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The Northern Spy
December 2007

The Spy's Case Files

Rick Sutcliffe

The case of the missing economy

heats up by the month (or cools off, depending on your choice of metaphor). Canada's southern neighbour faces (and it shares some of these to an extent) uncontrolled fiscal deficits, paying for expensive foreign adventures with no prospect of return on investment, a failed housing market, massive illiquidity of the resulting bad paper, increasingly scarce, hard to get, and expensive oil, huge infrastructure and social deficits, pollution problems requiring staggering investments and lifestyle changes, interest rates that can neither go up nor down without making something worse, gargantuan trade deficits, a failing drug war, loss of international confidence in the once mighty yankeebuck, religious-based hostility from a sizeable fraction of the world's population, and the total lack of political will among politicians of any stripe to do anything about the problems. One must therefore timidly enquire how the high-tech economy might be affected in the face of deepening recession.

On the one hand, government and business will become reluctant to make capital (equipment) purchases, and this will surely hit the traditional PC market numbers very hard. On the other, tough times force sharper cost-benefit analysis, and this could push both sectors toward cheaper, more reliable, and more easily-maintained Macintosh systems and away from resource-costly PCs. Score a Pyrrhic double win for Apple--modest improvements in sales to big-number buyers even while the overall market shrinks, perhaps dramatically.

What about on the household front? An economy that cannot afford its once-darling (and frequently deceptive) junk mortgages is hardly fruitful ground for marketing high-tech toys. In the short term, the negative press and faltering economy should to lower retailers' expectations for the usual year-end buying season. (It's not really "Christmas"--that's something else.)

And yet, as in any recession, the poor will get poorer and the rich will at least hold their own in relative terms over the longer haul. Thus, goods with the reputation (real or only perceived) as high-quality, even if priced accordingly, will not suffer as much as lower priced and lower quality items. This too could shift relative market share to Apple, though even they ought to prepare for absolute numbers to decline. After all, this economic setback will last more than just a few months.

Given that Apple's computer sales are only beginning to cash in on the mindshare gained from the iPhone and iPod and you have a three-pronged reason to believe the net result will be much sharper increases in overall market share (of a possibly diminishing total) than previously forecast.

A similar pushme-pullyou is already taking place in the equity markets. Perceptions of a coming slowdown have punished high tech stocks, including Apple's. The Spy isn't planning on buying any equities just now, but thinks it reasonable to expect their shares will do better relative to the rest of the market over the medium term, for it is one of the few companies that retain a technological glow in the face of a bleak overall market. (Colour them steady to up in a sea of declining prices.)

Expect currency markets to become ever more important in the short to medium term, as world trade forces force the greenback to a more realistic level, and other countries shift their reserves to more stable (better managed) currencies. This makes U.S.-manufactured items cheaper elsewhere (boosting exports), and goods from Asia, South America, and Europe more expensive in the United States, gradually improving the trade balance, but at the expense of American standards of living. Given that most technology items are already manufactured in Third World countries, the effect on them may be more neutral than on others.

Every manufacturing sector sports well-managed and nimble companies able to adapt to the new economic realities, to do more than merely survive. However, there will be many casualties, and a goodly number will be in high-tech, where only insatiable consumerism has kept some enterprises afloat in the face of bad management and worse decisions. At least we should be spared the spectacle of quite so many outfits preying on the rest by suing over phoney patents. They will be too busy crafting survival plans.

The case of the emerging eBook reader.

Amazon has apparently decided to try a little vertical integration of its own in the eBook market, with its much-leaked "Kindle" reader now being officially released.

There's apparently a lot to like here. ("Apparently", because the Spy is not an early adopter of many products.) The device uses eInk technology, so the screen should be very readable. It also uses their "whispernet" via Sprint's EVDO cellphone network to access content, (including blogs, newspapers, and magazines) which is a big plus, and makes the device not so much a reader as content terminal, in both the viewing and vending sense. It appears to offer respectable storage (200 books claimed), an ergonomic size, and light weight--all in the hopes of duplicating or bettering the reading experience offered by dead tree books

On the other hand, there is also much to indicate that though the device may kindle (sic) a revolution, it does not itself constitute one. First, even by Apple's control freak standards, this is a closed platform. You access (and pay for) only what Amazon says you can, and at the moment, that means the traditional publishers who've never before been friends of the eBook. There's no indication anyone else will be invited to the party. Surely the number of titles will grow, but there is no indication the smaller publishers who built and are the mainstay the eBook industry will be allowed to benefit. The very fact that Amazon partnered first with the big boys to the exclusion of the little girls bodes ill for both their platform and the industry.

Second, from pictures alone, the design does not appear either inspired or practical. The page turning bars are on the sides, yet the bottom sports a substantial keyboard, presumably for entering credit card information and book titles. Without trying one, this appears awkward.

Third, there's nothing in the pricing model for either the existing eBook industry or its consumers to get very excited about. A price range from $6.50 to $9.99 per book might excite the large publishing houses who can get incremental sales on their paper products at next to no cost, but it's too high to compete directly with the existing market--high enough that the Spy suspects the model serves primarily to boost its own profits by spreading out the connectivity costs over expected purchases.

Fourth, and back to the closed platform issue, Kindle uses a variant of the Mobipocket format, but one that is unique to Kindle, so not even existing Mobipocket formatted eBooks work. Amazon has ironclad control over files. The Spy suspects that hackers will find a way for Kindles to use other sites and content than that blessed by Amazon, but heartily wishes this whole proprietary approach to content would go away. That's what killed the Rocket reader, and it will kill this too, if either someone finds a better way or the hackers get theirs.

The Spy has believed all along that the electronic book reader will eventually replace industrial age books. However reluctant Apple may be to get into the business, its designers and marketers could readily trump this attempt. He could himself, and he makes no pretensions of being either.

Locate the keyboard in a drawer or on a touch screen, and put page turning buttons on the bottom sides or underneath. Use a better case design. Dedicate the entire top surface to reading when not actually ordering or creating bookmarks. Price out-of-copyright books at ninety-nine cents, and sell current releases for $4.99, with others in between. Use no DRM whatsoever. Let the user put her own content on the device. Let anyone sell any content they want for it. Allow access to all sites (full browser). Include at least a PDA and possibly a phone. Make pocket and tablet versions. Run it on Mac OS. Sell the physical product starting at $200. 'Nuff said?

Whether iSteve cares enough about this market to bother is quite another question, but the Spy would be greatly disappointed if this is the best anyone can do, as Kindle is little much more than the old Rocket book with more readability and titles, but still hampered by the same closed-system mentality. Still, it looks like a partial step in the right direction.

The case of the missing Googlephone

proved the Spy part right and part wrong in his prescient prognostications last month--right in that there is no Googlephone, but only a specified platform which manufacturers can build to run Google specified software, and wrong in that the iPhone isn't part of the picture. Perhaps Apple and Google have yet other fish to fry.

The case of the unlocked StevePhone

T-Mobile, Deutsche Telecom's wireless division, has given up contesting court orders requiring it to make iPhones available unlocked so they can be used on rival German networks. True, such phones will be two-and-a-half times as costly, but who can doubt this is the precedent for North American law, whenever the first such case reaches the courts here?

The case of the incremented versions

ConfigServer Firewall has reached version 2.92 with some minor fixes and improvements. If you run a server, this is a must have product from WayToTheWeb to help lock down your machine. As in times past, the Spy highly recommends their products and services to harden your server (and mail system). The black hats knock on his door thousands of times a day, and it's good to have confidence that it won't swing open very easily.

Nisus Writer Pro has been bumped to 1.0.2 for Leopard compatibility. The express version has also been incrementally updated to 3.0.1. No new features to speak of, though. The Spy resignedly awaits a file merger/inserter, and useable invisible text for web markup.

A useful tip has come his way on the former front, however. Apple's Pages (if one has it) can merge multiple rtf files. Just open the first in the sequence, place the cursor where the insert is to take place (at the end for merging in multiple chapters) and use Insert-Choose, then multiply select the files to be added at that point. They will be incorporated in the desired sequence. This feature alone is almost enough to tempt him to switch to the innovative, albeit underpowered Apple product.

The case of the purloined literary idea

iHow quickly science fiction turns into science fact. The Spy used the idea of inducing meiosis in skin cells as an incidental plot element in one of his novels just a few years ago. Today, he notes a news item that stem cells have been produced from skin. His fictional feat (which he simply assumed would be possible) comes a step closer--at least, cloning from skin cells should be very nearly possible, making the whole questionable practice of using human embryos for stem cell research moot, to the great relief of many. Just a matter of time, folks.

Hey. Perhaps Amazon, Apple, Fictionwise, Google, and other players will get together to realize another of his fictional elements--the Personal Intelligence Enhancement Appliance (PIEA). Combine an eInk reader with PDA and phone, a few very personal interface enhancements like ear speakers, eye cameras and throat mikes, and you'd be pretty close to what his Hibernians use on a daily basis as portable MTs (Metalibrary Terminals).

--The Northern Spy

Rick Sutcliffe, (a.k.a. The Northern Spy) is professor of Computing Science and Mathematics at Trinity Western University. He's written two textbooks and several novels, one named best ePublished SF novel for 2003. His columns have appeared in numerous magazines and newspapers, and he's a regular speaker at churches, schools, academic meetings, and conferences. He and his wife Joyce have lived in the Aldergrove/Bradner area of BC since 1972.

Want to discuss this and other Northern Spy columns? Surf on over to ArjayBB.com. Participate and you could win free web hosting from the WebNameHost.net subsidiary of Arjay Web Services. Rick Sutcliffe's fiction can be purchased in various eBook formats from Fictionwise, and in dead tree form from Bowker's Booksurge.


The Northern Spy Home Page: http://www.TheNorthernSpy.com

The Spy's Laws collected: http://www.thenorthernspy.com/spyslaws.htm

The Spy's Shareware download site: http://downloads.thenorthernspy.com/

WebNameHost : http://www.WebNameHost.net

WebNameSource : http://www.WebNameSource.net

nameman : http://nameman.net

opundo : http://opundo.com

Sheaves Christian Resources : http://sheaves.org

Arjay Books: http://www.ArjayBooks.com

Booksurge: http://www.booksurge.com

Fictionwise: http://www.fictionwise.com

ConfigServerFirewall: http://www.configserver.com/

NisusWriter: http://www.nisus.com/

Skin cells to Stem Cells: http://abcnews.go.com/Technology/wireStory?id=3891061

Amazon's Kindle: http://www.amazon.com/Amazon-com-kindle/dp/B000FI73MA

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Last Updated: 2007 12 01