Google Purchases On2 - Additional Thoughts

Dan Rayburn, whose Business of Video blog is integrated into the StreamingMedia.com home page, alongside articles that I and others write, posted this morning about the Google-On2 acquisition. In his blog post, labelled Google's Acquisition of On2 Not a Big Deal, Here's Why, Dan listed off a series of reasons why Google may not have been interested in purchasing On2.

A fascinating read, and a bit of a different take from the streamingmedia.com news article I'd written early this morning, which outlined the deal.

In between writing mine and reading Dan's I had spent some time thinking through what Google might be up to, so I posted the following as a comment on Dan's blog:

I think Google's got a nice three-base hit going on here, with the outside chance of a home run. As you mention, open sourcing VP8 could deal with the objections that have been raised more loudly since the Open Video Conference in June and the subsequent impact on the HTML 5 video tag discussions.

As mentioned in the streamingmedia.com articles I did around both of those topics, Google's made it plain, at least with Chrome, that it's wiling to play both in the open-source and standards-based video worlds.

The original open-sourcing of the VP codec that Theora is based on, VP3.2, has raised valid objections about the open-source community's use of a "tired" code base to attempt an assault on H.264.

The thing is, Google doesn't have to open-source VP8 to be a part of the open-source movement toward a "free" codec; they can open-source VP7 instead, which provides a chance for the open-source community to mount a decent effort to catch up with H.264 (and for Wikimedia and Mozilla and Chrome to get what they wanted during the HTML5 debate)

Based on the comparisons I did a few years ago (in Dec 2007, available at www.on2.com/file.php?195) between VP6, VP7 and H.264, if they released VP7 as open-source it would bring open-source and standards-based codecs close to parity.

The second-base play is that Google gets H.264 as part of its On2 purchase. That's what the Hantro part of the On2 purchase gives Google a double benefit.

The third-base play is that Google gets to make the open-source community happy, play in the standards-based world with H.264 and keep VP8 all to itself as a proprietary codec for live, low-latency, bi-directional streams (beyond Googletalk, think Skype, AIM Triton, the Chinese telecom that On2 has as a client for video IM, etc.)

Will it be a home run? I think the economies of scale Google gets from buying out of an unknown licensing fee might look like a way to get that final base, but the real final sprint from third to home plate will be all about Google's ability to execute on a vision like the one I'm conjecturing. Regardless, the gestalt of these moves means Google gets a chance to keep something for itself, while building a barrier to entry on the innovation side.

Someone followed up with a response, asking about the patent litigation that could follow, and whether the Hantro portion of On2 (H.264 embedded) would be as big an issue, so I posted the following clarifying comments.

One of the reasons, as least in my mind, that On2 bought Hantro was to hedge its bets and further embed itself into the embedded device space. What On2 got from Hantro, then, was a set of expertise that it could couple with a group of the original RPI researchers that form the core of On2's development team.

The latter group has been continually innovating for well over a decade, and while it's not a surefire method for success, since so much money has to be rolled back into research and development, it certainly has allowed a small company like On2 to keep pace with the industry as a whole.

Will this keep the IP lawsuits at bay? I suspect not, but since Google specifically calls out the R&D and innovation as a factor in the purchase, one wonders - if Google can keep them happy - what greenfield innovations the small team will be able to perform with somewhat limitless resources and a mobile / embedded platform that's a potential alternative to RIM and Apple's offerings.

It's still early in the process, and On2 has its earnings call tomorrow, but it seems like a decent plan if Google's on track to do even a fraction of this . . .

Wrapup: CES and Mobile World Congress, or How I Spent My Winter Break

The first 45 days of any year for a digital media consultant typically means lots of travel. After all, even if Macworld and the  Consumer Electronics Show (CES) don’t fall on the exact same days, the choice of which to go to is not eliminated: it just means you get to make two trips to the west coast - one to Vegas and one to San Francisco.

Then there are the other shows that creep up and around the end of January; this year I attended Video 08, a trade show in Orlando geared toward those who do event videography for a living and who are discovering streaming media as a huge sales, marketing and revenue vein that can keep brides, graduates and mitzvah goers happy for years to come.


Packing it all in
Then, in early February, the small (tiny?) screen show takes place in Barcelona, the recently renamed Mobile World Congress.

This year’s press bags for both the Vegas and Barcelona events were decent backpacks; and, while I normally give up the goods for the kids (as one journalist waiting in the press line said: “I never have to buy my girls a back pack for school”) I chose to put these two packs to a real-world test in a climb up Monserrat to the Sant Jeroni chapel and overlook.

Turns out each one was useful after all, and not just for carrying a few pieces of swag and tons of marketing slicks picked up during the week-long booth troll [Note to PR firms: the trend toward USB thumb drives is a very good idea, especially if it combines multiple companies together].

Then there is the writing. Between the Sourcebook, Streaming Media’s year in review (and trend predictor) that I contribute to, the regular writing from each day at the shows and finalizing market analysis / go-to-market strategy reports for clients, the early part of the year turns into a 25,000 to 30,000 word marathon that keeps the consulting juices flowing and done to avoid the “2 year consulting” plague of cash-cow consulting that relies on old data.

So that, hopefully, is it for the winter break trade show travel schedule. Not that the travel slows down, as I’ve got client projects in late February and early March, then some personal travel for a few weddings, followed by the next big shows take place in April, May and June, with NAB, Streaming Media East and the Infocomm-NSCA-NxtComm glom in sequential order.

Makes one tired just thinking about the schedule, but we do what needs to be done, and often travel so that you - or our clients - don’t have to.

Handsets: Personal Devices or Enabling Platforms?

This year’s Mobile World Congress, the show formerly known as 3GSM World Congress, has embraced “radio agnosticism” as a way to push mobile technologies of all kinds forward - including CDMA, WiMax, Long Term Evolution (LTE) among others.

In town covering the show for Streaming Media (www.streamingmedia.com), I stopped by the Vodafone store closest to the Fira, to check on why my Vodafone chip from Italy wasn’t working in Spain. The very helpful attendant first said my phone, purchased in Switzerland in 2006, didn’t work on Vodafone’s Spanish network.

A Vodafone is a Vodafone is a Vodafone
Turns out it wasn’t the phone, or that I’d not registered on Vodafone’s network - had tried that before looking for a store - or even that I was using a phone that was two years old (try carting a clunky Motorola to a trade show dinner with Nokia, where N95 and E71 handsets abound, although I did score with the multi-hinged Samsung I carry in my back pocket by habit even when I’m not in a country with Verizon coverage - err, every country except the United States).

Turns out I needed to buy a new SIM chip since I’d not used any of my minutes in the last year, which meant I was going to pay Euros 24 for the ability to text a colleague who had picked up my apartment key. Since I’d exhausted all other means of connecting, including texting from “free SMS” pages and sending emails, and it was 8:30 PM (30 hours since I’d slept horizontally), it was worth expense.

While I waited for my turn at the Vodafone store, I had a chance to look at the new HSDPA modems, glance at the touch-sensitive phones and look over service plans.  It struck me that two of three issues holding back universal connectivity are about ready to be addressed.

The first is a consistent universal platform for voice and data connectivity. The recent decisions by Verizon, AT&T and many other wireless carriers to adopt LTE - and the move to include WiMax as a portion of LTE’s growth - put this possibility into play within the nex three years.

The second, announced as part of European Commission’s Commissioner of Telecommunications presentation at Mobile World Congress, is an end to egregious data roaming charges. While the iPhone’s move into cutting data into flat-rate pricing may have been partly on Viviane Reding’s mind as she warned mobile operators to fix excessive data roaming charges in the same way they fixed mobile voice charges - or risk having the roaming charge reductions forced up on them - the deadline of June 2008 can’t come soon enough. For Europe to gain the benefits of its union when it comes to easily moving between countries and still doing business at a reasonable cost, data roaming charges, and flat-rate data services for that matter, desperately need modernization.

The third area still outstanding - global data and roaming service agreements at a reasonable cost - may be addressed by external market forces as large conglomerates such as Telefonica, Vodafone, 3 and others find customer demand equal-price roaming across group countries. A move like this could have just as much bearing on the business strategies of small- and medium-size businesses as flat-rate intranational mobile voice pricing and services such as Vonage has had on trade between Europe and the US.

Jose Thinks - and podcasts - Streaming Media West 2007

Jose Castillo, podcasting partner in crime from www.thinkjose.com on the Streaming Media Podcasts (www.streamingmedia.com/podcasts) interviews Jan Ozer of Doceo Publishing on the first day of Streaming Media West 2007.

This was our first joint interview since starting the podcast several weeks ago (I’m on the other side of the table manning the Popper Stopper) and Jan gave a great overview of his pre-day workshop as well as his software-based encoding session taking place on November 6.
This year’s Streaming Media West show was a positive in several ways. First, it continues to grow. Although it’s still a shadow of the same show back in the late 1990s (I remember moderating panels that had twice as many people as attended this year’s keynote) the show has attracted people from the various elements of streaming, including both suits & creatives.

The best keynote, for me at least, was the one I covered for my contributing editor duties at StreamingMedia.com, which had presentations from both Erick Hachenburg, CEO of MetaCafe.com, and also Betsy Scolnik of National Geographic (see the article at http://www.streamingmedia.com/article.asp?id=9756). Good stuff, and a good reminder.

Opportunity: Author White Paper on Flash Video

With the proliferation of Flash Video on the web, the recent announcement in Chicago at Adobe’s MAX 2007 conference that the newest versions of Flash Player and Adobe Media Player will include two new codecs was a welcome sign.

One of the codecs is a high definition profile of On2’s VP6 called VP6-S; the other is H.264, the videoconferencing standard codec that has also begun to take the broadcast world by storm.

Along with the announcement, which now brings the number of Flash Video codecs to four, there is an additional need for education on Flash Video and the options that each allow.

I’m honored to be asked to write a white paper on the topic; it’s been about six years since I stepped away from doing day-to-day market analysis, and I have to say I’ve missed it. This is a good topic to get my feet wet again.

This project also lets me do something I’ve not had a chance to do for several years: put a camera back in my hands to produce a set of video clips that will be used as reference material for the white paper.

More as the project progresses.

Wrapup: Panel @ TI Worldwide Developer's Conference

Our panelists have just finished “The Good, The Bad and The Ugly” video panel at Texas Instruments TIDC (the TI Worldwide Developer Conference held at Hotel Anatole in Dallas), a variation of the live webcast we did at TI’s headquarters back in December 2006.

The variation on this one was that we had a live audience and that we expanded beyond transcoding to get to an overall picture of the state of consumer video delivery on the web, on DVD and via IPTV.

The audience questions were good, and also reminded me of the continual education we have to do to separate the types of delivery, the myriad codecs and the actual content from each other, in order to provide a consistent set of “terms of art” to describe particular problems or opportunities. More on this when I have a few more moments. Right now I need to track down my bag, which US Airways forced me to gate check last night in Philly  – and which still hasn’t shown up 12 hours later.

Opportunity: Panel @ TI Worldwide Developer's Conference

As a follow up to the webcast in December for Texas Instruments, I just received an invitation to host a panel at TI’s Worldwide Developer Conference.

We'd like to broaden the scope slightly; the panel would be called "The Good, The Bad and The Ugly of Digital Video".  There's a lot of good in the market including the improved quality of the new, advanced video standards.  There are some challenges in how transcoding will be actually implemented, however, at various points in chain.  And if some of the challenges in digital video don't get solved, things could get ugly.  Transcoding wouldn't be the focus of the panel, but would still be discussed in the conversation.  

Sounds like a good panel.