DEC: company long gone, but Corporate Philosophy very much alive

DEC Corporate Philosophy

I worked for Digital Equipment for 17 years. Having done my A-Level project implementing a subset of the Joss language interpreter in PDP-8 PAL-III assembler at Grammar School, I left on a Friday and started at Digital the very next Monday. I ended up running their UK Software Products Group, the source of around one third of the UK subsidiaries profits.

This was the place where you were trusted “to do the right thing” and “to seek forgiveness, not permission”. We even had a Field Service Engineer in Welwyn told to get a part over from Galway Manufacturing to fix a fault in a customers downed DECsystem-10 as quickly as possible, “whatever it takes” said his manager. He chartered a plane, and when his boss found out, he just quoted the “seek forgiveness” line – which was an edict we had from Jean-Claude Peterschmitt, who ran the whole of Europe for the Company.

My Division also had a written policy that said we should always look after current customers before starting to chase new ones. Not to mention that the Salesfolks were not commissioned, so their honesty shone through and we got far more than our fair share of evangelistic senior customers.

Above all, we were taught to throw responsibility to our teams, and to help them grow. And to value honesty above all else, with no retribution if anything screwed up. If it did, it was probably my fault along the way anyway, so a good learning experience.

These traits last with me to this day. I’ve had many fantastic employees, and have pride in what virtually all of them have achieved – be they from my time at Digital, Metrologie, Demon Internet, BT, Trafficmaster, CCD or Computacenter.

Brilliant Budget (but please look away from the debt)

Pie Chart showing UK Government Debt

It feels a bit churlish after the Chancellor delivered a stack of pension related changes things that help me personally, but in the background I suspect something much bigger may come back to bite us all. Something just doesn’t reconcile in my brain, but park the picture above for a moment while I explain why.

While waiting for a phone call for a planned Interview by the Daily Telegraph after the Budget Speech yesterday, I threw some data into a graph the way I normally do if I don’t understand something. Picking at the result of this sort exercise is a step of me being inquisitive, trying to reconcile things that, at face value, don’t appear to add up.

Last Year

Just before the Chancellors last Autumn Statement, I was asked by my pension provider if it would be okay to give my name to the Daily Telegraph, nominally to interview me afterwards at its effect on Jane and I personally. I think because we had a SIPP plus an ISA, and there were rumoured changes to them. In the event, really little happened to either, so none of my words, nor our photographs, were used. However, one thing really bugged me, and has done ever since.

I don’t normally listen to politicians at speaking at Westminster, and indeed don’t read any Daily or Sunday Newspaper. I buy the Economist 4-6 times per year (normally when they run a Technology Quarterly, or when something topical on the cover grabs me), but outside that, I tend to dip into articles by authors I respect on the Internet at large. One of these is John Lanchester in the London Book Review, whose financial journalism is very matter of fact, entertaining and his logic backed up with well researched facts.

Brilliant Journalism

John Lanchester wrote one story in January 2013 entitled “Let’s Call it Failure“. If there’s only one article you read all year, this should be it; 4,507 words of journalism of the highest order. The one thing that my brain locked onto was, that all the talk about austerity and budget cuts, that the total amount of government spending was still headed relentlessly up every year.

With that in mind, the thing that struck me during the Autumn statement was that every statistic of financial news was a hockey stick of relentless improvement, but every number quoted, without exception, was a future projection. If you laid the actuals leading up to those projections onto the exact same graph, I think most people would think the authors were on crack. Bad, worse, worse, (into projections), better, better, better.

Up stood Ed Balls, the Shadow Chancellor, and I thought he’d zero in on that like a rabid dog. Instead, we got given a bit of a random rambling and wide derision, but no useful repost. With that, I largely shook my head and went back to my work.

Budget 2014

Fast forward to the March 18th 2014 budget. The Telegraph asked again if they could interview me afterwards (they had our pictures ready to go too). So, I bought three newspapers in the morning, summarised the structure of what I was likely to say, and for the second time ever in my life, listened live to a Government budget related speech.

As before, the Chancellor was heavy on future GDP percentage increase projections, leading to decreases in projected borrowing, crossing the line to having income exceeding spend sometime in 2018. On the face of it, progress. This time, no mention of further targeting of the Welfare budget, which I know is 2/3 spent on pensioners and health related measures, both deemed off limit to any reduction (OAPs tend to be voluminous and willing to turn up on Election Days).  Last time, there were big cuts to this planned, which I opined at the time was an unprecedented direct assault on the less well off and those in need.

However, the need for borrowing is the delta between income and spend in the current account. The Chancellor made no mentions of any statistically significant further budget cuts (just caps on previously planned reductions, tied to the consumer price index into future years). The goal appears to be to have income to exceed total spend sometime in 2018 now driven primarily by a flurry of GDP percentage increases. So, in these times of austerity, the assumption of most people is that Government spending will continue to slow, glide over a peak and then begin to fall. Now look at the graph I posted above; this assumption is patently false. Why?

Debt Levels

One notable thing in the John Lanchester piece were the original projections back in the 2010 budget, where we were planned to pass into balanced inputs/outputs by 2014. Instead, we made little progress, and indeed had some big cash injections into the current account, like that of 4G Spectrum Auctions, and of absorbing £28 Billion reserves from the Royal Mail Pension Fund. The gotcha with taking all the assets of the Royal Mail pension fund as cash into the current account is that all it’s future liabilities and funding shortfall are booted unceremoniously into the UK Governments future borrowing requirements. So borrowing is still rising, despite all the austerity we can all feel. But then GDP is a pain to predict, where even the so-called “Office of Budget Responsibility” forecast it consistently wrong, and from what i’ve read before, it’s conversion to Government income is not a direct mapping. So, to turn back to that original John Lanchester piece; in one part of it, he defined what “Gross Domestic Product” was, which disabused me once and for all of thinking GDP was a measure of money volume. It’s not:

It concerns a technical economic factor called the multiplier, and that in turn involves us in a discussion of what GDP is and how the economy works. Imagine for a moment that you come across an unexpected ten pounds. After making a mental note not to spend it all at once, you go out and spend it all at once, on, say, two pairs of woolly socks. The person from the sock shop then takes your tenner and spends it on wine, and the wine merchant spends it on tickets to see “The Bitter Tears of Petra von Kant”, and the owner of the cinema spends it on chocolate, and the sweet-shop owner spends it on a bus ticket, and the owner of the bus company deposits it in the bank. That initial ten pounds has been spent six times, and has generated £60 of economic activity.

In a sense, no one is any better off; and yet, that movement of money makes everyone better off. To put it another way, that first tenner has contributed £60 to Britain’s GDP. Seen in this way, GDP can be thought of as a measure not so much of size – how much money we have, how much money the economy contains – but of velocity. It measures the movement of money through and around the economy; it measures activity. If you had taken the same ten quid when it was first given to you and simply paid it into your bank account, the net position could be argued to be the same – except that the only contribution to GDP is that initial gift of £10, and if this behaviour were replicated across the whole economy, then the whole economy would grind to a halt. And that, broadly speaking, is what is happening right now. People are sitting on that first tenner.

Hence the Government derives income from taxing the flow of money, and the OBR has to make a guess on not only how much money is in the economy, but to guess the multiplier to see how intense it’s flow is. That then gives an approximate mapping to tax income, which can then offset the projected spend. And despite the historical variances (which always appear to be much better than actuals achieved), the Chancellor has queued quite a few spending plans built on those assumptions.

Strange Income Sources

The curious thing about previous estimates (that resulted in a shortfall), was that the economy nevertheless grew slightly based largely on a one time positive of PPI claims on financial institutions. Fines from the LIBOR fixing scandal would usually in turn also benefit flows, but the Chancellor elected to give this to charities – albeit ones likely to have to spend the money rather than pocket it into their reserves (read: savings).

HS2 – all quiet – wonder why?

But – how do projects like HS2 work? Currently estimated to cost £42.6 Billion. Experience in other similar projects suggest the effect is to move the London commuter belt out to Manchester, a lot of whom are going to wave as it flies by places en route through the West Midlands. A lot of the financial analysis will suggest that the government will get an infusion of cash (as they did with HS1 between London and the Channel Tunnel, in that case £2.1Bn from a Canadian Pension fund), which will be paid with guaranteed returns to that source over the next 20 years. So, the government gets a short term wad of cash, but throws it into liabilities as a flow of debt repayments, with interest, long into the future.

This mirrors the way PFI projects work; the cost-benefit analyses are constructed on the belief that there will be tax income from the project, albeit in a lot of cases the private companies use various techniques to avoid paying that tax on a grand scale. Tax haven and avoidance city. For a sobering read, have a read of “The Great Tax Robbery”, written by ex-HMRC inspector Richard Brooks (and now resident at Private Eye magazine). He’s fairly convinced that the Government (by their actions, rather than their words) openly encourage corporate tax avoidance to feed their need to keep PFI projects off UK current account books. However, his wording is a bit more careful than mine is likely to be if I dared repeat the gist of the various examples he cites:

Austerity?

So, what’s all this austerity thing about? Ed Milliband’s reply was accurate, that we can all feel a drop in living standards – particularly the current Governments targets of the less well off. A lot of problem statement puffery, but nothing tendered in the time available for an alternative set of proposals (if they exist – no evidence that stands up to any statistically valid scrutiny yet).

As a country, we’re borrowing at unprecedented levels, and the hunger for more debt is rising like topsy. We’re largely fueling our existence from large one time shots into our current account, which add to more long term debt. The cost of servicing that debt is equally huge, so all eyes on the bond market, and ratings of our ability to pay back our debts. If it looks like we’re not tightening our belts with our spending enough, we may give the impression we’re not being prudent, and if our credit rating downgrades, the increase in interest charges alone may send us swirling into a downward spiral.

One other funny in the future projections is that the Government apparently adjust the future spend levels, playing the consumer price index inflation in to deflate the currency value of our future loan payments. That helps dampen the apparent spend projections quite markedly (a bit like a snowball, but in reverse). Yet the graph still heads relentless upward regardless.

What have the Romans done for us?

So, it’s all a bit of a shell game, and our current debt levels are 10x that of those in 1980 the last time we all felt deep austerity – just before the financial markets were deregulated. So far, i’ve not found how the graphs subdivide into what the spend categories are. The Government appear to have not decided to reign in final salary pensions that the rest of us had to, based on commercial affordability. And things like Trident, HS2 and countless other money sinks are also still in the future mix. And UK Government debt levels are still rising relentlessly.

The only historical precedent is that of the fall of Rome, where the currency ended up being devalued into oblivion leading to an eventual collapse. Something successive UK governments appear to ignore – so far. I wonder if it would be more prudent to systematically reduce our current huge, relentlessly growing debt levels. Harold McMillans warning concerning “selling the family silver” are now ignored, and i’m not sure the new owners have our own long term interests at heart.

NFC and it’s route to, eh, oblivion?

Square iPad POS Terminal

I see that credit card companies have started deploying Near Field Communications (NFC) technology to the world (aka Contactless Payments), and speculation is running on which mobile handset vendors will bundle the technology. Am I the only person who thinks that it’s a neat solution to a problem that doesn’t exist – outside of the few geeks and Credit Card Issuers who think it’s neat?

I think Square (the mobile phone credit card payment processor and designer of the iPad till shown above) have got it completely right, where NFC takes everyone up a blind alley. Square started by looking at the usual buying experience in a retail setting, and worked things back from there on how to remove all the friction. It sort of works like this.

When a regular customer is within a short distance from the shop, their picture and name appears on the till. If they walk in, one press shows their regular order items and any special upsells. They can be greeted by name, asked if they want their usual and whether they’d like to try the offer of the day. You can then offer to let them pay using their normal debit or credit card, process the payment and email the receipt. You have already authenticated them, so all good to go. A nice retail experience.

With NFC, all the action is past the time when you can do the basics of good service, and the upsell opportunity is gone. You just take the payment, and oops – they need to authenticate that they are the user of the phone (otherwise a thief with a stolen phone would run past every till in the nearest department store). So you have to enter a password or pin. So, what’s the extra advantage over using a card, without the retailer having to cough up the costs of expen$ive readers?

I can’t think of one. Square seem to have the right idea. And to me, NFC looks like a white elephant. Have I missed something?

Shareholder Positions and Profits YTD

Pie Chart of Ian Waring Stock Profits YTD

At the start of last year, I started to run my pension funds personally. In line with normal advice, I put circa 70% of the available funds in Vantage LifeStrategy 100% Equity Accumulating Index Trackers, and the balance i’ve used to bet on a few companies I believe have a rosy long term future – while being fully aware of likely swings of the US Dollar vs GB pounds. I’ve lived long enough to see that cycle between $1.40 and $2.20 to the pound – currently nicely in the middle and with holdings I can leave in situ waiting for the right position to enact an exit – albeit that’s not for many years into the future.

At the moment, my total fund is up 9.05% in the year i’ve been running it. The shares portion of this has come in +17.68% year to date (touch wood – profit of £21,871.99). The sources that contributed to the increase in the fund are as above.

In the early days, I did bet on a few others but kept the shareholding small until I had visibility of what they were doing. When they weren’t giving meaningful return, or where I felt I didn’t understand the company direction (strategically) well enough – or learnt their susceptibility to unfounded competitor rumours – I unloaded them. That applied (for various reasons) to ARM, Baidu, Red Hat, Salesforce.com, Splunk and Netflix.

At this stage, i’ve retained positions in Google, Amazon, Tableau Software, Apple and… Facebook. I did buy some Facebook shares in the early days after it’s IPO, but unloaded them at a slight loss while they were in the $20’s. I’ve now bought back in at $69 – largely because Mark Zuckerberg’s purchase of WhatsApp, and the fact he’s put the WhatsApp CEO – who is vehemently against advertising – onto the Facebook Board. I thought this was brilliant, as advertising is the major current source of Facebook’s income, and there was a willingness to put someone up there that will push an alternative, subscription based model. A good sign that Facebook are willing to be radical with their business models, and not follow the normal high technology malaise of clinging to a failing business model into oblivion.

I always think that the Advertising Industry is naive to think their next frontier is the screen of people’s mobile phones; it’s a bit like having a kiddie jumping up and down in front of the TV when you’re trying to watch something. WhatsApp currently charge $1/year for the instant messaging service, and at that level, there is even scope for friends (or vendors) to offer to pay the subscriptions of large numbers of users.

Liquid Metal and GT Advanced Technologies were a small punt based on hearing about various Apple licensing agreements two years ago, and then seeing Apple employees start filing patents on the associated materials just ahead of contract renewal due dates. Liquid Metal is likely to be used for the carcass of new iPhones (without the need to mill aluminium as at present) and GT Advanced Technology supply very resilient Sapphire screens large enough for the display surface of same. Those shares turned out to be quite volatile, so I did an exit stage left on profits of 30.9% and 24.2% respectively – within 3 weeks of their original purchase.

Google shares will split in April, improving their liquidity. Amazon have had a recent fall, but i’m confident that they’ll recover 20-25% in the next 2-3 months. Tableau Software are just about to dilute things a bit with a new share offering, but my returns are still very good (not too far away from 100% returns for the 218 shares I still have). Apple are a blog post all by themselves, cursed by Analyst expectations of slowing growth (despite ratcheting up their market share relentlessly, plus earning 70% of the mobile industry profits) and discounting the likelihood of laying another category of Golden Egg, as they’ve done for iPod, iPhone and iPad already. Quite funny when Amazon trade at huge multiples on the suspicion that their conveyor belt will magic Golden Egg league profits as soon as Jeff Bezos decides that’s what he wants. And Facebook is a wait and see.

There are three potential IPOs i’m looking out for, but that apart, the strategy is “Long Term Buy and Hold”. Working well so far, touch wood.

Introduction to Bitcoin

BitCoin Coin

Bitcoin appears in the news often these days. I’ve found two resources that give an excellent overview of what it’s all about.

The Book

One is a self published Kindle book by David Seaman (not the ex-Arsenal goalkeeper) that – when I bought it – was 27 pages long and £2.51 to buy. As an aside, isn’t it great that publishing economics are such that you can buy a concise book with no useless “filler” to unnecessarily increase it’s page count? The book is:

A Talk

Alternatively, if you prefer to listen – particularly if you have a long train or car journey, I recommend one of the recent John Gruber Podcasts, entitled “Mind of a Gambler”. That’s not in itself a reference to Bitcoin, as he and guest Glenn Fleishman spent the first segment of the show talking about the game of Jeopardy, and then the best strategy when playing BlackJack. That included the findings of an IBM statistician (proven by getting a computer to play millions of games under different player strategies) that you should fold your hand as soon as you get two cards adding up to 12 or above, ie: not to twist if there’s any chance that the next card you twist could make you exceed 21. While it looks odd to quit so early to other human players, it is in fact the strategy that maximises your income on the table. But I digress.

The whole John Gruber “The Talk Show – Mind of a Gambler” (Show number 74) podcast can found at: http://www.muleradio.net/thetalkshow/74/. His guest is Glenn Fleishman, who has written articles for several publications, including The Economist, on the subject of BitCoin. The whole Podcast is 2 hours 24 minutes long, but the part pertinent to Bitcoin is between 26:28 to 1:55:22 – so about 90 minutes long.

Alternatively, if you prefer talks with pertinent slides as a subject expert goes along, there is a good YouTube video that summarised Bitcoin to students at Stanford University, given by one of their Chinese Alumni, Bobby C Lee. You can watch the presentation here; it’s under 75 minutes long and is an excellent summary.

Open Minded Governments (Seriously!)

It’s been really surprising to find how open minded some government institutions are about Bitcoin and other similar “Crypto” currencies – particularly in the USA and in China. A total polar opposite to the norms of the sensationalist tabloid press (who, at this time, are unusually quiet).

How it works

The central tenet of these currencies is that your “cash value” is stored as sophisticated, long number which only you can transact.

When you want to transfer any value to another party, you have to sign the transaction with a long private alphanumeric key (known only to you!), and details of that cash movement is recorded onto a transaction ledger. The main innovation with Bitcoin is that the ledger is viewable by anyone, and copies of it are distributed over many, many computers all over the Internet.

Once a cash transaction is made, many other computers do a complex piece of maths to keep guessing a checksum, which when one somewhere in the world successfully matches, is written back into the ledger to lock the transaction in the transaction history. This result is then written back to all the various distributed copies of the ledger, and the winner of the “be first to complete the checksum” lottery is awarded 25 BitCoins as a prize. This is what “Mining for Bitcoins” is.

The piece of the ledger currently under construction is called “the blockchain”.

Limited Reserves

There are two subsidiary characteristics of Bitcoin. One is that they’ll only every be circa 21 million bit coins minted. This is just like gold bars when major currencies were backed by country gold reserves. At one point, a UK pound or a US dollar was indicative of a share of the gold in the UK Treasury (for GB Pounds) or Ford Knox (for US Dollars). However, a more recent move was to disassociate currencies from underlying gold reserves, giving Governments to print as much money as they wanted with a value based on “trust” rather than a share of the underlying gold reserves. This has enabled successive governments to, in effect, keep devaluing their own currencies (aka “quantitative easing”), which economists have mixed views about. Some even point to what happened to the Roman Empire when such a long term devaluation strategy went to extremes. Bitcoin, by its very nature, cannot be manipulated in the same way; it is a return to the financial discipline of the Gold Standard.

“Mining” Arms Race

The other characteristic is that the processing power needed to enter the lottery to help confirm the validity of Bitcoin transactions in the current distributed public ledger “block chain” – termed “mining” – is getting ever more mathematically complex. What used to take a home PC, escalated into using the Graphics Co-Processors (which are 100’s of times faster at the calculations needed), and to running specialised “mining” computers based on ASICs (Application Specific Integrated Circuits). And people with their own specialised mining hardware started assembling themselves into co-ordinated groups (like lottery syndicates) to increase the chances of winning the blockchain lottery, even if they ended up with a small share of the 25 bitcoins on offer each time their team won.

Personal Security

From a security point of view, your Public Key is something you have to be absolutely inane to keep to yourself and no-one else. If someone else knows it, they can sign off cash transactions as if it were you. Some of the scare stories are where online wallet sites had poor security and leaked this – which is disastrous. You are heavily encouraged to keep your key offline and only to use it when you sign a transaction.

Anonymity – and concerns that go with it

One of the appeals of Bitcoin and other similar crypto currencies is that they are effectively cash, but the only public record is of transactions – not of the assets you may have associated with your private key. This has led to some concern that people can, on the one hand, claim absolute poverty, and in the next minute, throw a significant size transaction. Traditionally, there is no mapping from the owner of a public key to the real person sitting behind that ID – and hence a concern that Bitcoin could be used for illegal purposes.

A Proposal

Simon Wardley made some very valid points on his Bits & Pieces Blog yesterday (entitled “How to fix Bitcoin“) that suggested Governments should enforce a register of who physically sits behind each public key, so then their transactions would expose who they are, and who are they paying. The Chinese Government already enforce this type of registration. Given the transaction ledger is open to all, you could then ensure appropriate tax treatment; on the downside, there is then extreme transparency – anyone can see how much money you receive, how much you pay and the parties at either end of each cash move.

Gaps at the moment

While the desire is valid, I suspect a lot will depend on the veracity of Governments to monitor the creation of virtual tax entities (I think they call them Trusts, or Companies!) and to be able to routinely unwrap who the ultimate beneficiaries of trade with each are. This is a total mess in the world already, but with vested interests at all levels trying to keep the lid on what could be a sizable can of (taxes due) worms between various tax jurisdictions. The alternative is to dispense with monetary movement taxes altogether, but I suspect Simon is totally correct that the result of doing this would not be welcome by society as a whole (you’d then be taxing people on land and assets instead – and leaving insufficient funds to pay for what benefits the population at large).

The other effect is that you can see the amounts, sender and receiver metadata, but you can’t see what was physically traded in the exchange. Only the money values. However, that is why HM Customs and Excise have the powers they currently enjoy for our mutual good – the ability to go look wherever they need to without obstruction in anyones books should they suspect anything untoward exists.

No Transaction Charges!

For the time being, there are lots of positives being discussed by experts, and the market in Bitcoins (and other crypto currencies) is unregulated. You can set up an account on an exchange like Coinbase (in San Francisco, funded by VC Andreessen Horowitz) and set up a trading account to receive Bitcoins area. Effectively a Merchant account but with zero transaction charges.

The downside at the moment is that our current UK Government have hooked onto some nefarious sensationalist media claims that Bitcoin is used to trade in illegal goods, and were indicating that sites that include “Pay with Bitcoin” links as part of their “sites to blacklist” efforts with UK ISPs. Even though I have a Coinbase account set up, i’ve been reticent to put this payment option on my company web site (to pay £360 to pay for a website, at whatever the current GBP/BTC exchange rate is) for that reason alone so far.

I’m sure it will change in time when we have someone in Government with the appropriate cluestick back in the saddle.

Bright Future

For the future, if Bitcoin is to achieve the transaction volumes that Visa or Mastercard manage, the blockchains will need to grow sinificantly in size and some other approaches needed to get the transaction authorisation time down (currently it can take 10+ minutes for a Bitcoin transaction to be notified as being confirmed as complete). We’ll also likely see the unit of value drop by two orders of magnitude to be more representative of a unit of cash useful in people’s lives.

However, early days, interesting alternative approaches on the table and i’m sure an evolution into our ability to realise the potential of a crypto currency in the long term future. At that point, transferring monetary value will be as easy as sending an email – to anyone, worldwide.

Ask not what your mobile phone can do for you, …

John F Kennedy Photograph (JFK)

Last nights Gillmor Gang felt like it arrived at a conclusion that the next big frontier for mobile platforms was the message bus that is notifications. From a consumer perspective, Google are good at this, albeit Google Now and Google Plus tread over each other occasionally, and Google Plus’s Circles quickly fall into disrepute. Apple’s notification system is mostly empty and unused. It was perceived that Microsoft didn’t have a strategy at all. Meanwhile, the messaging vendors running across multiple platforms are lined up for a battle royal to keep their respective user bases growing, and applicable in their niche use contexts (WhatsApp, Line, WeChat, Hangouts, Skype, Linc, Secret, Snapchat, Chatter, Twitter, LinkedIn, etc).

For me, interesting and pertinent comment tends to come from Feedly (mainly RSS feeds), my DoggCatcher Podcast consumption, a couple of mailing lists and the occasional post on Twitter, Facebook, Google+ and very rarely, in LinkedIn. For the most part, all of these social apps shift ungodly amounts of pollution in my stream, and are systematically getting worse. It really doesn’t surprise me that Twitter have had over 1 billion registrations, of whom only 1/4 are regular users now; the daily requests to add more suggested users does nothing for my feed quality – and in fact precisely the opposite.

My Nexus 5 with Google Now already flashes up a bus timetable and next bus eta when I walk past a bus stop. It has all the performance of the stocks I own already tabulated. It tells me the result of Aston Villa’s last match (1-0 against Chelsea – must be a bug there somewhere) and soon will tell me the next match due, along with the relevant league stats of both teams. And at the moment, it will throw in the name of someone from Google+ whose Birthday is today, although i’ve never heard of any of the folks listed in the 5 months since i’ve switched to Android. And if I have worked out how to integrate my calendar, it will tell me if I need to leave early for my next meeting in light of the current traffic conditions.

With that, most of my future use cases that help *me* are largely covered. Improving the efficiency of me recording my food intake and exercise routines may help; i’ve logged all my food intake and have it summarised as carbs, protein, fat, calories and exercise calories expended by day, every day since June 3rd 2002. My weekly weight readings go back that far too. My fitbit does a reasonable job counting my steps and I get a £5 book voucher to spend every 4 months or so for the privilege of admitting my exercise stats. So, an Apple iWatch with heart rate/pressure monitoring may add a bit more data meat for me to have graphed. So, what’s next to help… me?

The industry is now off the starting blocks and into the calls of “Big Data”, “Internet of Things”, “Sensors everywhere”. My phone already knows the time, my location, who i’m calling, who’s calling me, how fast i’m travelling, where i’m headed (be it in my calendar or set as my navigation destination) and where I have notification of tracking data for an inbound package from Amazon. Some data based on data clues i’ve shared with Google (location, searches, Chromecast media consumption) and Amazon (purchases). I wonder if any Visa/Mastercard data makes it back. And now that the role of “information hub” has escaped from living room Games Consoles and into that Smartphone into my pocket, what value to I get back from it now?

A lot of the benefits are going to accrue higher up the food chain – in which case Steve Gillmor’s words may (as usual) be prescient.

One of my previous employers had over 10,000 staff, thousands of suppliers and a large number of B2B customers. One system there collected the metadata from email on who was conversing with who; anyone could go onto the system and see (in priority order) who was engaged with a specific supplier, or all the touch points into large enterprises they serviced. That speeded up the engagements (as it would do in any knowledge based business). That may also work for phone calls made or received on the company mobile in the future.

The same company also have high water marks in various business processes, so if an iceberg is heading your way that will break the customers SLAs, the management chain get the needed urgency and corrective actions instilled – before the customers notice. However, it is silo’d on specific tracking systems that managers have to dip into regularly.

For an Enterprise, one of the keys is to be able to link business processes and the exception handling flows so that the relevant people know whatever is important to them, when it is important to them. Some of my previous work was to graph important things simply to show, for example, what the flow of incoming cash was, it’s sources and any queries that may impale the chances of a customer paying their invoice(s) on time. Very much like the sort of card dished out by Google Now, but with some limited interactivity to dig down deeper into a prioritised list – to enable fast spotting of the root cause to address. It worked spectacularly well to help eradicate potential problems and to markedly improve DSO.

(For what it’s worth, once I could reach the database tables I needed, I prototyped the reporting needed to address the business issues very quickly in Tableau Desktop Professional. Then in line with corporate reporting platform decisions, self learnt then reimplemented the whole lot in Microsoft SQL Services Reporting Services (aka SSRS) – a very bitty, detailed and long process – where the reports still run to this day).

Some time ago, Facebook provided an alternative UI that made your friends the centre of your mobile experience. This largely fell into disrepute as many of the apps on a phone are gateways into simple process tasks, and the entry point wasn’t specific to a designated “friend”. John Borthwick wrote a piece on Medium about which Mobile apps appeared on a wide variety of home screens. Yahoo bought startup Aviate who provide a launcher that moves icons to the home screen – for immediate availability – based on the context of where you are and what you do regularly. I’m yet to see any analysis that segments which apps are used, when and how often; that would be a useful base to ask further questions.

In the meantime, linking apps into appropriate notifications from Enterprise systems may well be a useful thing for mobile applications. That historically has been the domain of Microsoft applications with custom extensions written in VBA (Visual Basic for Applications). It’s probably a sign of genius that you can do likewise with Google Apps now (Chrome Extensions were announced last week) – with add-on code written JavaScript – the most popular programming language in the world.

The main downside is that, for a business process, JavaScript (as indeed is true of VBA) is akin to writing stuff in very basic assembler. Mind bogglingly long winded and subject to excruciating minute detail. I think there’s probably a lot of mileage in being able to provide Google Now type cards with graphs and data you can drill into out of the box – all thrown into the notifications stream with an interface not unlike IFTTT (If This then That – one of John Borthwicks companies) to deliver the information to the correct people, at the right time, only.

I’m just waiting for the first signs that the Enterprise Software vendors will start putting the hooks in to enable Google to undertake the assault on this hitherto Microsoft stronghold using Chrome Extensions.

In the meantime, I also ask myself how folks like SAP and Oracle survive with their very clunky ERP software, all of which looks ripe for disruption with modern open source based software – but that’s another story about money, customisation and organisational inertia all by itself.

 

Chromecast: the UK revolution goes live Wednesday, 9am

Google Chromecast

Have £40 or so in your pocket and camp outside one of many stores (Dixons/Currys/PCworld are one set of outlets, Argos probably another) for 9am Wednesday, and you should be able to walk out minutes later with a Google Chromecast.

Having used my US-sourced one for 8 months now, i’ll provide a short list of things to do below, to ensure you have your Chromecast working straight away – and without the speed bumps that new users typically experience.

I’ve been running mine since they first got released in the USA, and fortunately managed to get one of my relatives in Arizona to redirect the two I ordered on Amazon to here. My youngest son in North London has the other one.

Once set up, you can fire up YouTube, Netflix, Google Music or a Chrome Browser Tab on your iPhone, Android phone, Apple iPad, Android Tablet or on a Windows PC – then literally throw the display over to your large flat screen TV. After doing so, the source device becomes the remote.

It is fantastically impressive. I managed to throw a YouTube video of Marc Bolan and T-Rex (my wifes teenage crush way back then) playing on YouTube to our Toshiba 37″ TV, then piled a set of his other tracks in the queue behind it – which then played one after the other. Ditto for streaming Google Play Music, having built a playlist of Christmas Music tracks to play in the background at a Family Christmas get-together.

For me – living as we do 3 miles from the local BT exchange and having broadband speeds of 1-1.3Mb/s, the most impressive thing to me was having Netflix stream a 2-3 hour film to our 1080p 37″ TV with no loss of quality, no noise and a perfect viewing experience.

Last week, the BBC released a maintenance release of iPlayer – but which appears to have Chromecast support hidden inside and ready to go. If SkyGo does likewise, then I believe all our media needs will have been met.

Getting it working, avoiding the common frustrations

As a free gift based on my 8 months personal experience – if you want to get ready for your installation this week, a few things to do to make your experience as close to “always works first time” as I can get you:

  1. On your home Wi-Fi router, disable “Accesss Point Isolation” – aka “AP Isolation”. If your router was used in a coffee shop, you wouldn’t want other drinkers’ devices able to access your computer, tablet or phone – and hence AP Isolation is normally enabled to insert the Chinese walls. Your Chromecast needs to be able to talk to your phone/tablet/PC via the router, so this must be disabled. Note that some Asus branded routers don’t allow you to do this; those would need to be replaced. Note also that if you have a BT HomeHub router, they already have “AP Isolation” disabled for your private, home network – so no action is needed if you connect your Chromecast to that; as long as you don’t use the BTfon/BTopenzone/Public network in place in some units for your Chromecast connection, you’re in good shape already.
  2. Your router needs to be using the 2.4GHz WiFi band using 802.11B, G or N speeds; that is the usual norm, and virtually every router works on these. However, some routers – particularly ones that daisy chain together to provide wider geographic coverage – can use 5 Ghz signal frequencies as well. The Chromecast cannot use the 5GHz bands. Note also the 2.4GHz is normally good for indoor use only; be aware that 2.4GHz is the frequency at which a Microwave disturbs/heats water, hence why WiFi routers aren’t so good if there is rain between the router and the devices wirelessly connected to it.
  3. The Chromecast plugs into one of your TV HDMI ports. The power cable on the back of it plugs into a spare USB port on your TV (if a powered USB port is present – Chromecast just needs the 5V provided) or use the power supply provided to plug it into a mains socket. Even the USA one we received worked on a 240V supply without any adjustment.
  4. Install the Chromecast app from the Google Play Store (for Android), AppStore for iOS or where directed for Windows/Chrome. You only need this on one device to set the unit up, from which point the application is rarely used again.
  5. Set the HDMI channel on your TV as the signal source using your TV remote. Some on screen installation directions should be present.
  6. Fire up the app, follow the instructions (we named our TV “Living Room”).
  7. Once all set, the TV screen will show a message saying “Ready to Cast”, and with a screen saver background that keeps changing every few minutes.
  8. Then, time for fun. Fire up the YouTube app, Netflix app, etc on your phone, tablet or PC. Start something running (my introductory pick was YouTube with Laurel and Hardy in “Way Out West” – singing “The Trail of the Lonesome Pine”). Then select the “Cast” icon, choose the name of your TV listed, and then sit back. The stream feeds into the Chromecast, and your TV fires up the video/sound of your chosen video or film. From that point, your local device becomes the remote control – so you can pause/play/stop at will.

That’s all there is to it. Hope you enjoy this device as much as we do – and please tell our your friends! And if you’ve any issues with yours i’ve not listed, reply below and i’ll endeavour to assist.

Footnote:

The part number Google assigned to the Chromecast I have is “H2G2-42”, which is a tip of the hat to “HitchHikers Guide to the Galaxy” and 42 – the meaning of Life, the Universe and Everything” from the novel by Douglas Adams.

The associated power supply (at least in the USA) is MST3K-US. That in turn is a tip of the hat to “Mystery Science Theatre 3000“, a cult American Comedy TV series.

Another Fantastic Resource on Google+ is from James Mosvick: Chromecast Tips & Tricks Guide.

Did you know 2.8% of your customers are dead?

Gravestone saying "Rest in Peace"

Those are the exact words I mentioned to the CEO of a B2C company – where customers were paying monthly subscription fees. Unfortunately, his immediate question back was “Okay, but how many of those are on Direct Debit?”. I think my reaction to his interest in the number of people paying for his service, but not using it, was one where I thought he’d do damage to his brand than earn him extra profits.

It’s long been an accepted view that Marketing in IT circles is often considered a set of “hail Mary” throws to attract new potential customers, with little of the precision of folks who have that title in Fast Moving Consumer Goods (FMCG) companies. I’ve sat in meetings with a roomful of IT reseller “Marketing” folks to find I was the only company present doing systematic testing to find out what works, what didn’t and to use this learning to continuously improve. More a case of “getting the letter out” and losing the ability to learn anything; surely much better to send two different wordings out, to see which one pulled better – at the very least.

I’m reminded of one person I met who worked in the field for a Chocolate vendor, and like all his industry colleagues, could relate to 1/10 of one percent shifts in his market share in the retail outlets he supplied through. He was expected to have an action plan in place if anything slipped a little, or to do more of anything that slightly increased his share. One day, fed up selling Chocolate bars, he decided to move to a company selling software to large IBM computer installations.

He walked in to see his new boss, and made the fundamental mistake of asking what his software products market share was in IBM Mainframe installations working in the Finance Industry and in the counties of Avon and Somerset. His new boss looked at him as if he’d arrived from the Planet Zog, and told him just to get on the road and sell something. He ended up thinking this was dumb, and set up his own company to fix the gap.

He elected to start sending out questionnaires to all the large IBM customer sites in the UK (there were, at the time, some 1,000-1,500 of them), getting a telesales team to help profile each site, and to reflect the use of hardware and software products in each. Then sent out a quarterly summary, segmented by industry, of what everyones peers were using – so the survey participants saw value in knowing what their peers in like organisations were doing. He subsequently extended  the scope to cover other vendors, and gradually picked up a thorough profile of some 30,000 installations, covering over 80% of Enterprise IT spend in the country.

At that point, he had an ever-evolving database of all mix of hardware and software in each, coupled with all the senior decision makers details, and even the names of IT projects both planned and underway in each. The last time I had a meeting with him, he could aim me into the best 5-10 prospects for my IT products and services that aligned with what my ideal customer would look like (in terms of associated prerequisite products they were already running) – with a single rifle shot – allowing sales focus and without spreading sales effort over many unproductive lead follow-ups. Marketing (and Sales) Gold. Expensive to use, by worth every penny.

He subsequently sold his company and the database to Ziff Davis, then to Harte Hanks – the same folks who compile the list of dead people (from published UK Death Certificates) that was part of the profiling exercise I undertook and that I mentioned above. They then sold the same Database assets and it’s regular surveys to the company where it resides today.

Apart from that data, there are a number of other useful sources you can draw on. I once managed to persuade MySQL (before Sun, long before Oracle, ownership) to get their customers profiled, just by relating postcodes we deduced from sampling contact addresses and/or the same from location information on their web sites. It turned out that 26% of their base existed in System Integrators, Web Development and Software companies, while the remaining 74% was flat as a pancake over 300 other SIC codes. Very difficult to target as a whole unless you had the full list of customers – which only they did! There are also various mailing lists, MeetUps, forums and resources like GitHub where you can get a view of where specific developer skills are active.

All very basic compared to Consumer Marketing, where armed with a name, a date of birth and/or a postcode, you can deduce a pretty compelling picture of what your B2C customer looks like, family make-up, what they read and their relative wealth. When I was at Demon Internet (first UK Internet Service Provider), we could even spot one segment of very heavy users that, back in 1997, turned out to be 16-19 year olds living in crowded accommodation, playing online games and with no parental supervision of the associated phone costs. We also had the benefit of one external consultant who was adept at summarising 550 pages of BMRB Internet Survey number tables, producing an actionable and succinct 3-5 pages of A4 trends to ride on.

Today, with even the most expensive mobile smartphones starting to commoditise – and vendors looking to emphasize even the smallest differentiation now – I wasn’t too surprised that Samsung in the USA have today landed an ex-VP of Proctor & Gamble to head their Marketing Efforts going forward.

With that, the IT industry has now come full circle – and FMCG class Marketing skills will start to become ever more important in our midst.

 

The Art of Decoy Pricing

Over Christmas, I read Dan Ariely’s “Predictably Irrational” – a fascinating Book. One surprise, then a few snippets that suggest Apple execute a few important things to textbook standard – albeit with one glaring mistake.

The one surprise was from The Economist, who offered:

Economist Subscription Offer

At first blush, a silly offer. In tests, 16% chose the Internet only edition, 0% the print only one, and 84% the print plus Internet offer. However, offer only the basic and top flight offer:

Economist Revised Offer

and the takeup goes to 68% and 32% respectively. Hence, the presence of a similar, but clearly inferior, decoy swings the takeup of the high priced option from 32% to 84% of the takeup. Which is exactly what happened when Apple’s iPhone line-up became the iPhone 4s, 5c and 5s – with the 5c and 5s prices starting at circa £469 and £549 respectively. Everyone jumped at the most expensive 5s model, leaving short supply of that model and a glut of the slightly less expensive (but less capable) unsold 5c models.

As to the more positive things that reminded me of Apple, the following struck chords:

  • Perceived prices being high through restricted product supply
  • Setting (high) price anchors with arbitrary coherence; Johnny Ives gushing verbals at Apple announcement events, no less. Reassuringly expensive, just like some french lager ads.
  • the use of “free” components to take all risk out of a risk/reward comparison
  • Social norms of help at a Genius Bar versus competitor costly pains when a product goes wrong
  • Minimising options. I recall Steve Jobs redefining the Mac lineup to a 2 x 2 matrix; consumer/professional vs laptop/desktop, one model in each box. Likewise iPhones and iPads to good/better/best models.
  • Lower prices distinctively make us believe lower quality; Apple do the opposite, even wrapping the packaging to reinforce the quality feel. Even their boxes are things of beauty, apparently no expense spared.

There are further snippets about folks following a herd instinct as a sense of belonging (ordering meals aloud in a Restaurant; make sure you call your choice first!). Also the fact that if you affirm your honesty in some way before initiating any task, you are likely to follow it with the absolute truth – something our judicial system does very well.

I ended up in a difference of opinion with a friend on DNA testing (Jane ordered a testing kit from 23andMe, just before the US Food & Drug Administration told them to stop releasing results of their genetic tests). Textbook defence on my part having invested in one side of the argument, just like supporters of opposing football teams having self centred views of the exact same incident (it’s a penalty! No, he dived! How could you think that, it was right in front of you! …).

So, with that, some karma. I know how I’d react, and I could see my own irrationality.

People. They are confusing things. And in all ways but one slight pricing hiccup, Apple are eerily clever.