustrates this concept with a story about the student teacher Stacy Snyder. Snyder had passed all her exams and had earned all her credits but was refused her teaching certificate because she had put an innocent costume party photo of herself on her MySpace page with the caption “drunken pirate”. Snyder offered to remove the picture but to no avail.  The 25 year old student teacher who had her future ruined by a MySpace picture An additional example is the Canadian psychotherapist Andrew Feldmar who was permanently barred from entering the US when a customs officer did a Google search and found an article he wrote in an academic journal ten years ago where he mentioned that he had used LSD around 1965. As Schönberger points out, what happened 40 years ago has nothing to do with Feldmar’s life or the person he is today. There are numerous other examples of people who have had their lives shattered because something from their private sphere or their distant past resurfaced on the internet and was taken out of context. Another of Mayer-Schönberger’s arguments is that a perfect memory is a curse, not a blessing. Rare medical cases where people are unable to forget (and therefore remember exactly what happened every day of their lives) show that these people become overwhelmed with trivial details and have difficulty making normal everyday decisions. The book is a first attempt to address this issue. The author’s idea is to formulate a framework for how to shift the default mode in the information society back to slowly forgetting (the natural human state for millennia), instead of remembering. The methods he identifies could focus either on the power aspects or on bringing the time aspects back into the equation. He identifies six methods for managing the problem:
When Mayer-Schönberger discusses the methods he points out that privacy rights is a useless tool since individuals almost never actively request that their information be removed or take their claims to court. Information Ecology rules are more efficient as they protect all information. However, the data retention laws that were initiated after 9/11 move in the opposite direction. The author proposes that the default in the digital world should be changed to slowly forgetting instead of remembering. Perhaps one should receive a prompt for when one wants an item to expire every time a document is saved or something is put on the internet. This would serve as an important reminder about the temporal nature of information. I must commend Mayer-Schönberger for his insightful and thought-provoking arguments. I support his program for mandated expiry dates of old database records held by large organizations and possibly prompting for expiry dates when you save a document, etc. However, I am not convinced that his program for institutionalized forgetting will solve the problem. To some extent I think he is barking up the wrong tree. Instead of proposing an elaborate system for forgetting in the digital world, the problem would be significantly reduced in a more relaxed and trusting culture. The first problem is that we live in a society driven by the logic of the tabloids, rife with hysterical moral panics. Background checks and diligence create a self-reinforcing process, where the mindset of the trash media feeds into the mainstream corporate environment. If you devote significant resources to uncovering incriminating information you will most likely find something minor. To justify the costs of the investigation it is much easier to disregard the context and act on the information rather than be lenient. This pro-panic bias feeds itself. If a major company or government agency rejects a qualified candidate for a senior role because of some 15 year old nude pictures it sets the tone and other organisations will follow their lead. The second problem is that moral panics feed into the legislative process, which results in disproportionate laws. If lawmakers could deliver a professional, rational and proportional legal system many of the problems addressed by Mayer-Schönberger would disappear on their own. For example, the statue of limitation rules for minor crimes would make it moot if someone used drugs more than 10 years ago. Policies for the “morality” of teachers should be handled by professional managers, not by politicians and political appointees with a need to pump themselves up and show toughness against alleged “immorality”. The third problem is that information is power. As long as incriminating material can be a bargaining chip that can give you a hold on your enemies there will be incentives to hoard information. Even if the full program for forgetting were implemented, bad faith information hoarders would ignore it. But this problem would dissolve by itself if society was more relaxed. The more bans and restrictions that are not respected, the more hypocrisy there is in a society, and the more room for blackmail. My personal belief is that the tidal wave of digital information is stronger than any program for forgetting. The problems brought up by Mayer-Schönberger might very well lead to a repressive, paranoid, self-censoring society, where people are afraid of surveillance, backstabbing, and attacks in the same way as in the former Soviet Union. (I find this negative development less likely outside of the US and the UK. In France, for example, infidelity by leading politicians is a non-issue.) But even in the US/UK, it is possible to envision a positive development, driven by the forces of demography as one generation is replaced by the next. Over time the Facebook generation will grow up and their new life on the Net will initially clash with the value system of the older generation. For example, the teenage practice of sending sexual text messages or pictures via the mobile phone (sexting) is widespread (20-25% according to surveys). In the next 10-15 years there will be a number of scandals in which hard working, bright career lawyers are denied partnership because a raunchy nude picture that was taken when they were a teenager resurfaced during a background check. A number of aspiring public figures will have their lives destroyed when the tabloids realize how easy it is to uncover damning material by paying hard cash. I believe that the public guardians of “morality” will eventually lose this battle in the same way as the prohibitionists lost their battle to keep alcohol illegal. In 2030 most people under 40 will have been to a costume party, played with a camera in the bedroom during their teen years, or have a friend who took pictures of them drinking alcohol in their dorm room even though they were under 21. At some point, the sympathies will shift from the zealots to the “culprits” as the new generation gets fed up with the older generation’s hypocritical moral panics. Recruiters will eventually realize that a ten year old Facebook picture in which the candidate is drunk and surrounded by friends does not disqualify him. Rather, it can be seen as an indication of social skills. In 2030 the newly appointed prosecutor will be forgiven for any ten year old “scandal” that has resurfaced about his dorm room shenanigans. If society is flooded with “scandalous” material about almost everyone, eventually no one will have the energy to care or be upset by it. Ergo, the material will be forgotten. (As a bonus we will have a more relaxed society with discredited tabloids and fewer moral panics.) More information can be found in his book, in a video from his seminar at Harvard, from CBC and NPR radio interviews with transcripts. Blogs about Mayer-Schönberger’s ideas are Reputationdefender, Harvard Berkman Center, Princeton University Press, Only Dead Fish, Reuters Great Debate, and the Daily Kos. The Economist recently ran an excellent article (“Japan’s technology champions – Invisible but indispensable”) about successful medium size Japanese companies that are global market leaders in proprietary high-tech components. As their unique capabilities are so hard to replicate they can enjoy stable and very high profits year after year. The article mentions several examples of companies that in Japan are labeled chuken kigyo (strong, medium-sized firm). For example, the unknown company Nidec makes 75% of the micro-motors for hard-disk drives in computers. Japan Steel Works is the only company that can make the huge solid-steel vessel that contains the radioactivity in a nuclear power plant. Only the Japanese company has the technology to forge a single 600-tonne steel ingot into the critical $150m part. The Japanese company Murata has 40% of the global market for capacitors and their overall margins (including other lines of business) is around 50%. Shimano earns around $1.5 billion a year by supplying 60-70% of the world’s bicycle gears and brakes. Covalent controls 70% of the market for carbon brushes in electric motors. A few Japanese firms are indispensable in four critical steps in the process of making computer chips: wafer processing; thin-film formation; coating, lithography and developing; and contact and packaging. The success of these companies is a case study for management theory and they hold valuable lessons for the rest of us. What these companies illustrate is that making a critical component (or module) that that are built on proprietary knowledge can be a very profitable market position if you are the global market leader. The Japanese chuken kigyo companies take the idea of protecting their unique capabilities to the extreme. They often own their critical supply chains and some firms even make their own production machinery in order to maintain a deep proprietary understanding of their technology. The knowledge about the technology is tacit, not formal. It accumulates by working with colleagues over many years. This poses a barrier to entry for rivals. It is also why these firms try to maintain lifetime employment. Another contributing factor to their success can be found in Japanese culture. A strong emphasis on quality, structure, and excellence permeates Japanese society. There is right way of doing even trivial tasks such wrapping presents or making tea, and a way of learning to be a master by total concentration and paying attention to details. A work force brought up with this set of values is of course an asset for companies that strive for excellence in complicated technologies. The German Mittelstands are another example of successful medium size firms that exploit unique proprietary capabilities in a similar way. Features in German culture such as the emphasis on quality, durability, order, structure, craftsmanship and attention to detail have been used to explain the success of the Mittelstands and are strikingly similar to the Japanese value system. The implication is not that a strategy of excellence in proprietary knowledge only works in Japan and Germany. There are numerous examples of companies that have succeeded in proprietary advanced technology components throughout the world. Unfortunately, in some countries it would be an uphill battle to go against the dominating work ethics and business culture. The necessary long-term perspective will be hard to accomplish if short-term financial results are allowed to dominate strategic decision making. Preventing high staff turnover will be a problem if the cultural norm is to frequently change jobs. If the norm is to fire staff as soon as there is a dip in revenues, companies will not be able to build staff loyalty. If a country has a substandard work ethic with a laid back attitude about quality, professionalism and service it will be difficult to motivate staff to commit to changing the way they work in order to attain this kind of perfectionism. A company that wants to emulate this strategy of excellence in proprietary technology should take a hard look at their available competence and capabilities before attempting to implement it. For example, this might work in Sweden but I would be concerned about the lack of attention to detail and the lax work ethic that is prevalent in the Swedish workforce. However, I do not believe in cultural determinism. Drawbacks can be overcome and firms in other countries can replicate the best parts of the success factors from the Mittelstands and the chuken kigyos. Sweden needs more bold entrepreneurs who dare to start new businesses. Unfortunately, Sweden comes out at the bottom in the Global Entrepreneurship Monitor that measures entrepreneurial activity. On the other hand, Sweden comes out on top in the EU study “European Innovation Scoreboard 2008” for having the best innovation performance in the EU. The background to this paradox is an economy with a regulatory framework adapted for salaried employees in large companies. Taxation is unfavorable for owners/entrepreneurs and the cultural attitudes are still somewhat negative outside the hi-tech sector.  Sweden: leading in EU Innovation Performance (ref: EIS 2008) I believe that one of the major obstacles for entrepreneurship in Sweden has been the absence of role models in Swedes’ social networks. People who have succeeded as entrepreneurs can inspire others, disseminate their experiences, and provide mentoring and coaching for their community. However, if one wants to start a company in Sweden, more and more organizations and support structures are being put in place to pave the way for you. Science based startups have the best support structures but startups in the rest of the economy are also getting more support. Venture Capital is usually the first that comes to mind but VC is only relevant for some types of startups. The importance of VC is often exaggerated. Most startups generate their own capital internally and manage to launch without formal VC funding. Here is a quick overview of some actors in the Swedish Innovation System for startups, mostly based in the Stockholm region.
It remains to be seen if these support programs are enough to overcome the historical disadvantages of low entrepreneurial activity. One of the many hurdles for startups and entrepreneurs in Sweden has been the shortage of investment capital for seed financing. In the very first stages of a new company the capital requirement can be as little as a below 50,000 Euros. In countries such as the US entrepreneurs have often been able to raise the small amounts that are needed by taking out a second mortgage on their house, or from FFF investors (Family, Friends and Fools), or sometimes from angel investors. The higher level of private capital accumulation in a low tax economy makes that easier compared to Sweden. The Venture Capital model is not suited for seed financing. For a VC investor, the amount of work needed to evaluate a 40,000 Euro investment is almost the same as for an investment of a million Euros. Failure rates are much higher for seed financing and the higher returns do not compensate for all the work that goes in to managing a portfolio full of many small investments. That seed financing is a bottleneck in the Swedish Innovation System has been known for over a decade. The already existing government agencies for funding of new companies such as Almi and Industrifonden were adapted for lending to and investments in established companies. Agencies such as Vinnova and Tillväxtverket (formerly Nutek) used to fund applied industrial commercial research, often in partnership with larger companies, but did not have specific programs in place to help innovators to transform their innovations into a viable startup company. What the Swedish government has viewed as particularly dissatisfactory is that the high percentage of GDP spent on R&D in Sweden has produced so few new successful companies. To facilitate the commercialization of scientific results from the Swedish university system, new government funded programs have been put in place during the last few years. Their aim has been to fill the gap where there is insufficient support and funding in the earliest phase of the startup. In 2005 the government agency Innovationsbron (the Innovation Bridge) was founded. They provide funding for regional incubators and have some funds available for loans and seed investments. What I find unconventional and interesting is that as a complement to the traditional role as an angel investor Innovationsbron also offers support for an extensive verification of the technological and commercial viability of the innovation. This way the entrepreneur doesn’t even have to set up a legal business during the first evaluation phase and can put all their focus on getting a better understanding of the viability and potential of the business concept. Innovationsbron offers the first phases of this evaluation. Vinnova (The Swedish Governmental Agency for Innovation Systems) can offer the most promising concepts a deeper commercial and technological evaluation with prototyping up to an additional 200,000 Euros from their program called Vinn Verifiering. A few weeks ago I listened to the program director for Vinn Verifiering Kjell Håkan Närfelt at a seminar. An interesting observation was that the linear planning and control paradigm seems to be falling out of favor in the startup and innovation world. Närfelt defined his mission as valorisation of R&D (valorisation is a term that means creation of value). Instead of viewing verification and early phase work in a startup as a development project he stated that it should be viewed as a learning process. The linear control paradigm with roots in Industrial age Fortune 500s and MBA-style management consulting works well for large corporations that operate in stable and well defined markets. For environments with very high uncertainty it is less helpful to work with a framework built on plans, predictions, and deviations from plan. For a startup a better method is to use Discovery Driven Planning and turn common practice upside down. Instead of starting the market analysis with the macro level concept “market attractiveness” it is better to start with an analysis on the micro level with an understanding of the customer’s context and needs. Instead of beginning with a business plan it is better to go through the extensive verification process first and write a business plan when you have more facts on the table. Another example of the new approach in the Vinnova verification program is the ambition to give prototyping a wider scope than technology only. Prototyping should also be used to learn more about the users and their context. I find this whole approach very promising. If you are a talented researcher in the Swedish university system and have a scientific discovery with commercial potential, the government has paved the way for you. In addition to these verification programs, the government will (starting next year) spend somewhere around 5 million Euros annually on eight new Innovation Offices located at the major Swedish university campuses. The Innovation Offices will be the first point of contact for the budding entrepreneurs and offer support in patenting and hands-on business skills. What sets Sweden apart from most other Western countries is that the scientists are allowed to keep the intellectual property of their discoveries such as patents. Sweden has been at a disadvantage in attempting to attract international top scientists due to high taxes, mediocre salaries and a less than inviting climate. However, the promise to keep your patents and get support for your startup might be a magnet that can overcome these disadvantages. As it is right now these programs only target commercialization of scientific results. If your startup is outside the R&D area you can’t get this support and funding. Hopefully in a few years, the experiences from these programs can be repackaged into a other programs that are aimed at promising startups in all sectors of the economy. After 9/11 it was inevitable that the trade-off between civil liberties and security would shift in favor of security. The thinking of this period can neatly be summarized in a quote by Tony Blair who said something like “if there is a new terrorist attack, people will not ask why we infringed on civil liberties but why we didn’t do more to prevent this from happening”. However, almost a decade after 9/11 the Zeitgeist has shifted once again and there are strong signals that privacy and civil liberties are on their way to becoming major political issues. The government machinery moves slowly and it takes years before a policy shift is implemented and new security measures start to affect people’s daily lives. In the name of national security, measures such as interception of Internet traffic and retention of traffic records (phone calls, SMS etc.) are now rolled out across Europe and the US while the memory of 9/11 is fading. This backlash against the increasingly intrusive post 9/11 surveillance state is most strongly felt among the Net generation. What adds fuel to the fire is that the Net generation fears that these new instruments will be handed over to the copyright lobby to chase MP3 music file sharers. The file sharers don’t view what they’re doing as a serious criminal offense. This is a generation that lives a growing part of their social and private life on the Net. They feel strongly about even the slightest possibility of interception of private messages by secretive government agencies. Recent scandals when confidential government data bases have been compromised by human error does not exactly add to the confidence. The privacy backlash has already triggered significant protests in some countries. In Sweden, controversies during 2008 around a new surveillance law that would give the military intelligence agency FRA the right to intercept all internet traffic that passes the Swedish border created parliamentary chaos, street protests, and dominated headline media for months until the government partly retreated. The campaign against the “FRA-law” is a case study for how an impending privacy backlash can develop in other countries. It was successfully initiated by the Swedish blogosphere and drew supporters from wide areas of society. In the European Parliament elections in June 2009 this controversy helped the Swedish Pirate Party to gain 7.1 percent of the votes and win seats in Brussels. (The Pirate Party should not only be viewed as the political arm of music and software pirates. The issue of privacy and civil liberties was much more important for most voters than file sharing.) In the campaign against the FRA-law, the file sharers suspected that increased surveillance would be used to gather evidence against them. Closet gay people feared that such information would somehow leak. The same applied to those who communicated with opposition groups in repressive countries. People who wanted to keep their porn habits private or cheated on their partner had their own reasons. Environmental and left-wing activists took issue with the suspicion that the secret brotherhood of spooks are too cozy with the arms industry, big government or big companies such as the GMO-industry. Celebrities feared that the tabloids would pay enough to corrupt civil servants in the surveillance agencies. Civil rights activists opposed it by principle. More surveillance laws are in the works and new protests have the potential to explode in the headlines in more countries. In Germany street protests with upwards of 8,000 people have taken place under the banner “Freedom Not Fear”. Another country that comes to mind is the UK, which has already gone a long way towards the surveillance state. Security agencies and the police are given new rights to install spyware on people’s computers and there are plans to track and record people’s movement via their mobile phone positioning. Customs officers in the US and UK already have the right to inspect and copy all content on a passenger’s laptop, MP3 player and mobile phone in their “fight against terrorism”. At the same time, the legal restrictions on methods that are enacted to fight terrorism have been relaxed and they can sometimes be used without a court order or grounds for suspicion. The EU Directive of Traffic Data Retention requires that operators keep records of their users’ traffic for up to two years (though not the content) for law enforcement agencies. Another EU Directive (IPRED) gives copyright holders the right to request file sharers IP-addresses from ISPs. A new international antipiracy treaty, ACTA has stirred up controversy over a proposal to explicitly allow customs officers to perform random searches of laptops and MP3 players. The secrecy surrounding the ACTA negotiations of course adds to the controversy. In addition there are EU proposals championed by France to ban users from Net access as a punishment for file sharing. The ban is planned to be an administrative decision by the operators/IPR holders without the means of appeal by the court system. It was rejected by the EU Parliament in April 2008 and rejected again during the vote for the Telecom Directive in October. In 2009, it was reintroduced a third time in the EU Parliament by the Medina report. After a tumultuous vote in May 2009 where the EU Parliament refused to accept the Telecom package (due to this controversy) the entire Telecom package was sent back to the EU Council of Ministers for compromise negotiations. To summarize, if the tipping point is reached in the public debate and the agenda changes from of fear terrorism to fear of an Orwellian 1984 society, the tabloids will have all this and a whole lot more to write about. The telcos are put in the awkward position of being forced to be the agents of these measures. Many telcos have an interest in exploiting the rich high quality customer data they already control. However, if they compile and extract more for their data mining projects, there will be more information for the authorities to collect. If users fear that collected information can be used against them because the telcos are too submissive to government security agencies or the copyright lobby, the trust will be lost. In the same way as Google has been lobbying for Net Neutrality, the telcos need to step up their lobbying efforts and do everything they can to counter this development. Challenging new laws in the courts together with making noise in the media would serve the purpose of reassuring customers that defending their privacy is paramount. When the Bush administration in 2001 requested that the US telcos cooperate with the NSA on mass wiretapping, the small operator Qwest stood firm and demanded a court order. No such order was presented and when the scandal of illegal wiretapping broke a few years later, Qwest was considered a hero. During the Swedish FRA controversy, all the Swedish telcos made a joint critical statement against the law. Hence, the wrath was not directed against them. The incumbent TeliaSonera have repeatedly stated that they will only give out information about their customers after a final court order (that is, in the supreme court). Telcos also need to make sure that respecting customer privacy is a priority throughout the entire organization. They should be as obsessive about privacy as the banks. No more scandals with telcos that use their network for spying on journalists or their own employees that they suspect of leaking information to the press. If there are any unlawful backroom agreements with the spooks in the name of alleged “national security” these should be dismantled. If the telcos are transparent about what they are forced to do my belief is that they can avoid being perceived as a part of the threatening surveillance machinery.  Satio smartphone with camera All mobile phone vendors hope to repeat the success of Apple with a new Jesus phone. Sony Ericsson’s candidate is Satio (previous working name Idou) and they are positioning the integrated 12 megapixel camera as the “killer app” that will lift Satio above the other smartphone competitors when it hits the shelves this fall. Unfortunately, I think they have made a serious design mistake in their choice of camera. For marketers that are used to the IT industry’s logic that “more is always better” it is a given that cramming as many pixels as possible into the smartphone is a desirable goal. Sony Ericsson’s motivation is that the Facebook generation wants an easy way to take high quality pictures. That is correct, but a 12 MP camera phone is not the answer. The problem is that a sensor with a lot of megapixels diminishes the ability to take good pictures in low light which, for most users, is much more important than taking high resolution pictures with 4000 x 3000 pixels. Sony Ericsson (SEMC) will run into problems when disappointed buyers realize how limited the camera is in practical usage. 12 megapixels used in the tiny sensors in a camera phone is not the same as 12 MP used in larger DSLR cameras. The number of megapixels is not the only performance factor. How tightly each pixel is packed on the sensor (Mpix/cm²) is of equal importance. If too many pixels are crammed on a sensor that is less than a square centimeter (6 × 4.5 mm if Sony’s new sensor is used in the Satio) each pixel will be so tiny that the physical limitations of the number of photons that can hit this pixel will determine the capability to produce an image. If the camera sensor is viewed as a football field filled with buckets, the photons can be viewed as a rain of billiard balls that fall down in the buckets. Each bucket is one pixel. Stronger light produces many billiard balls which increases the precision when the number of balls in each bucket is counted. Weak lighting conditions (few billiard balls falling down) might work if each bucket is large enough to at least catch a few balls. But if the same number of buckets is crammed into a handball field each bucket will only be the size of drinking glass and the errors (noise) will be much larger because the billiard balls are too few to fill up all the small glasses. For pictures taken in direct sunlight in the middle of the day or with a strong flash, the lowest sensitivity (ISO 100) is sufficient. Under these lighting conditions a small sensor (the handball field) is almost on par with a large sensor (the football field). There are still differences in quality because the optics in a small sensor camera is always inferior to larger, high quality optics. Quality differences are also caused by the fact that the leading camera vendors (Nikon and Canon) have more experience with electronic image processing than new players such as SEMC. But as soon as you take pictures in low light and have to increase sensor sensitivity to ISO 400, 800 (or even higher) the difference between a large and a small sensor with the same megapixel count becomes dramatic. In web forums such as Nikonians and review sites like DPReview most pro photographers and photo nerds have been in agreement about this for a long time. They are generally skeptical about small point-and-shoot cameras since the image noise level becomes unacceptable indoors or with low lighting. They are also critical about the way the vendors try to compensate for mediocre image quality with exaggerated electronic post-processing, by saturating the colors and by increasing edge sharpness. The result is quite often pictures that look unnatural. The table below shows the differences in the sensor area and pixel density for a selection of digital cameras and camera phones. Sensor format and pixel density
Notice in the table above that the value for pixel density (megapixel per square centimeter) should be as low as possible. That figure is a measure of how densely the pixels are packed on the sensor and it is of almost equal importance as the number of megapixels. With a sensor area of 27 mm² Satio will have a sensor in the same range as the smallest point-and-shoot cameras. This will give Satio a pixel density of 44 megapixels per square centimeter which is very high. Another observation from the table is that there are large differences in the sensor area between the camera types. The sensor in most DSLRs is around 350 mm². Compare this with the sensor in compact cameras which is between 28 and 40 mm². The sensor in a DSLR has an area that is twelve times larger than the smallest compact digital camera, thus providing twelve times higher capacity to collect light. The first vendor to use a small sensor with fewer megapixels which is optimized for maximum low light performance will capture an empty market segment. There are no products on the market today to fill this latent demand. A few years ago Fuji released the Finepix F31fd camera, a 6 Mpix compact camera using a larger sensor with very good low light performance. It was even possible to take decent night pictures without a flash at ISO 1600 which no other compact camera had ever managed. When Fuji discontinued the model the camera gained cult status and the used prices on eBay have sometimes been close to double the new price. Of course a company should not design their products for the nerd market. However, it is worthwhile to listen to advanced users. In this case they are right, high sensitivity in low light is relevant for everyone. Taking pictures indoors of your friends without being forced to use flash is perfect for the Facebook generation. That the mass market customer believes “the more megapixels a camera has the better it is” is natural given that almost all marketing from the vendors has focused on megapixels. However, sooner or later the well-founded criticism of the megapixel obsession (e.g. from the New York Times’ technology editor) will bring awareness to the general public. The only major advantage with a high megapixel sensor in a camera phone is that you can zoom in electronically without a disastrous loss of resolution. The electronic zoom only provides magnification from the center of the sensor if the lens has no moving parts. However, the marketers’ obsession with large zoom range (12x for Satio) is also criticized by those who actually use these cameras. Even if a camera has image stabilization is not enough to compensate for the fact that light sensitivity and resolution deteriorate significantly with electronic zooming. The New York Times points out that a good wide angle range is more important (so you can take pictures of all your friends around the dinner table) than useless telezooms. A manufacturer that launches a camera (or cam phone) with a smaller zoom range and superior low light performance but with fewer megapixels can easily communicate user value. A marketing message could be built on comparing test pictures or copy text such as: “No flash at the wedding”, “Say goodbye to washed out flash images”, “Take pictures without anyone noticing”, etc. If Sony Ericsson wants to reduce the pixel density my suggestion is that they develop a much more light sensitive sensor of the same size with a resolution of 2400 × 1800 pixels. This resolution will deliver 4.3 MPix pictures and the pixel density will be 15.9 Mpix/cm² which is much better than 44. A resolution of 2400 × 1800 pixels should be comparable to the resolution of a typical PC screen. Most screens have a lower resolution of 1680 × 1050 or 1920 × 1080, which means that the picture’s size has to be reduced in order to fit on the screen. Even larger 24 inch and 27 inch screens don’t have a higher resolution than 1920 × 1200. (Since most digital pictures are only displayed on a screen and never printed on paper, the higher resolution requirements for printing are not as relevant here.) Sony Ericsson’s Satio as a case studyFor Sony Ericsson’s sake one has to hope that the Satio will be well received by the market and that all the other advanced features are enough to convince the customers, in spite of the problems with the camera, to buy the smartphone. SEMC’s choice of camera is of general interest for product strategists in the tech sector and I will use it as case for an analysis of how the process went wrong (from my perspective as an outsider) and give some free advice to SEMC:
This article has previously been published on my Swedish blog. |
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2009-2010 Mobile Foresight |
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