Dana Blankenhorn

Save the Kindles

You can be comfortable in a big company. But you can also miss opportunities because they don’t look big enough.

Take Amazon.Com. They’re on track to bring in $500 billion this year. About half will be in merchandise sales. The other half will be in services of various kinds. The stock fell after earnings because the cloud unit projected slower growth, some of it driven by its own effort to help customers lower their cloud costs, some by the cost of adding AI software to AWS. Overall, Amazon stock is a buy.

My problem is Amazon has become such a sprawling business that some divisions are just too small to merit attention.

Take the Kindle book division. This is funny because Amazon started as a bookstore.  

I like the Kindle. An e-book reader is lighter than almost any book. You can use it with the lights off. A Fire Tablet can cost just $40 and serve as a personal TV. You can get refurbished Kindle readers dirt cheap.

E-books make printed books seem an environmental disaster. E-books also save money. Amazon offers a $10/month library service called Kindle Unlimited. I consider it a bargain. It offers lots of e-books at $1 to $3.

But in all the efforts by some states to ban books and close libraries, you haven’t heard a word from Amazon. That’s because the Kindle business is so small, by Amazon standards, that the company would rather keep quiet than pursue an opportunity that might be controversial.

The 1983 Game

By my calculations, oil took over political dominance from manufacturing in 1968. Tech took over from oil in 2008.

That means we’re now playing the 1983 game. (This will be my 40th Peachtree Road Race. That's me at my second, in 1984.)

That was the year I bought my house. Interest rates were still high making the $49,500 price hard to afford. While oilman George H.W. Bush was VP, it was the defense and media industries who had Ronald Reagan’s ear. The oil shortage of the 1970s had turned into an oil glut, fueled by the Administration pushing the Saudis to keep pumping even while prices paid to Texas oilmen were falling.

This should sound familiar to today’s tech tycoons. Even while Californian Kamala Harris sits as VP, the industry is being battered in Washington. There are calls to break up the company, to tightly regulate the Internet. The collapse of Silicon Valley Bank was a bad look.

The industry thus faces a political choice.

A lot of the big swinging dicks of the last decade have made their choice. Led by Peter Thiel, a lot of them are putting all the cash they can into Republican campaigns. They see control of the government, under the leadership of a Republican party dedicated to their specific interests, as the best route forward.

Why Clouds Will Win the Streaming Wars

Since long before the streaming crash began, I predicted its Big Three would end up being Apple, Google, and Amazon.Com.

Not Netflix. Not Disney. Not Comcast or Paramount or Warner Brothers.

The Cloud Czars.

As usual, I was early to the story. But it has long been clear that, when push comes to shove in streaming, money talks. The coming result was easy for me to see and the story was easy to do.

Of the three Cloud Czars, Amazon is the best-positioned. They have the front-end technology with the Fire Stick, which has one-third of the U.S. market. They have Prime Video, which becomes a huge value if you use the Amazon store. They can re-sell every other streamer’s stuff and make money. They’re also global, something only Netflix and Disney among their competitors can lay claim to.

Business Needs Consensus

I have long believed historians misread the Progressive Era.

They see it as a victory for liberal values.

I read it as a victory for business. Which isn’t necessarily a different thing.

Fact is, the business of America is business. America has always been led by a dominant industry. Farming, then cotton, then railroads, then infrastructure, manufacturing, oil, and now technology.

Power flows to the highest-value industry and, when that is supplanted, flows away from it. Just as cotton lost to the railroads in the Civil War, I believe railroads lost to infrastructure in the Progressive Era.

What the great inventions of the late 19^th century – electricity, telephony, and the automobile – required for mass adoption was scaled, organized infrastructure. Having two or more electric utilities, two or more phone companies, or (God forbid) two or more private road networks made no sense. What Wall Street saw in the 1890s was that monopolies created efficiency.

But the monopolies would need the approval of government. The price of government approval, in a democracy, would be regulation, and some means of control over the result.

I Have a Dream for Netiquette

In the mid-1980s I joined a group called the Electronic Networking Association.

The ENA believed, naively, that if people could communicate across their differences, they might understand each other better.

Few people used the Internet then. We were all elites, intellectually at least. We were thoughtful and we shared a First World viewpoint, even if we lived in Japan, Europe or Africa. We shared values, sort of like the Quakers. 

What we believed in was Netiquette. These are simple rules for civilized behavior. Assume goodwill. Don’t yell. In short, be nice. When in doubt, apologize and resolve to do better.  

The punishment for a violation of Netiquette was a stern talking to, for both sides of the argument. The punishment for repeated outbursts was to be shunned by the group, dismissed, cast off.

The Coming Streaming Shakeout

Streaming is about to learn what the printed web learned 20 years ago.

In a world of unlimited content, the gating factor for your audience is time.

There’s a corollary. Don’t depend on ads to make up for this. There’s just too much inventory.

I have a bad tendency to be early to things. I screamed about the dot-com bubble in 1997. I’ve been yammering about the coming streaming crash since 2019.

But now it’s here. First Netflix (NFLX) fell from grace. Then Disney (DIS) did the same. The Cloud Czars are worth half what they were now that you can get paid for having money. When interest rates were 2%, a price to earnings multiple of 45 looked OK. With money at 5% you need to be below 20 to be competitive.

Fixing Twitter on Mastodon

Twitter is broken beyond repair.

But it can be fixed. On Mastodon. If users learn something I learned back in 1988.

I’m @[email protected] on Mastodon. Journa.host is run by Adam Davidson, formerly of The New Yorker. It’s one of thousands of servers supporting Mastodon on the Internet.

Users can block users on Twitter. But on Mastodon servers can also block servers. Users can also move between servers. This means people choose whatever server conforms to their standards on what should be blocked and what allowed. You can have alt-right servers, alt-left servers, and alt-bicycling servers.

A lot of people, looking at Mastodon over the last few weeks, have looked askance at this. People are isolating behind their server walls, they complain. Or they might.

But that was always true for Twitter. It was designed to be. The problem is that many people didn’t use their block commands aggressively enough. Journalists amplified extreme views by retweeting them. Hate was amplified by user outrage.

Bad News is Good News

A few weeks ago, I noted how the “bad news” at Snap, Twitter and other social media companies can easily be interpreted as good news.. If people are no longer interested in rage tweeting, they could be becoming more thoughtful. They could be reserving judgment. They could have found real lives.

The same is true, doubly so, with the recent “problems” at chip stocks like Nvidia, Micron and Qualcomm. Prices for commodity chips are falling. The “chip shortage” is easing. In the near term it means lower profits for big chip companies. Sell, sell, sell.

But it also means falling prices and more supply for companies that use chips. It means car prices could start declining. It means the Machine Internet can get a fresh start.

The Streaming Crash

A small fall in subscriber numbers sent Netflix stock down 25% overnight in what stock market observers are calling the “streaming crash.”

All the companies involved in streaming crashed in sympathy. Paramount was down 11%. Warner Discovery dropped 5%. Disney was down 4% and even Amazon lost 2%.

As usual I was early to this. I wrote about the streaming crash in 2019.  “The limits to the streaming market are time and, to a lesser extent, money,” I wrote. If you were reading closely, you’d know the most important limit is time.

The Metaverse Problem

Back in 2009, I covered Taiwan’s CompuText show, alongside my son, then 18.

We spent four days wandering the halls, on the hunt for “desktop Linux.” We eventually found Linux Foundation head Jim Zemlin addressing a small group in a corner of Taiwan 101, the city’s tallest building, miles from the show’s main hall. It’s become something of a joke between us since then.

The point is there was no desktop Linux. You can argue that Google Android is Linux, or that the Mac OS is based on a Linux, but these aren’t truly open systems. Linux is, and was, primarily a server technology.

This is important to note when thinking about Web 3.0, or the Metaverse, as the buzzword advocates call it. They say it’s the biggest thing since the Web was spun, nearly 3 decades ago. It’s certainly the biggest thing since the Cloud, which Amazon began selling 15 years ago.