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Much Of Intel’s $740M Cloudera Investment Likely Went To Existing Shareholders

Originally posted on TechCrunch:

Yesterday’s blockbuster news that Intel had invested $740 million in Hadoop-focused Cloudera was a surprise. The market hadn’t expected Intel’s investment to be so large.

The deal was so large that industry watchers like TechCrunch and VC Experts ticked through Cloudera’s seventh amended and restated certificate of incorporation, and tried to square the firm’s Series F Preferred Stock with the investment size.

Things didn’t add up: Either Intel paid a much higher per-share price for Cloudera than did its recent investors like Google Ventures, or it bought from sources outside the company.

The former might be true, but the latter certainly is. Intel and Cloudera both confirmed with TechCrunch that Intel purchased shares from entities outside of Cloudera itself. This means that Intel did in fact spend $740 million to buy 18 percent of Cloudera, but that those dollars did not all go to Cloudera itself.

In fact, it…

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Apple + Xfinity, not quite Magic

Source: NCTA Comcast recently provided a document to accompany filings made by Comcast and Time Warner Cable (TWC) explaining to regulators why they should be allowed to merge. In the document, Comcast alludes to Apple’s video services in a section describing competition coming from several technology companies, including Amazon and Microsoft. When mentioning Apple’s plans, Comcast distinguishes Apple’s current Apple TV from a different set-top box still in development. Time and technology have again disrupted a traditional value chain forcing potential competitors to become frenemies. It is still early to speculate on the terms or potential fallout, but here are a few things to consider.

Comcast is far ahead of all other Cable Providers with an their internally developed Xfinity STB RDK and Viper IP cloud platform.  Syncing, linking, streaming TV everywhere, Xfinity X1 provides hundreds of streaming live linear programming and On Demand options in the home. X2 is an all IP platform that supports Live TV Everywhere, On-demand Video, Personal Video Recording anywhere. While it is available in most markets, Comcast has yet to deploy their Xfinity X1 or X2 service to masses.

Deployment of Xfinity and Viper to all of its potentially 33+ million Pay TV subscribers will cost Comcast billions while logistically taking multiple years. In turn, the massive investment provides no market expansion and minimal improvement in current market share or revenues outside of the expected annual rate hikes. Advertising revenues will benefit from Addressable Advertising and a Programmatic Buyers Index enabled by Xfinity advanced audience measurements and ad insertion technology.

Cable is getting hit from competitors and changing consumer values on all sides. Losing customers in ultra dense urban markets largely due to the tactics of Verizon Fios and AT&T u-Verses who offer their multi-play bundles to 48 million homes passed. Satellite providers also have a unique advantage with rural customers transfixed outside the reach of Cable and Telco networks. Satellite TV can also deliver the best pricing due to its lower cost structure. A growing 16+ million urban dwellers also rely on free local over the air digital broadcast. While we are clearly seeing OTT cord cutting, Netflix/Amazon cord shaving and some millennial cord never behaviors, the primary consumer behavior is one of price shopping/switching. With the common value denominators being Live Linear HD Programming @ 77% followed by Original Programming @ 32%, Video On Demand @ 27 % and TV Everywhere @ 19%.

It is unlikely the Apple deal will facilitate delivery out of Comcast MSO franchise footprint. Bandwidth economics for live digitally encoded programing delivered to living-room HD TV’s are largely dependent on network economics gained from IPTV multicasting, Switched Digital Video (SVD) multiplexing, or Digital Video Broadcasting (DVB). While its technically possible to deliver Live HD video to the living-room without IP multicasting over fixed or wireless broadband, its economically challenging when you add in carriage and retransmission fees. You can check in with Cox on the Flarewatch or Intel on its OnCue experiment if you potentially disagree.

Aereo gets away with it because they do not have consumer density or scale and when they do the economics saved on carriage/retransmission fees more than accommodate transit or peering delivery cost for the small lineup of local channels delivered. MLB TV while live is only one channel and again they do not pay retransmission fees due to sports blackout rules.  Subscription VOD services like Netflix are differentiate as the number of users in a node never watch the same content at the same exact time. Video on Demand providers benefit from CDN edge caching of content and direct Transit agreements with Cable MSO’s but they do not from IPTV or SDV delivery. TV Everywhere is also different as Laptops, Tablets and Smartphones require a fraction of the bandwidth required for big screen HD delivery.

Comcast broadband IP video delivery expertise is not what brought Apple to the Table, its the legacy Hybrid Fiber Cable network that delivers Live HD Linear TV programming past 83 Million (64%) US homes. Reach is not the only consideration, Comcast/TWC would own 33% of all Pay TV subscribers while controlling 38% of all broadband Internet homes. They also gain considerable market leverage in several key areas including transit, peering, cell back-haul, metro-Ethernet, carriage rates, retransmission fees, advertising CPM, regional sports network coverage, and wholesale pricing and infrastructure purchasing power. Xfinity X1 or X2 are not likely to vector Comcast subscriber acquisition trajectories. Subscriber acquisition is currently driven by consumer economics, loyalty, value, and influenced by the slow demise of appointment TV audiences, despite a vast improvement in overall cable experience and attractive introductory pricing for a mufti-play bundle. Therefore, it is timely for Apple to negotiate for its “new product category” investors and consumers have long awaited. If Comcast history with Verizon post its spectrumCo sale or any of its numerous Pay TV joint ventures are a future indicator, then the magical possibility for combinatorial innovation from the combined offering is one I would have to caveat with a very large and potentially looming question mark.

The deal would not benefit NBC/Universal in the form of content distribution revenues or ratings reach as they already have OTT distribution with Hulu+ and others already. Nor was it likely in Apples deal strategy as they had originally picked TWC as a potential “first” partner. Apple could wait and could negotiate a hybrid service with AT&T, Verizon, Dish or Direct or but that makes little sense. They could wait for Aereo’s supreme court case to conclude and pursue a new strategy after the possible juster positioning of CBS minded media outlets but time is not on their side nor is jurisprudence. What they will not be able to do is negotiate with the multitudes of local, national broadcasters, regional sports networks and independents for retransmission/carriage fees. This was the death spiral for Intel’s OnCue start-up business unit that was recently sold to Verizon. Cable MSO are the easiest to integrate with and are loosing subscribers to Satellite and Telco TV providers so a Cable MSO deal now makes the best sense.

Apple is likely targeting the 22 million cable broadband homes that do not pay for even basic Cable TV. A combination of Satellite, DVB and cord cutters, thus we are unlikely to see Apple Original Content, Ad free TV and Ale-Carte channel subscriptions, the three trans-formative features Steve Jobs thought would disrupt the Pay-TV Eco-system. What we are left with is a smaller more affordable channel lineup, the Apple brand, Apple store, and some new Apple TV Apps. Leading me to believe that the new Apple Pay TV STB will simply add a Coaxial Cable connector to the existing Apple TV box, trick out the user interface with Siri and an improved “Apple Experience” and integrate the back-office provisioning/authentication process with hopes of inking similar revenue sharing agreements with other Cable MSO providers for access to the remaining 48 million homes passed.

The deal with Apple improves investor confidence and brand image indicating to financial markets that Comcast can adapt its value chain in a Pay-TV market full of digital disruption, segmented value and nonexistent home/subscriber growth for the foreseeable future. Comcast would get a low-end subscription hedge against cord cutters, price shoppers and cord-never with a cut on Apples margin. They also might eventually benefit from the Apple’s in Car development program if they can get past the term sheet. Most importantly Comcast gets a stay of execution to complete its Xfinity/Viper all IP network roll out while Apple gets to deliver a “New Product Category”.

FCC 15th Report on Video Competition
Senate Hearing on Comcast TWC Aquisition


Marketing Trends for 2014

1. The End Of The Desktop?
2. Prime Time For Real Time
3. Filling Up On Snackable Content
4. Wearable Tech Catches On—Kind Of
5. Lighting Up The Dark Assets
6. Ad Exchanges Are Not A Clearance Rack
7. People-Based Research Makes A Comeback
8. Fighting The Man
9. More Maker Fairs And Meet-Ups
10. Crowdsourcing Everything
11. Strike Down The Banners

Marketing Resolutions for 2014

1. Produce More Video Content
2. Install Audience Management
3. Take Better Advantage Of Mobile Capabilities
4. Track Social Sentiment And Buzz
5. Get A Digital Asset Manager
6. Invest In Social Advertising
7. Stop Using So Much Excel
8. Put Your Toe Into Attribution Modeling
9. Go Guerrilla With Mobile And Local Advertising
10. Get A Personality

Thematic’s for Cambrian Innovators


Primary user research and STEM are historically leveraged more frequently for trans-formative innovation, but market themes are usually backed by broader political, economic or social change and historically have created larger waves of disruption.

A few of my top thematic picks for Cambrian change agents at the tip of the hipsters spear.

3D Printing (DNA, CRISPR Cells, Organs, Clothes, Food)
Alternative Currencies, Shadow Economies, High Frequency Traders, Microfinance
Artificial Intelligence (Predictive Algorithms, Machine Learned logic, Bio-Mimicry)
Augmented Reality (Singularity, Super Intelligence, Deep Learning)
Big Data (Actionable Analytics, Miners, Brokers, Continuous Streams, Data Journalism)
Cloud (Virtualization, Automation, Orchestration, Disintermediation)
Content Curation (Collaborative Filters, Analytically Predicted, Machine learned)
Contextual Awareness (Location, Screen, Time, Facial Recognition, Past Behaviors)
Combinatorial Innovation (reconstruction of value chains, task brokers)
Digital Rights & Policies (PII, Privacy, Transparency, Data Life Cycle, Brokering, Collection)
Everybody Codes (scratch, code.org, udacity, eLance, oDesk)
Holocracy (the disruption of matrixed organizations)
Image Streams and Surveillance apps (Planes, Drones, Satellites, Stores, Poles, Homes, Work)
Industrial Internet (Advanced manufacturing, Frictionless supply chain)
Internet of Things (M2M, Telemetry, Connected Home, Connected Cars)
Knowledge Graph 2.0 (Mobile Context, Mobile Semantics)
Mobile Payment (POS Devices, API, Apps & Fulfillment Platforms)
Nano Everything (Tubes, Fibers, Particles, Composites, Graphene, Sapphire Crystals)
Open Everything (Open Compute, OpenStack, OpenIDEO, GIT Hub, Open Data)
Object Based Storage (software defined)
Pervasive Computing (Devices, Sensors, Robotics, Drones, Wearables)
Platform Learning (MOOC, Coursera, Lynda.com, Kahn Academy)
Programmable Networks (SDN, NFV, vEPC, OpenStack)
Programmatic Advertising (RTB, Mobile Context, Multichannel Attribution Models)
Quantifiable Self (mHealth and mWellness services and technologies)
Retail 2.0 (mobile click & collect, mobile beacons, interactive store displays)
Second Screen (Simultaneous, Sequential usage, Complementary data, Companion apps)
Shared, Gift, Barter Economies (homes, cars, luxury brands, services)
Smart Car (Connected, Self-Driving, Data Enabled)
Smart Home (Connected, Automated, Sensor’d and Surveilled)
Social Graph 2.0 (federated apps, social capital, trust brokers, anonymity)

Top 25 Informative Slideshares of 2013

  1. KPCB Internet Trends 2013
  2. 26 Time Management Hacks I Wish I’d Known at 20
  3. Culture Code: Creating A Lovable Company
  4. Congratulations Graduate! Eleven Reasons Why I Will Never Hire You
  5. What Would Steve Do?
  6. 16 Unique & Innovative Ways to Market your Business
  7. Trading Up The Chain: How To Make National News in 3 Easy Steps
  8. Everything Fake Click Fraud Fake Pages Botnets Ad Waste Reduction
  9. The Plateau Effect: Why People Get Stuck and How to Break Through
  10. 50 Customer Service Quotes You Need to Hang In Your Office
  11. Crap. The Content Marketing Deluge
  12. Profits before People
  13. 10 Leadership Lessons I Wish I Learned In My 20′s
  14. What’s the Future of Business by Brian Solis
  15. 10 Powerful Body Language Tips for your next Presentation
  16. 20 Jobs of the Future
  17. 7 Tips to Beautiful PowerPoint
  18. How to (not) Fail
  19. Nail the First 60 Seconds of Your Presentation
  20. 50 Powerful Statistics About Tech Mega Trends
  21. Pixar’s 22 Rules to Phenomenal Storytelling
  22. The Growth Hacker Wake Up Call
  23. The Future of Work Report 2013
  24. The Sharing Economy
  25. 99 Facts on the Future of Business