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Nokia: Continued moderate progress with Lumia, urgent Asha Touch refresh and new innovations to come against the onslaught of unbranded Android and forked Android players in China and India
Nokia Corporation’s CEO Discusses Q1 2013 Results – Earnings Call Transcript [Seeking Alpha, April 18, 2013]
… At the highest level, I am pleased that in Q1 2013 Nokia Group achieved underlying operating profitability for the third quarter in a row. In a moment, I will share my perspective on Nokia’s Q1 performance. However, I wanted to first note that we believe this quarter further underscored that Nokia, and other industry participants continue to operate in one of the most exciting and fast moving business environments in the world today.
Compared to a year ago a lot has changed in our industry, and I wanted to share some of the trends we’re seeing. For example, the distance between the various Android participants seems starker than ever before as the dominance of one hardware vendor becomes more visible. Additionally, unbranded Android and forked Android players continue to emerge from China and India creating new dynamics both within and increasingly outside of Asia. With this growth in low-priced fragmented versions of Android the Android experience is becoming inconsistent across the lower-end price range.
In February, Mobile World Congress highlighted the growth in startup alternative platforms with many new entrants placing bets on next generation technologies like HTML5. While we have not yet seen one of these alternative platforms gain broad scale we should not underestimate what could happen if a dominant Android provider shifts some of its focus to an alternative platform.
We also saw new attempts to disrupt existing business models, whether it is the new Facebook home forking the Android experience or Amazon providing a differentiated tablet that forks the Android stack, we see leading technology companies take deliberate steps to change Android and possibly disrupt our industry. There are some patterns of change that seem inevitable. For example, consumers are expecting their digital lives to be more and more mobile as evidenced by the recent statistics about the shift towards mobility at the expense of less mobile PC experiences. Consumers are also increasingly discerning about the capabilities and new experiences that attract their attention. They are less interested in counting cores and pixel density, and more interested in experiences that are truly innovative.
This constant pattern of change in our industry is an opportunity. We believe we can move through the industry fragmentation and churn within unrelenting focus on executing our strategy. Thus, we remain focused on improving the competitiveness of our products effectively managing our costs and moving with urgency. …
…
People are responding positively to the new innovation throughout the Lumia portfolio imaging, design and navigation are capturing attention among reviewers, operators, retail associates and ultimately consumers. We believe we have increased the competitiveness of our Smart Devices, and as a result Lumia is clearly making progress. We’re pleased that today Lumia is even out shipping the iPhone in countries like Argentina, India, Poland, Ukraine and of course in our home country of Finland.
Importantly, the positive consumer reaction to the innovation and differentiation in Lumia is starting to come through in our numbers. We are encouraged by the financial performance of our newer Lumia devices based on Windows Phone 8, which generated not only solid growth, but also a gross margin in Q1 that was somewhat above the Smart Devices average.
At the same time, we’ve recognize that we must continue to increase our sales and improve our retail execution for Lumia. For example, in the United States, securing what operators call hero status or the top spot at the point of sale is critically important, because it attracts premium subsidies and additional marketing investment.
Later this quarter, a new Lumia device is anticipated to have hero status with a leading U.S. operator, an event which will mark the beginning of a season of new product introductions. Additionally, Nokia, Microsoft and operators have committed to increase the global Windows Phone marketing dollars towards Lumia. Together with Microsoft we are working on major marketing campaigns, training more retail associates, improving how we leverage operator marketing that is available to us, and seeding more live devices to create a more engaging point of sale experience. Overall, we are very pleased with our progress around Lumia.
…
… indeed we plan a refresh of elements of our mobile phones portfolio. Some of which has been announced, and it’s just landing in the market. For example, the very lowest price points the Nokia 105, which when you look at the volumes for Q1, some of the significant movement in volume levels were at the end of the predecessor to the 105 product line, that space, and now we’re just entering the market with new product there. And, of course, we’ve also signaled that in the very near term you should expect to see a freshening in the Asha product line. If you know, we’re roughly 9 months or so into the Asha full touch line relative to when we began shipping it.
So, reasonable to expect that it’s due for freshening and we’re looking forward to that in the near-term.
…
With respect to the Lumia portfolio going into Q2 some of the principal drivers of additional volume relate to the newer products that are entering the market, the 720 and 520 are important in this, particularly the 520. 520 is obviously at a lower price point and moving into markets, where that’s far more competitive than some of the hero products could be except for the people willing to pay top dollar for a device.
…
Nokia Corporation Q1 2013 Interim Report [April 18, 2013]
…
Nokia Group net sales in Q1 2013 were EUR 5.9 billion
– Devices & Services Q1 net sales decreased 25% quarter-on-quarter to EUR 2.9 billion.
– Lumia Q1 volumes increased 27% quarter-on-quarter to 5.6 million units, reflecting increasing momentum.
– Mobile Phones Q1 volumes decreased 30% quarter-on-quarter to 55.8 million units, reflecting competitive industry dynamics and an estimated higher than normal seasonal decline in the market addressable by Mobile Phones.
– Nokia Siemens Networks net sales decreased 30% quarter-on-quarter to EUR 2.8 billion, reflecting industry seasonality.Nokia Group net cash higher quarter-on-quarter
– Nokia Group ends first quarter 2013 with a strong balance sheet and solid cash position. Gross cash was EUR 10.1 billion and net cash was EUR 4.5 billion.
– Nokia Group strengthened its net cash position by approximately EUR 120 million sequentially. Nokia Siemens Networks contributed approximately EUR 210 million to the Nokia Group net cash position.…
NOKIA OUTLOOK
– Nokia expects its Devices & Services non-IFRS operating margin in the second quarter 2013 to be approximately negative 2 percent, plus or minus four percentage points. This outlook is based on Nokia’s expectations regarding a number of factors, including:
>> competitive industry dynamics continuing to negatively affect the Mobile Phones and Smart Devices business units;
>> consumer demand for our products, particularly for our Mobile Phones products;
>> continued ramp up for our Lumia smartphones;
>> expected increases in Devices & Services’ operating expenses; and
>> the macroeconomic environment.– In the second quarter 2013 supported by the wider availability of recently announced Lumia products, Nokia expects the sequential growth in Lumia unit volumes to be higher than the 27% sequential growth in the first quarter 2013.
– Nokia continues to target to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of approximately EUR 3.0 billion by the end of 2013.
– Nokia expects HERE’s non-IFRS operating margin in the second quarter 2013 to be negative primarily due to lower recognized revenue from internal sales.
– Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS operating margin in the second quarter 2013 to be approximately positive 5 percent, plus or minus four percentage points. This outlook is based on Nokia Siemens Networks’ expectations regarding a number of factors, including:>> competitive industry dynamics;
>> product and regional mix; and
>> the macroeconomic environment.– Nokia and Nokia Siemens Networks continue to target to reduce Nokia Siemens Networks’ non-IFRS annualized operating expenses and production overheads by more than EUR 1 billion by the end of 2013, compared to the end of 2011.
…
In the first quarter 2013, we received a quarterly platform support payment of USD 250 million (approximately EUR 188 million) from Microsoft. Our agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft. Under the terms of the agreement governing the platform support payments, the amount of each quarterly platform support payment is USD 250 million. We have a competitive software royalty structure, which includes annual minimum software royalty commitments that vary over the life of the agreement. Software royalty payments, with minimum commitments are paid quarterly. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US dollars. Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments. In accordance with the terms of the agreement, the platform support payments and annual minimum software royalty commitment payments continue for a corresponding period of time.
…
The following table sets forth the mobile device volumes for our Devices & Services business for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.
DEVICES & SERVICES MOBILE DEVICE VOLUMES BY GEOGRAPHIC AREA
million units |
Q1/2013 |
Q1/2012 |
YoY
|
Q4/2012 |
QoQ
|
Europe |
11.8 |
15.8 |
-25% |
19.4 |
-39% |
Middle East & Africa |
15.5 |
21.4 |
-28% |
21.8 |
-29% |
Greater China |
3.4 |
9.2 |
-63% |
4.6 |
-26% |
Asia-Pacific |
23.1 |
26.1 |
-11% |
28.7 |
-20% |
North America |
0.4 |
0.6 |
-33% |
0.7 |
-43% |
Latin America |
7.7 |
9.6 |
-20% |
11.1 |
-31% |
Total |
61.9 |
82.7 |
-25% |
86.3 |
-28% |
On a year-on-year basis, net sales decreased in all regions except North America where the increase was primarily due to our Smart Devices business unit. The largest relative year-on-year decline in net sales was in Greater China followed by Europe and Middle East and Africa. In Greater China and Europe the net sales declines were primarily due to our Smart Devices business unit whereas in the Middle East and Africa the net sales decline was primarily due to our Mobile Phones business unit.
On a sequential basis, net sales decreased in all regions except Greater China where the increase was primarily due to our Smart Devices business unit. The largest relative sequential declines in net sales were in North America followed by Middle East and Africa and Europe. The sequential net sales decline in North America was primarily due to our Smart Devices business unit, whereas in Middle East and Africa and Europe the net sales declines were primarily due to our Mobile Phones business unit.
At constant currency Devices & Services’ net sales would have decreased 33% year-on-year and 23% sequentially.
…
Volume
During the first quarter 2013 we shipped 55.8 million Mobile Phones units, of which 5.0 million were Asha full touch smartphones.
On a year-on-year basis, our Mobile Phones volumes in the first quarter 2013 were negatively affected by competitive industry dynamics, including intense smartphone competition at increasingly lower price points and intense competition at the low end of our product portfolio as well as an estimated higher than normal seasonal decline in the market addressable by Mobile Phones. Compared to the first quarter 2012, our Mobile Phones volumes declined across our portfolio, most notably for our non-full touch devices that we sell to our customers for above EUR 30. These declines were partially offset by sales volumes of Asha full touch smartphones in the first quarter 2013 that were not part of our portfolio in the first quarter 2012.
On a sequential basis, our Mobile Phones volumes in the first quarter 2013 were negatively affected by competitive industry dynamics, including intense competition at the low end of our product portfolio and smartphone competition at increasingly lower price points affecting the rest of our Mobile Phones portfolio, as well as estimated higher than normal seasonal decline in the market addressable by Mobile Phones. Compared to the fourth quarter 2012 our Mobile Phones volumes declined across our portfolio, most notably for lower priced devices that we sell to our customers for below EUR 30.
Asha full touch smartphones Q1 volumes decreased 46% quarter-on-quarter to 5.0 million units, reflecting intense competitive industry dynamics as well as lower seasonal demand.
During the first quarter 2013, our Mobile Phones channel inventory declined in absolute unit volumes.
Average Selling Price
The year-on-year decline in our Mobile Phones ASP in the first quarter 2013 was primarily due to general price erosion and an increased proportion of sales of lower priced devices, partially offset by a net positive impact related to foreign currency fluctuations.
The sequential decline in our Mobile Phones ASP in the first quarter 2013 was primarily due to general price erosion, a net negative impact related to foreign currency fluctuations and a higher proportion of sales of lower priced devices.
Gross Margin
The year-on-year decline in our Mobile Phones gross margin in the first quarter 2013 was primarily due to a negative product mix shift towards lower gross margin devices, as well as the net negative impact related to foreign currency fluctuations, partially offset by lower freight costs.
On a sequential basis, the increase in our Mobile Phones gross margin in the first quarter 2013 was primarily due to lower warranty costs, partially offset by higher price erosion than cost erosion and higher fixed costs per unit because of lower sales volumes.
…
Q1 OPERATING HIGHLIGHTS
DEVICES & SERVICES OPERATING HIGHLIGHTS
SMART DEVICES
– Nokia started shipping the Nokia Lumia 620, a compact smartphone with a colorful design that brings Windows Phone 8 to a more youthful audience.
– Nokia announced the Lumia 520, its most affordable Windows Phone 8 smartphone, delivering experiences normally found only in high-end smartphones, such as the same digital camera lenses found on the flagship Nokia Lumia 920, Nokia Music for free music out of the box and even offline, and the HERE location suite.
– Nokia announced and started shipping the Nokia Lumia 720, a midrange Windows 8 smartphone with high-end camera performance featuring a large f/1.9 aperture and exclusive Carl Zeiss optics designed to deliver clear pictures day and night. The sleek and stylish smartphone comes with the latest high-end Nokia Lumia experiences, including Nokia Music, the HERE location suite, and the option to add wireless charging with a snap-on wireless charging cover.
– Nokia’s Lumia range of smartphones continued to attract businesses, including Foxtons, London’s leading estate agent, which has chosen the Nokia Lumia 820 as its business smartphone; Mall of America, the United States’ largest retail and entertainment complex, which is switching from BlackBerry to the Nokia Lumia 920 because of the tight integration with Microsoft services and built-in Microsoft Office suite; and The Coca-Cola Company, whose sales associates in Vietnam and Cambodia are using Nokia Lumia smartphones for order processing, equipment validation and market execution improvement.
– The Windows Phone Store continued to strengthen in terms of the quantity and quality of applications. Windows Phone offers more than 135 000 applications and games. Key new applications that arrived in Store during the quarter included Pandora, United Airlines and Temple Run.
MOBILE PHONES
– Nokia announced the Nokia 301, the most affordable Nokia device to offer video streaming; it also comes with new smart camera features inspired by the digital camera lenses on Nokia’s Lumia smartphones.
– Nokia announced the Nokia Asha 310, which provides Dual SIM and Wi-Fi in the same device, a first for Nokia smartphones.
– Nokia announced the Nokia 105, its most affordable phone to date, retailing at a recommended price of EUR 15. The Nokia 105 is the ideal device for the first-time phone buyer, featuring a bright color screen with clear menus and essentials like FM radio, multiple alarm clocks, speaking clock and flashlight. The dust- and splash-proof, pillowed keymat and battery life of up to 35 days also make it ideal for people in search of a reliable back-up phone.
HERE OPERATING HIGHLIGHTS
In the first quarter 2013, HERE continued to strengthen its offering on Nokia’s Lumia range as well as broaden the experiences available across the Windows Phone 8 ecosystem:
– HERE further integrated its location-based experiences to enable people to seamlessly transition from driving to walking to public transit thanks to improved app-to-app linking and syncing of favorites from here.com to any HERE experience. HERE now also offers unique capabilities for users to customize their home screen as a personal location dashboard.
– With LiveSight technology, HERE introduced innovation that is aimed at changing the way people interact with maps, and their world. After first showcasing the technology in the HERE City Lens application, HERE also announced that it is extending LiveSight to HERE Maps. LiveSight recognizes what people see through their phone’s camera and layers that view with relevant, place-based information.
– HERE further strengthened the Windows Phone 8 ecosystem by making its suite of location-based experiences available for non-Nokia Windows Phone 8 devices. HERE offers HERE Drive, HERE Maps and HERE Transit to owners of non-Nokia Windows Phone 8 devices in Canada, France, Germany, Italy, Mexico, Spain, the United Kingdom and the United States. HERE also continued to broaden access to its maps content and the HERE Platform through several new partnerships, including:
– Mozilla, which as a first collaborative step with HERE now has HTML5-based HERE Maps for the new Firefox OS.
– Toyota Motor Europe, which selected the HERE platform’s Local Search for Automotive to power its next generation Touch & Go navigation and infotainment systems. Local Search for Automotive is a specifically designed solution developed to fulfill the requirements of the automotive industry. This announcement marks a significant advancement in our longstanding partnership with Toyota and includes plans to collaborate with Nokia to study more services that leverage the HERE Location Platform.
– More than 10 companies decided to adopt the HERE Location platform, including Terra in Brazil and Tiscali and SEAT Pagine Gialle in Italy, demonstrating that the platform is gaining momentum across industries.
– Wetter.com, Europe’s largest German language weather portal with 13 million unique visitors, which is laying information from radar stations and satellite imagery on top of their HERE-powered map. For instance, this enables people to pinpoint where it is raining with great precision.
– Garmin, which is the first customer to launch Natural Guidance in the U.S. market and did so at the Consumer Electronics Show. Natural Guidance provides directions in a more humanized way with recognizable landmarks, buildings, traffic lights and stop signs, such as “turn right after the church” or “turn left at the traffic light.”
– HERE continued to strengthen its long lasting relationships within the automotive industry, with a number of companies deciding that they would continue to benefit from our automotive grade quality maps by selecting HERE as their partner for Map Updates. These included FujitsuTEN Australia Limited, KIA Europe, Mitsubishi Motor Corporation (MMC), Nissan Mexico, Subaru Canada and Volkswagen Europe.
…
Nokia’s expanded, new risks and uncertainties for its Windows Phone strategy for 2013
According to the Nokia SEC filing for the fiscal year ended December 31, 2012 (FY12) vs. that of the Nokia SEC filing for the fiscal year ended December 31, 2011 (FY11):
As per the “Risks and Uncertainties” sections in both, there are the following expanded texts in the FY12 section vs. that of in the FY11 section (highlighted full text comparisons you can see in a PDF format downloadable from here):
[We may not be able to make Nokia products with Windows Phone a competitive choice for consumers unless the Windows Phone ecosystem becomes a competitive and profitable global ecosystem that achieves sufficient scale, value and attractiveness to relevant market participants.]
We believe that successful smartphone platforms require a successful ecosystem around them. … Today, industry participants are creating competing ecosystems of mutually beneficial partnerships to combine hardware, software, services and an application environment to create high-quality differentiated smartphones. Certain smartphone platforms and their related ecosystems have gained significant momentum and market share, specifically Google’s Android platform and Apple’s iOS platform, and are continuing apace, with Android-based smartphones continuing to gain significant market share during 2012 and also reaching lower price points.
… Although Microsoft will continue to license Windows Phone to other mobile manufacturers, we believe we can differentiate Nokia smartphones from those of our competitors that also use the Windows Phone platform as well as other platforms. The first Nokia smartphones powered by Windows Phone were launched in October 2011 under the Lumia name. We launched additional Windows Phone 7 devices and the first Windows Phone 8 Lumia devices during 2012. See Item 4B. “Business Overview—Devices & Services—Smart Devices” for a more information.
…
Microsoft has recently launched the Windows 8 operating system used to power personal computers and tablets, and the related Windows Phone 8 operating system is used in the latest Nokia smartphones. The success of Nokia’s Windows Phone 8 smartphones will be negatively affected if the Windows 8 platform does not achieve or retain broad or timely market acceptance or is not preferred by ecosystem participants, mobile operators and consumers.
…
Other competitive major smartphone ecosystems, primarily Google’s Android and Apple’s iOS, have advantages that may be difficult for the Windows Phone ecosystem to overcome, such as first-mover advantage, momentum, a larger share of the smartphone market, engagement by developers, mobile operators and consumers and brand preference, and their advantages may become greater over time.
…
[acknowledging that] We may not be able to develop sufficient quantities of high-quality differentiated Nokia products with Windows Phone in order to achieve the scale needed for a competitive global ecosystem in a timely manner, or at all. [vs. just “execute with speed” a year ago]
…
Our competitors may use various technical and commercial means to make the Windows Phone ecosystem unattractive compared to other ecosystems, including for instance hindering application development, not providing tools to allow applications to be developed to industry standard or not allowing certain applications to work or work efficiently on the Windows Phone platform.
[vs. just “Other competitive major smartphone ecosystems have advantages that may be difficult for us to overcome, such as first-mover advantage, momentum, engagement by developers, mobile operators and consumers and brand preference, and their advantages may become even greater before we complete our transition to the Windows Phone platform.” a year ago]…
The Windows Phone ecosystem is relatively small, and thus it may not be compelling for hardware and software suppliers and developers, which may for instance lead to our reliance on a limited number of suppliers, later availability of the latest innovations and increased cost of components and software.
Mobile devices are increasingly used with other technical appliances, for instance speakers and car audio systems or have accessories and gadgets that can be used in conjunction with the mobile device. As the Windows Phone ecosystem is relatively small, it may not be compelling for third parties to design such technical appliances, accessories or gadgets to a similar extent as with other ecosystems.
[As the recognition of the already observable effect of the “Other competitive major smartphone ecosystems, primarily Google’s Android and Apple’s iOS, have advantages that may be difficult for the Windows Phone ecosystem to overcome, such as …” vs. just a possible risk associated with “may not be able to attract developers and other participants to the Windows Phone ecosystem” a year ago]
…
The frequency of Windows Phone operating system updates may be too slow and the platform may be too closed to address changing market and customer requirements in a timely manner, which may erode customer support and consumer attractiveness of the platform.
Emergence of new alternative ecosystems and platforms could make the Windows Phone ecosystem less attractive to customers and consumers.
As well as per:
[Our success in the smartphone market depends on our ability to introduce and bring to market quantities of attractive, competitively priced Nokia products with Windows Phone that are positively differentiated from our competitors’ products, both outside and within the Windows Phone ecosystem, and receive broad market acceptance.]
[despite of all the risks and uncertainties already given there is no change in the sense that]
Our strategy is to compete in the smartphone market with Nokia products with Windows Phone.…
[but there are new warnings that]
The Microsoft Windows Phone platform … may limit our ability to … bring certain hardware capabilities at the higher price points.… we may not be able to introduce functionalities such as advanced imaging and sensor technology …
[as well as more intensive warnings by saying that there is]
… lack of proper training of sales personnel, insufficient marketing support and experience
[vs. using just the “inadequate” attribute a year ago]
… still relatively unfamiliar Windows Phone platform in an otherwise highly competitive market.
[vs. “new and” used a year ago]
[Regarding “Microsoft may not be able to provide the software innovations and features we rely on for the Windows Phone operating system in a timely manner, if at all” it is now added that]
Additionally, we are dependent on Microsoft for timely error corrections for customer and country variants as well as generic software releases.Other manufacturers also produce competing mobile products which are based on the Windows Phone operating system. We may face increased competition from other manufacturers, including Microsoft, who already produce or may produce competing Windows Phone based products. Increased competition within the Windows Phone ecosystem could result for instance in lower sales of our devices or lower potential for a profitable business model.
We are aiming to expand our Windows Phone-based products to lower price points. The availability of Windows Phone-based products that we or our competitors offer at lower price points may have a negative effect on the sales of our higher priced Windows Phone-based products.
With all that it is the case that
[Our partnership with Microsoft is subject to risks and uncertainties.]
In addition to the factors outlined above in connection with the Windows Phone ecosystem and sales of Nokia products with Windows Phone …
[i.e. as the result of the above added risks there is an enhanced warning that]
A further change in smartphone strategy either by Microsoft or Nokia could be costly and further adversely affect our market share, competitiveness and profitability.
[vs. without that “either by Microsoft or Nokia” stated a year ago, meaning that on either side there is an increased risk in that regard vs. that of a year ago]
[as well as adding now that]
Microsoft could provide better support to another device manufacturer which produces devices that run on the Windows Phone platform…
We license from Microsoft the Windows Phone operating system as our primary smartphone platform. Microsoft may act independently of us with respect to decisions and communications on that operating system which may have a negative effect on us. Moreover, if Microsoft reduces investment in that operating system or discontinues it, our smartphone strategy would be directly negatively affected by such acts.
Microsoft may make strategic decisions or changes that may be detrimental to us. For example, in addition to the Surface tablet, Microsoft may broaden its strategy to sell other mobile devices under its own brand, including smartphones. This could lead Microsoft to focus more on their own devices and less on mobile devices of other manufacturers that operate on the Windows Phone platform, including Nokia.
We may not be able to sufficiently influence Microsoft in bringing the features or functionalities for the Windows Phone platform that we deem most important, or Microsoft may otherwise focus on other areas of its business leading to reduced resources devoted to the Windows Phone platform or failures to implement features or functionalities. This may be heightened if our position in the partnership deteriorates, for instance through other companies using leverage to influence Microsoft, or if Microsoft chooses to develop its own mobile devices, including smartphones, or if Microsoft otherwise develops interests that are contrary to ours.
…
Applying 2-16 cores of ARM Cortex-A15 in ‘2014 vintage’ LSI Axxia SoCs that will power next-generation LTE basestations from macrocells to small cells opening upto 1000 times faster access to the cloud by 2020
OR LSI Corporation’s ARM Cortex-A15 based 2-16 core SoCs with similar number of LSI’s specialized networking accelerators inside to drive the next-generation LTE base stations (from femto- through pico- and micro- to macro- and metrocells) boosting the cloud clients to get out of the current infancy of the mobile Internet OR Cooperation of LSI Corporation with ARM on highly scalable and energy efficient multicores and cache coherent interconnect for them within an SoC now enhanced with a joint LSI and Nokia-Siemens Network effort to improve real-time performance, I/O optimization, robustness and heterogeneous operating environments on multi-core SoCs, also carried out within the newly setup Linaro* Networking Group OR How ARM’s Cortex-A15 to A57 (32-bit to 64-bit) micro-architecture roadmap is going to be enhanced by an upto 16 core SoC architecture developed by LSI Corporation now and with more than 16 cores in the future (with Cortex-A57) which will enable Nokia-Siemens Networks to fullfill its vision of “1 GB per day revolution by 2020” for which a 1000x increase** in traffic throughput will be needed
* From p. 38 of ARM Annual Report 2012 [March 1, 2013] “In 2010 ARM helped launch Linaro, an open source software not-for-profit organisation which [among others] enriches the software toolkit for Android phones. By summer 2012 the results looked pretty impressive, with a reported 100% performance improvement for the Android 4 operating system. See Linaro Android is up to twice as fast as stock Android [AndroidAuthority.com, June 5, 2012]”
** Note that Qualcomm is also working along this vision as evidenced by its Products & Services: Wireless Networks Technology 1000x Data Challenge Overview [Aug 22, 2012], Spectrum [Sept 24, 2012], Small Cells [Oct 1, 2012] and Efficiency [Oct 1, 2012] pages of declaring its corporate intents. This was also one of the focus demos and presentations from Qualcomm on the MWC 2013 last week as evidenced by their The 1000x Mobile Data Challenge at Mobile World Congress [QUALCOMMVlog YouTube channel, Feb 22, 2013] video serving also as a good background intro here
First watch the LSI Axxia video report from MWC 2013: Axxia Processor Family
LSI Axxia 5500 announced, 16-core ARM Cortex-A15 for network infrastructure [Charbax YouTube channel, Feb 28, 2013]
Troy Bailey: [5:40] Will be sampling in early third quarter … Mass production typically is a six to nine months process after that (i.e. 2014) to validate and also to work with customers to get their products ready to go out. [5:54]
Next watch 4G World 2012: The 1-Gigabyte Revolution [LightReadingTV YouTube, Nov 2, 2012] (on the same Oct 29 – Nov 1 conference)
For which it was announced at MWC 2013 that Nokia Siemens Networks and LSI Collaborate on Wireless Infrastructure Solutions [LSI press release, Feb 21, 2013]
LSI® Axxia® platform and SoC capabilities contribute to
higher-performance mobile broadband solutionsNokia Siemens Networks and LSI Corporation (NASDAQ: LSI) announced today a collaborative framework with ARM® processor based System-on-Chips (SoCs) that enable enhanced support for real-time performance, I/O optimization, robustness and heterogeneous operating environments on multi-core SoCs.
Nokia Siemens Networks is increasing investment in technology development in mobile broadband business and actively participating in Linaro Networking Group and to ARM ecosystem in general to enable better use of Open Source Linux®software and tools. This will both enhance performance of forthcoming base station BTS products as well as drive towards lower power consumption.
“LSI is very pleased to be collaborating with Nokia Siemens Networks on innovative mobile broadband solutions,” said Jim Anderson, general manager for LSI’s Networking Solutions Group. “The LSI Axxia line combines ARM processor cores with our unique Virtual Pipeline™ acceleration technology to create a platform for next-generation mobile broadband solutions and other applications. Our advanced software and emulation capabilities ensure accelerated time to market for our customers.”
Complement this with the following two videos produced by Qualcomm for MWC 2013:
– Neighborhood Small Cells [QUALCOMMVlog YouTube channel, Feb 22, 2013]
– LTE Advanced Opportunistic Small Cells [QUALCOMMVlog YouTube channel, Feb 22, 2013]
LSI Axxia background:
– Axxia Communication Processor AXM5500 [LSI promotion site, Feb 19, 2013]
Accelerating Next Generation Networks Mobile Networks
- Enabling one architecture for heterogenous networks
- Leveraging software and hardware investments
- Accelerating time-to-revenue
First 16 core ARM based Multicore Processor for Mobile Networks
The Axxia® Communication Processor AXM5500 product family is designed to accelerate performance and increase power efficiency for mobile networks. The Axxia 5500 series combines 16 ARM cores with LSI’s specialized networking accelerators to offer networking service providers more capable and intelligent wireless infrastructure equipment, including multi-radio base stations, mobile backhaul equipment and gateways.
Leading Technology
The AXM5500 is the industry’s first multicore communication processor to be available with ARM’s new CoreLink™ CCN-504 interconnect technology, which provides the end-to-end quality of service needed for networking applications.
Power Efficiency
LSI’s latest semiconductor manufacturing technology combined with ARM’s power efficient cores more than double the amount of data that can be processed by the Axxia 5500 at the same power level.
Extensive Scalability
The Axxia 5500 platform architecture can scale to meet the performance required for 4G LTE and other data intensive networking applications.
Networking Expertise
LSI’s unique Virtual Pipeline technology efficiently accelerates mobile data processing to allow carriers to deploy next generation applications to support massive data growth.
Software and Tools
LSI’s robust development tools and production quality data plane software accelerate time-to-market. The Axxia architecture’s scalability allows OEM software investment to be reused across the entire mobile network.
– The Data Deluge: Mobile Network Challenges & Solutions [LSICorporation YouTube channel, Sept 18, 2012]
– Bridging the Data Deluge Gap–The Role of Smart Silicon in Networks [by Michael Merluzzi, LSI Corporation in EETimes Design, Feb 28, 2013]
The proliferation of smart mobile devices, video, user-generated content and social networking, and the rising adoption of cloud services for both enterprise and consumer services are all driving explosive growth of wireless networking infrastructure. Globally, mobile data traffic is expected to grow 18-fold between 2011 and 2016, reaching 10.8 exabytes per month by 2016. Today, video traffic alone accounts for 40 percent of the wireless network load. The number of mobile devices connected to wireless networks will reach 25 billion, averaging 3.5 devices for every person on the planet, by 2015. That number is expected to double, to 50 billion, by 2020.This growth in storage capacity and network traffic is far outstripping the infrastructure build-out required to support it, a phenomenon known as the data deluge gap.
To bridge this gap, the industry needs to leverage smarter silicon technology to scale datacenter infrastructures more cost effectively. Besides helping close the data deluge gap, smarter data processing offers potential dramatic improvements in application performance. A recent survey of 412 European datacenter managers conducted by LSI revealed that while 93 percent acknowledged the critical importance of improving application performance, a full 75% do not feel that they are achieving the desired results. This indicates that there is rising pressure on datacenter managers to find smarter ways to push systems to do much more work within the same power and cost profiles.
Accelerating Networks
Smart software running on general-purpose processors, increasingly with multiple cores, is pervasive in the datacenter. Processors have long inhabited switches and routers, firewalls and load-balancers, WAN accelerators and VPN gateways. None of these systems are fast enough, however, to keep pace with the data deluge on its own, for a basic reason: general-purpose processors must treat every byte equally. While such equality is perfectly acceptable for system-level versatility, it is inadequate for low-level, high-volume packet processing.
This reality is driving the need for more intelligence in silicon that is purpose-built for specific networking applications to provide the right balance of performance, power consumption and programmability. Today’s smart silicon has reached a level of price/performance that makes it more cost-effective than adding general-purpose processors.
The latest generation of smart silicon typically features multiple cores of general-purpose processors and multiple acceleration engines for common networking functions, such as packet classification with deep packet inspection, security processing, especially for encryption and decryption, and traffic management.
Some of these acceleration engines are so powerful they can completely offload specialized network processing from general-purpose processors, making it easier to perform switching, routing and other networking functions entirely in smart line cards installed in servers and networking appliances to further accelerate overall network performance.
In many organizations today, microseconds matter, driving strong demand for faster response times. For trading firms, latency can be measured in millions of dollars per millisecond. For others, such as online retailers, every millisecond of delay can mean lost sales and fading customer loyalty. Tomorrow’s datacenter networks will need to be both faster and flatter, and therefore, smarter than ever. To eliminate the data deluge gap and maximize performance, systems need to be smarter, and those smarts will increasingly need to take the form of purpose-built silicon.
About the Author
Michael Merluzzi is product marketing manager in the Networking Solutions Group of LSI Corporation. Focusing on mobile backhaul applications, Merluzzi is responsible for marketing of integrated platform solutions and application-enabling software for the LSI Axxia family of multicore communication processors. Previously, he held a variety of roles in technical marketing, applications engineering and software development. Merluzzi holds a bachelor’s degree in Electrical Engineering from The Pennsylvania State University and master’s degrees in Business Administration and Computer Engineering from Lehigh University.
– SoCs with more powerful cores need a more powerful interconnect [New Electronics, Jan 8, 2013]
… Troy Bailey is director of marketing with LSI. He said the company is seeing a ‘data deluge‘. “There is more and more data driven by video and mobile use. By most projections, the amount of data will outstrip the capacity of the infrastructure in the future, so what’s needed is faster devices to handle more data.”
Bailey also says there is a need for smarter devices. “We have to develop better ways to handle data; for instance, not moving data that doesn’t need to be moved. One of the ways we can do that is to add intelligence and processing throughout the network, rather than at gateways.”
The way to do this, in LSI’s opinion, is to add more and faster general purpose cores to network processors, but also to add acceleration engines to do those tasks with which general purpose cores struggle. “For example,” Bailey said, “there’s a lot of activity on a per packet basis – classifying, deep packet inspection. If you do these tasks with a general purpose processor, it will be slow and expensive.”
He has an analogy: “A mechanic with a basic set of tools can fix your car, but a specialist who works on one part of the car will have special tools and special knowledge.”
But, as he noted, traffic management is an important element in designing the architecture of a network processor. “If you can avoid sending data over the network, you’re better off and particularly so if you can cache it or put processing capacity closer to the network edge.”
LSI has a range of devices either available or in the planning stage. “We have single and dual core devices that perform the same tasks,” Bailey explained, “but we also have devices with dozens of cores. We see a strong opportunity to handle data in special purpose hardware, so devices will have more engines and more cores. This will need a balance between general purpose and special hardware.”
And the question of which cores to use has been under discussion. Until recently, LSI has based its network processors on PowerPC cores, but an announcement early in 2012 revealed ARM cores are now on the road map. “Some of these discussions are driven by customer requirements,” Bailey said. “The ARM architecture is strong and there’s a good ecosystem, so the move makes a lot of sense. LSI’s approach is based on hardware acceleration, which also makes sense, and we are not looking to use proprietary cores. So while a Cortex-A15 doesn’t necessarily bring more performance, it is more power efficient.”
Then comes the challenge of linking all these cores together. And LSI has turned again to ARM, taking a lead license for ARM’s CCN-504 interconnect. “We have helped ARM to define what’s required in such an interconnect. As you add more cores – particularly accelerators – you end up with a lot of compute elements and when that happens, there’s opportunities for bottlenecks. You could end up adding more cores, but getting lower performance,” Bailey contended.
Neil Parris is ARM’s interconnect product manager. He said CCN-504 had been developed specifically to address the issue of more cores. “It’s about providing coherency between the cpus and the I/O and about using data on chip.”
In some respects, it’s a consequence of integration. “There used to be a range of chips which needed to be connected,” Parris observed. “Now, it’s a single chip with multiple cores which is power critical and which needs to interface to the latest technology.”
CCN-504 – CCN stands for cache coherent network – is the first in a family of interconnects being developed to support future complex devices. “It supports four cpu clusters,” Parris said, “and each cluster can comprise up to four cores. It also supports ARM’s 64bit architecture, which is important for those people building servers.
“Each cpu cluster has an L2 cache, which is configurable to 2Mbyte, or 4Mbyte in the case of the Cortex-A15. The interconnect’s purpose is to join all the processors in a coherent manner, making sure all cores have a consistent view of memory.”
But CCN-504 isn’t ARM’s first cache coherent network. “That was the CCI-400,” Parris said. “That’s aimed at mobile applications with two clusters, including Big.LITTLE.”
Caching is an important element and one which supports Bailey’s view that you shouldn’t have to move data if you don’t have to. “Caches are important contributors to power efficiency and performance,” Parris pointed out. “The more data you have on chip, the fewer the accesses needed to external memory. It helps with power consumption and performance.”
CCN-504 has also been built with cores other than ARM’s in mind. The network can support up to 18 AMBA interfaces, which allows designers to take advantage of such functions as 40Gbit Ethernet, USB and serial ATA links. But it also features PCI-Express connectivity. “Companies will use this facility to add their own IP into an SoC,” Parris explained. “For example, they may wish to add their own accelerator, and it’s our aim to provide them with a scalable platform on which they can build.”
All 18 AMBA interfaces are connected to the cache coherent network through an I/O virtualisation block which provides unified system memory. “AMBA defines interconnect,” Parris said, “and CCN-504 builds on the AMBA interconnect. It has an integrated L3 cache, which can be configured from 8 to 16Mbyte, and a snoop filter.” The snoop filter basically keeps an eye on all caches to ensure coherency and reduce bus traffic.
If the SoC does need to access external memory, ARM has developed the DMC-520 memory controller for 72bit wide DDR3/4. This supports a maximum bandwidth of 25.6Gbyte/s per channel and features buffering to optimise reads and writes. It’s the fifth generation DMC and includes error checking and correction features.
Overall, CCN-504 supports a system bandwidth of around 1Tbit/s and operates up to the cpu clock rate. “This network scales the performance of the CCF400 significantly,” Parris noted, “with more ports and a larger cache. At the moment, it’s 128bit wide, but future devices will move up, including bandwidth,” he added.
Bailey said LSI needed a strong technology partner for interconnect. “It’s not our point of differentiation,” he said, “so the licensing approach made sense. When you think of an SoC with 16 cores, there may be a total of 30 compute elements. It’s a complex design and that’s why it needs a robust networking solution.”
– 4G World 2012: The Future of LTE [LightReadingTV YouTube, Nov 2, 2012] (on an Oct 29 – Nov 1 conference “where enterprises and operators met to discuss the state of the art of the mobile enterprise marketplace” [as per the announcement])
– 4G World 2012: The 4G Opportunity [LightReadingTV YouTube, Nov 2, 2012] (on the same Oct 29 – Nov 1 conference)
4G World 2012: Innovation: Strategy, Technology & Collaboration [LightReadingTV YouTube, Nov 2, 2012] (on the same Oct 29 – Nov 1 conference)
4G World 2012: The 1-Gigabyte Revolution [LightReadingTV YouTube, Nov 2, 2012] (on the same Oct 29 – Nov 1 conference)
– Nokia Siemens Networks and LSI Collaborate on Wireless Infrastructure Solutions [LSI press release, Feb 21, 2013]
LSI® Axxia® platform and SoC capabilities contribute to
higher-performance mobile broadband solutionsNokia Siemens Networks and LSI Corporation (NASDAQ: LSI) announced today a collaborative framework with ARM® processor based System-on-Chips (SoCs) that enable enhanced support for real-time performance, I/O optimization, robustness and heterogeneous operating environments on multi-core SoCs.
Nokia Siemens Networks is increasing investment in technology development in mobile broadband business and actively participating in Linaro Networking Group and to ARM ecosystem in general to enable better use of Open Source Linux®software and tools. This will both enhance performance of forthcoming base station BTS products as well as drive towards lower power consumption.
“LSI is very pleased to be collaborating with Nokia Siemens Networks on innovative mobile broadband solutions,” said Jim Anderson, general manager for LSI’s Networking Solutions Group. “The LSI Axxia line combines ARM processor cores with our unique Virtual Pipeline™ acceleration technology to create a platform for next-generation mobile broadband solutions and other applications. Our advanced software and emulation capabilities ensure accelerated time to market for our customers.”
– Networking Leaders Collaborate to Maximize Choice, Performance and Power Efficiency [Linaro press release, Feb 20, 2013]
Industry leaders including AppliedMicro, ARM, Enea, Freescale®, LSI, MontaVista, Nokia Siemens Networks and Texas Instruments (TI) have formed a new group focused on accelerating Linux development for ARM processors in cloud and mobile infrastructure.
Linaro, the not-for-profit engineering organization developing open source software for the ARM® architecture, today announced the formation of the Linaro Networking Group (LNG) with twelve founding member companies including … <see above> … at the Embedded Linux Conference (ELC).
With ARM-based SoCs at the heart of the transformation occurring in cloud and mobile infrastructure applications such as switching, routing, base-stations and security, Linaro’s members are collaborating on fundamental software platforms to enable rapid deployment of new services across a range of converged infrastructure platforms. Developing the base platform for diverse and complex networking applications requires a significant amount of software that addresses common challenges. LNG will deliver this as an enhanced core Linux platform for networking equipment. …
Networking infrastructure is undergoing a transformation driven by the ramp in diverse data being moved through disparate networks to and from billions of diverse devices. The industry needs to simplify the management of the network as well as create new applications that will enable cloud service providers, carriers and others to reliably provide a great user experience across expanded mobility use cases and the increasing globally-connected intelligence of devices. Enterprises need to scale their networks and their network management capabilities to cope with these demands and also enable the rapid evolution of applications for new revenue-generating business models. LNG will accelerate this transformation through its initial focus on fundamental optimizations for use across all ARM-based networking infrastructure equipment.
…
An interim steering committee for LNG has been meeting since the end of 2012 and has agreed on four initial areas of work:
Virtualization support with considerations for real-time performance, I/O optimization, robustness and heterogeneous operating environments on multi-core SoCs.
Real-time operations and the Linux kernel optimizations for the control and data plane.
Packet processing optimizations that maximize performance and minimize latency in data flows through the network.
Dealing with legacy software and mixed-endian issues prevalent in the networking space.
Linaro expects initial software deliveries from the Linaro Networking Group during the first half of 2013 with on-going monthly releases thereafter.
– LSI hopes to power mobile networks with ARM-based processors [CIO, Feb 19, 2013]
Chipmaker LSI is taking ARM-based processors to new frontiers with its upcoming AXM5500 family, which will be used in mobile base stations of all sizes.
From today’s smartphones, tablets and thin clients to tomorrow’s servers, ARM-based processors are powering a growing number of different devices, and if LSI is successful, mobile networks will be added to that list. The company’s AXM5500 family of processors will use up to 16 Cortex-A15 cores to power base stations for mobile networks.
The Cortex-A15 is ARM’s most powerful processor to date, and is used in products like the Nexus 10 tablet from Google and Samsung Electronics.
“The intention is to provide high-performance and good efficiency on a scalable platform,” said Troy Bailey, director of marketing at LSI.
LSI’s processors for wireless infrastructure have historically been based on PowerPC processors, but because of increased demand for different size base stations in so-called heterogeneous networks, it decided to add ARM-based products.
In addition to achieving a new level of efficiency, working with ARM allows LSI to build a processor family that can be used in anything from a macro cell down to a pico cell, which means lower development costs, because software can be reused, according to Bailey. Pico cells are used to provide coverage for areas such as offices and shops. Installation and management becomes easier, as well, Bailey said.
The first two products are AXM5516 and AXM 5512, which have 16 and 12 cores, respectively. They are intended for use is large base stations. LSI will in the future add processors with fewer cores that are a better fit for small cells.
The product family also uses ARM’s new CoreLink CCN-504 Cache Coherent Network interconnect, which was announced in October last year. It can prioritize time-sensitive traffic and offers up to one terabit of usable system bandwidth per second, according to ARM.
“It is a very good and scalable interconnect. One of the challenges when building high core count processors is making sure you have no bottlenecks and waste the cores,” Bailey said.
The company is also looking at ARM’s new big.LITTLE processing architecture, which in its first generation combines the powerful Cortex-A15 and the energy-efficient Cortex-A7 on one die.
“There certainly are some tasks that need a very strong single thread performance, and there are some tasks that don’t, and it doesn’t make sense to light up a big A15 if it can be done on an A7, so we think it makes sense,” Bailey said.
The company will start sampling the first processors during the third quarter. Because the products aren’t being sampled yet, LSI will have to make to with visual demos showing the performance and power savings at next week’s Mobile World Congress.
LSI will have to convince equipment vendors that using ARM in their base stations is a good move and at least one company is open to the idea. Ericsson isn’t currently using ARM-based processors in its base stations. But “as we continue to expand and develop our base station portfolio, we always evaluate what possibilities are available from the general ICT industry and we might use ARM based processors in the future,” a spokeswoman said via email.
“We definitely have some major customers that are going in the ARM direction, and we have built this product for them” Bailey said.
More media reports for general briefings:
– ARM Chips Take on New Cellular Chores, Aided by LSI [Digits blog of WSJ, Feb 19, 2013]
– ARM is already the brains of your smartphone. Now it wants to run the network too [GIGAOM, Feb 20, 2013]
Understanding LSI
[LSICorporation YouTube channel, Dec 19, 2012]
[10:43] In the case of wireless infrastructure we are engaged with all the system providers . But what’s also exciting we’re engaged deeply with the top two players. This is Ericsson as well as Nokia-Siemens who have between the two of them 50 to 60% share in the wireless infrastructure market. [11:02]
See also: Investor Relations Update [LSI Corporation, Jan 23, 2013] from which the following three slides provide the latest relevant information:
Note: SAM (Served Available Market or Segmented Addressable Market) is a term that is typically used to reference the customers that can actually be reached out of the TAM (Total Addressable or Available Market). More on that: Estimate Addressable Market, Defining your TAM, Total Addressable Market and The importance of TAM, SAM and SOM in your plan 

LSI Management Discusses Q4 2012 Results – Earnings Call Transcript [Jan 23, 2013]: We began ramping our standard product Axxia multi-core communication processor at the leading base station OEM and expect continued growth as we move through this year. We have multi-generational engagements in the wireless space that we believe will enable LSI to have in excess of 50% share in data and control plane processing silicon in a few years. In addition to standard products like Axxia, we have custom silicon wins in the baseband function of base stations with multiple OEMs, further broadening LSI’s footprint in base station infrastructure. … We feel very good about our growth initiatives across networking. Axxia and our multi-core solution there continues to be adopted more and more across base station system vendors.
LSI’s CEO Presents at Morgan Stanley Technology, Media & Telecom Conference (Transcript)
[Feb 26, 2013]: We made a major announcement last week with Nokia Siemens. Nokia Siemens and LSI are collaborating on LSI’s next-generation Axxia processor. It’s the industry’s first 16-core ARM network processor. We believe we’ll have at least a 9- to 12-month advantage relative to time to market, as well as the attributes that we have in our product. This is a pretty significant achievement, with Nokia Siemens. It adds to the other major player that we’re also shipping Axxia into. And it’s a proof-point to what we said a year ago. We said a year ago that we would have over 50% share of the data plane and control plane, basically the CPU in the base station, that we would have 50% share over the course of the next several years. So we have 2 of the top 3 companies now adopting Axxia, and we’re well on our way to achieve that share position.
We also can extend that commentary into the baseband where we are also going to ship baseband silicon into these 2 companies, which we also believe will amount to at least 40% share. These share levels are up from 10% today. So we’re very excited about what’s happening in our networking business.
LSI transforming itself again [Brian Bailey on EETimes, Feb 20, 2013] (with the illustrations replaced by equivalent images from the AXM2502 Product Brief [March 8, 2012] and AXM5500 Product Brief [Feb 19, 2013] respectively which I recommend to read for further technical details)
LSI is a company that has been through a lot of changes over the years. I can remember when they had their own fabs, did custom design for their customers, and had their own suite of design tools. In short, they were a complete vertically integrated ASIC house. They have evolved many times and become fabless, transitioned to semi-custom design and today is building standard parts for markets such as storage and wireless networking.
The other day we learned about another big change in LSI future and it all has to do with their Axxia line of communications processors. Take a look at the block diagram for the AXM2502 product. It was powered by a pair of PowerPC processors connected to custom accelerators using their Virtual Pipeline technology. This is a 28nm product.
This week, LSI introduced the Axxia 5500 product family of communication processors designed to accelerate performance and increase power efficiency for multi-radio base stations and 4G/LTE-capable wireless networks. The LSI Axxia 5500 product family features 12 or 16 ARM cores.
This switch in processing core brings about a 4X control plane performance improvement and 2,5X data plane improvement and reduced power – something that is becoming important for all applications from battery powered handhelds to datacenters.
This chip not only makes advances for LSI, but ARM also. The two companies partnered to create this 16 core solution utilizing ARMs new CoreLink CCN-504 interconnect. CoreLink CCN-504 can deliver up to one Terabit of system bandwidth per second.
LSI also provides much of the software necessary to power this chip including high-performance layer two through four software packages that provide a complete wireless transport solution for networking OEMs.
More 3d party reports for further technical briefings:
– LSI and 6WIND team up for high performance networking [SemiAccurate, Oct 16, 2012]
– How does LSI envision the next generation of ARM networking SoCs? [SemiAccurate, Nov 28, 2012]
– LSI launches a 16-core ARM A15 cell phone chip [SemiAccurate, Feb 19, 2013]
…
The HetNet problem as LSI sees it
Until recently, you needed very different devices from top to bottom, the hardware on a pico basestation was nothing like that of the vastly larger long distance stations. This mandates some very different software stacks, management tools, and all sorts of other things that bring problems to the poor network trolls running the plumbing 24/7. Heterogeneity is not a good thing here, but there really wasn’t a choice, no hardware was suited for all of the tasks at hand. See what LSI is aiming for now?
Since the Axxia 5500 line can scale from 4 to 32 cores, it can meet all of the demands of basestations large and small. If the pico basestation needs a digitial front end and DSP setup that the big ones don’t, no problem, slap them on. If there are things that the little ones don’t need, pull them out and save die area. LSI hopes to be able to service all of a carrier’s needs from large to small with a single hardware family and the attendant software stack. Carriers like this, it saves them time, money, and headaches, speeds deployment, and makes life easier by simplifying everything. And that is exactly what LSI is aiming for with the Axxia 5500 family.
Corresponding LSI press releases with more information:
– LSI Announces Availability of Family of Network Accelerator Cards for Enterprise, Data Centers and Service Providers [July 20, 2011] “Complete platform built on industry-leading silicon with software protocols to provide high performance and deterministic features for networking OEMs”
– LSI Begins Shipping 28nm Custom Silicon for Datacenter and Mobile Network Applications [Nov 16, 2011] “Custom silicon enables networking and storage OEMs to build highly differentiated silicon solutions; demonstrates LSI leadership”
– LSI Expands Strategic Relationship with ARM to Offer Energy-Efficient Multicore Processors for Networking Applications [Jan 23, 2012] “Enhances industry’s most powerful networking silicon portfolio … LSI will gain access to:
- The broad family of ARM processors, including the ARM Cortex-A15 processor with virtualization support and future ARM processor
- ARM on-chip interconnect technology, including CoreLink™ cache coherent interconnect system IP, for use in multicore applications”
– LSI Introduces Highly Integrated Axxia Communication Processor to Accelerate Mobile Broadband [Feb 21, 2012] “AXM2500 reduces power consumption and physical space requirements; helps service providers seamlessly deploy heterogeneous networks and contend with data growth”
– LSI Expands Axxia Platform to Deliver Power-Efficient Mobile Networks [Feb 23, 2012] “Addition of ARM’s latest multicore technology will provide scalability, performance and low power consumption to meet growing demand for mobile broadband”
– LSI Expands Networking Ecosystem to Accelerate Implementation of 4G Networks [Feb 24, 2012] “Partner solutions accelerate time to market and reduce software investment for wireless manufacturers”
– LSI Collaborates with Vineyard Networks to Accelerate Mobile and Datacenter Networks [May 7, 2012] “Vineyard joins LSI networking ecosystem; combined solution delivers real-time application recognition to improve user experience”
– LSI and Microsemi Collaborate to Reduce Costs and Increase Performance of Mobile Networks [Sept 19, 2012] “Integration of Microsemi timing protocol into LSI® Axxia®communication processors provides networking equipment manufacturers with increased interoperability, reduced customer investment and faster time-to-market”
– LSI and 6WIND Team Up to Accelerate Mobile Infrastructure and Datacenter Network Performance [Oct 16, 2012] “6WINDGate packet processing software for LSI® Axxia®platform allows network OEMs to benefit from performance-optimized software that reduces time-to-market and lowers development costs”
– LSI Summit Convenes Technology Leaders to Unlock Opportunities in the New Innovation Era of Devices, Datacenters and Mobile Networks [Nov 13, 2012] “5th annual ‘Accelerating Innovation Summit’ attracts storage and networking experts to collaborate on solving the challenges of the data deluge”
– LSI Introduces Axxia® 5500 Communication Processors with ARM Technology for High-Performance, Power-Efficient Networks [Feb 19, 2013] “LSI scalable architecture with ARM multicore processors and interconnect to improve multi-radio base station and 4G/LTE-capable wireless network performance”
Future Coherent Interconnect Technology for Networking Applications [ARM’s Smart Connected Devices blog, Dec 11, 2012]
Coherent interconnects will be at the core of next-generation network systems and system-on-chip (SoC) devices. To meet the rapidly growing processing requirements of wireless infrastructure systems and servers, network equipment manufacturers need highly integrated SoCs with a heterogeneous mix of CPU cores. These cores need to handle a mix of general-purpose processing, packet processing and digital signal processing (DSP) functions. The interconnect at the center of these solutions must maintain cache coherency between cores and provide a low-latency path between the cores, caches, external memory and networking I/O.
We are seeing dramatic growth in the data bandwidth in both mobile and fixed line networks. Cloud computing and video services are key applications driving this growth. 4G/LTE networks are transforming the wireless network experience for high-volume data users. Larger data centers with many virtualized servers allow large content providers such as Facebook, Google and Amazon to support many millions of users. To meet these demands, carriers are making significant investments in enhanced 4G networks and infrastructure required to support the huge growth in data traffic.
The latest silicon technology allows the integration of many cores onto a single SoC, dramatically reducing the number of components in a system. The processor cores can be closely coupled to hardware acceleration engines, external memory interfaces and high-speed networking I/O. The level of integration presents significant challenges to developers, who must ensure the use of shared resources does not reduce system performance. The key to this integration is the interconnect between the different cores and the other functional blocks.
Standard RISC cores, licensed from vendors such as ARM, have allowed system OEMs to quickly develop new solutions using third-party tools for software development. The introduction of licensed IP for a low-latency coherent interconnect will allow OEMs to develop more easily new solutions integrating multiple general purpose CPU and other cores. By working with well-established IP and SoC vendors such as ARM and LSI, system developers will have access to next-generation networking SoCs with a mix of CPU cores, hardware accelerators and, if required, their own hardware blocks.
The “Future Coherent Interconnect Technology for Networking Applications,” by Heavy Reading for LSI and ARM, explores the benefits of using a low-latency, coherent interconnect at the core of a next-generation networking SoC and reviews the market demand for next-generation network SoCs with multiple CPU cores and hardware accelerators. It details the technical challenges and one solution that is available to system developers for a coherent interconnect with integrated cache and support for DDR3 and DDR4 memories. The paper also describes a next-generation networking SoC architecture that is built around a coherent interconnect and available to OEMs as a standard product or custom solution.
Guest Partner Blogger:
Michael Merluzzi is a Sr. Marketing Manager in the Networking Solutions Group at LSI Corporation. He has product marketing responsibilities for integrated platform solutions and application-enabling software for LSI’s Axxia® family of multicore communications processors. Previously, he has held a variety of roles in technical marketing, applications engineering and software development.
Michael holds a bachelor’s degree in Electrical Engineering from the Pennsylvania State University and master’s degrees in Business Administration and Computer Engineering from Lehigh University.
Next-Generation Multicore ARM Architectures for Intelligent Networks:
Next-generation multicore SoC architectures for tomorrow’s communications networks [by David Sonnier, LSI Corporation on Embedded Computing Design, Dec 11, 2012]
IT managers are under increasing pressure to boost network capacity and performance to cope with the data deluge. Networking systems are under a similar form of stress with their performance degrading as new capabilities are added in software. The solution to both needs is next-generation System-on-Chip (SoC) communications processors that combine multiple cores with multiple hardware acceleration engines.
The data deluge, with its massive growth in both mobile and enterprise network traffic, is driving substantial changes in the architectures of base stations, routers, gateways, and other networking systems. To maintain high performance as traffic volume and velocity continue to grow, next-generation communications processors combine multicore processors with specialized hardware acceleration engines in SoC ICs.
The following discussion examines the role of the SoC in today’s network infrastructures, as well as how the SoC will evolve in coming years. Before doing so, it is instructive to consider some of the trends driving this need.
Networks under increasing stress
In mobile networks, per-user access bandwidth is increasing by more than an order of magnitude from 200-300 Mbps in 3G networks to 3-5 Gbps in 4G Long-Term Evolution (LTE) networks. Advanced LTE technology will double bandwidth again to 5-10 Gbps. Higher-speed access networks will need more and smaller cells to deliver these data rates reliably to a growing number of mobile devices.
In response to these and other trends, mobile base station features are changing significantly. Multiple radios are being used in cloud[
]-like distributed antenna systems. Network topologies are flattening. Operators are offering advanced Quality of Service (QoS) and location-based services and moving to application-aware billing. The increased volume of traffic will begin to place considerable stress on both the access and backhaul portions of the network.
Traffic is similarly exploding within data center networks. Organizations are pursuing limitless-scale computing workloads on virtual machines, which is breaking many of the traditional networking protocols and procedures. The network itself is also becoming virtual and shifting to a Network-as-a-Service (NaaS) paradigm, which is driving organizations to a more flexible Software-Defined Networking (SDN) architecture.
These trends will transform the data center into a private cloud with a service-oriented network. This private cloud will need to interact more seamlessly and securely with public cloud offerings in hybrid arrangements. The result will be the need for greater intelligence, scalability, and flexibility throughout the network.
Moore’s Law not keeping pace
Once upon a time, Moore’s Law – the doubling of processor performance every 18 months or so – was sufficient to keep pace with computing and networking requirements. Hardware and software advanced in lockstep in both computers and networking equipment. As software added more features with greater sophistication, advances in processors maintained satisfactory levels of performance. But then along came the data deluge.
In mobile networks, for example, traffic volume is growing by some 78 percent per year, owing mostly to the increase in video traffic. This is already causing considerable congestion, and the problem will only get worse when an estimated 50 billion mobile devices are in use by 2016 and the total volume of traffic grows by a factor of 50 in the coming decade.
In data centers, data volume and velocity are also growing exponentially. According to IDC, digital data creation is rising 60 percent per year. The research firm’s Digital Universe Study predicts that annual data creation will grow 44-fold between 2009 and 2020 to 35 zettabytes (35 trillion gigabytes). All of this data must be moved, stored, and analyzed, making Big Data a big problem for most organizations today.
With the data deluge demanding more from network infrastructures, vendors have applied a Band-Aid to the problem by adding new software-based features and functions in networking equipment. Software has now grown so complex that hardware has fallen behind. One way for hardware to catch up is to use processors with multiple cores. If one general-purpose processor is not enough, try two, four, 16, or more.
Another way to improve hardware performance is to combine something new – multiple cores – with something old – Reduced Instruction Set Computing (RISC) technology. With RISC, less is more based on the uniform register file load/store architecture and simple addressing modes. ARM, for example, has made some enhancements to the basic RISC architecture to achieve a better balance of high performance, small code size, low power consumption, and small silicon area, with the last two factors being important to increasing the core count.
Hardware acceleration necessary, but …
General-purpose processors, regardless of the number of cores, are simply too slow for functions that must operate deep inside every packet, such as packet classification, cryptographic security, and traffic management, which is needed for intelligent QoS. Because these functions must often be performed in serial fashion, there is limited opportunity to process them simultaneously in multiple cores. For these reasons, such functions have long been performed in hardware, and it is increasingly common to have these hardware accelerators integrated with multicore processors in specialized SoC communications processors.
The number of function-specific acceleration engines available also continues to grow, and more engines (along with more cores) can now be placed on a single SoC. Examples of acceleration engines include packet classification, deep packet inspection, encryption/decryption, digital signal processing, transcoding, and traffic management. It is even possible now to integrate a system vendor’s unique intellectual property into a custom acceleration engine within an SoC. Taken together, these advances make it possible to replace multiple SoCs with a single SoC in many networking systems (see Figure 1).
Figure 1: SoC communications processors combine multiple general-purpose processor cores with multiple task-specific acceleration engines to deliver higher performance with a lower component count and lower power consumption.
In addition to delivering higher throughput, SoCs reduce the cost of equipment, resulting in a significant price/performance improvement. Furthermore, the ability to tightly couple multiple acceleration engines makes it easier to satisfy end-to-end QoS and service-level agreement requirements. The SoC also offers a distinct advantage when it comes to power consumption, which is an increasingly important consideration in network infrastructures, by providing the ability to replace multiple discrete components in a single energy-efficient IC.
The powerful capabilities of today’s SoCs make it possible to offload packet processing entirely to system line cards such as a router or switch. In distributed architectures like the IP Multimedia System and SDN, the offload can similarly be distributed among multiple systems, including servers.
Although hardware acceleration is necessary, the way it is implemented in some SoCs today may no longer be sufficient in applications requiring deterministic performance. The problem is caused by the workflow within the SoC itself when packets must pass through several hardware accelerators, which is increasingly the case for systems tasked with inspecting, transforming, securing, and otherwise manipulating traffic.
If traffic must be handled by a general-purpose processor each time it passes through a different acceleration engine, latency can increase dramatically, and deterministic performance cannot be guaranteed under all circumstances. This problem will get worse as data rates increase in Ethernet networks from 1 Gbps to 10 Gbps, and in mobile networks from 300 Mbps in 3G networks to 5 Gbps in 4G networks.
Next-generation multicore SoCs
LSI addresses the data path problem in its Axxia SoCs with Virtual Pipeline technology. The Virtual Pipeline creates a message-passing control path that enables system designers to dynamically specify different packet-processing flows that require different combinations of multiple acceleration engines. Each traffic flow is then processed directly through any engine in any desired sequence without intervention from a general-purpose processor (see Figure 2). This design natively supports connecting different heterogeneous cores together, enabling more flexibility and better power optimization.
Figure 2: To maximize performance, next-generation SoC communications processors process packets directly and sequentially in multiple acceleration engines without intermediate intervention from the CPU cores.
In addition to faster, more efficient packet processing, next-generation SoCs also include more general-purpose processor cores (to 32, 64, and beyond), highly scalable and lower-latency interconnects, nonblocking switching, and a wider choice of standard interfaces (Serial RapidIO, PCI Express, USB, I2C, and SATA) and higher-speed Ethernet interfaces (1G, 2.5G, 10G, and 40G+). To easily integrate these increasingly sophisticated capabilities into a system’s design, software development kits are enhanced with tools that simplify development, testing, debugging, and optimization tasks.
Next-generation SoC ICs accelerate time to market for new products while lowering both manufacturing costs and power consumption. With deterministic performance for data rates in excess of 40 Gbps, embedded hardware is once again poised to accommodate any additional capabilities required by the data deluge for another three to four years.
David Sonnier is a technical fellow in system architecture for the Networking Solutions Group of LSI Corporation.
LSI Corporation david.sonnier@lsi.com www.lsi.com
See how innovative is the Axxia SoC networking platform for mobile broadband speed [LSI China, Oct 15, 2012] as translated from Chinese by Google (except the introductory summary which manual corrections as well) because there is no English equivalent
What is Axxia? A communication processor? Not only that! It represents a unique innovation network SoC solutions platform, flexible and energy efficient and scalable architecture! It contains the complete network chip and software combination:
Communication processor, using state-of-the-art multi-core technology which can achieve fast path acceleration with deterministic performance and highly programmable;
Highest density, lowest cost and fully programmable media and baseband processor;
The TDM (time-division multiplex) transport of multiservice processor, high-density, low-power and fully trust through the packet network;
Customizazion based on Axxia processors, flexible customer management, industry-leading delivery times.
The Axxia Network SoC solutions for mobile and enterprise networks determine performance, customized solutions to achieve a high degree of differentiation.
Flexible and highly scalable platform
<from here on raw Google translation>
“With the mass deployment of EVS, SAE and LTE-Advanced, the new architecture of the system on the network bandwidth requirements will far exceed the processing capacity of the current infrastructure, which requires the SoC architecture with excellent expansion capability, in order to effectively control costs , while responding to the ever-rising demand for bandwidth. “LSI corporate network components, marketing director Tareq Bustami has pointed out.
Axxia the use of energy-efficient central processing unit (CPU) platform and instruction set architecture (ISA) multicore architecture-independent, allowing the general-purpose processor with flexible, determined by the Virtual Pipeline high-speed path integration, for according to the specific needs of the OEM manufacturers extend and customize Axxia platform to choose their own silicon design, such as ASIC, CSSP or ASSPs. Unique business model is the LSI customers widely hailed (as shown in Figure 1).
Figure 1. The LSI Axxia network platform has an original mixed approach of the general and specific types of processing, and has the ability to integrate custom IP.
This flexible business model is built on the LSI IP accumulation basis. Customers comply with the standards provided by LSI pre-verified IP cores to reduce costs and accelerate time-to-market.
CoreWare IP in LSI the proven complex IP functionality, and to achieve specific LSI design integrity, ease of use, reusability, supportability, quality, range of standard deliverables and supporting infrastructure. , CoreWare IP address program leading storage industry standard interfaces and components are synergistic, ensure compliance, and customer resources to focus on product differentiation and competitive advantage.
Since 1990 LSI IP solutions already contains a high-level, pre-packaged chip components and complete delivery, the LSI leading design tools and methods to achieve integration. LSI IP support for system-level design considerations for end-use applications, including simulation and signal integrity requirements.
LSI also provides a flexible IP subscription model, allowing customers to choose a wide range of solutions from LSI, from the the SerDes or I / O unit to complete the I / O controller, processor subsystem processor core to complete. Specifically including but not limited to: 1. (Key storage and network interface) from the current and next generation serial standards support, such as XFI (10G), Fibre Channel (8.5G), SAS (6G), PCI Express (5G) as well as many other interfaces; 2. the latest parallel storage interface supports DDR3 SDRAM, QDR, DDR II + SRAM and RLDRAM; memory chip-to-chip interface, such as SGMII and SPI4; 3. supports the industry’s most popular integrated processor products, such as PowerPC, ARM, MIPS and ZSP.
Collaboration with ARM, significantly improve mobile network performance / power ratio
Particularly worth mentioning is the integration, in addition to continue to develop Axxia communication processors, high-performance multi-core PowerPC-based ASSP products, LSI also recently a new high-performance multi-core ARM Cortex A-15 processor and LSI hardware accelerators certainty The Axxia processor program series ASSPs ideal for mobile access, backhaul and gateway. The series offers a variety of pin-compatible configuration, suitable for a variety of network applications, NodeB and eNodeB 3G/4G mobile access to the system, the mobile broadband radio network controller (RNC) applications as well as enterprise gateway. The Axxia Series provides a comprehensive software development environment, evaluation board, as well as the industry’s leading supplier, launched a series of hardware / software solutions.
ARM CPU and LSI hardware accelerators with the the Virtual Pipeline patented technology to achieve the best performance and flexibility. This partnership to provide customers with a proven scalable, multi-function software platform to support the extended multi-generation wireless infrastructure. LSI has been a long history of cooperation with ARM kernel currently has shipped over one billion ARM core integrated into LSI flagship the Axxia platform is a natural choice. The platform enables wireless manufacturers to develop a solution that contains all base station processing functions.
Add the ARM energy saving core the Axxia platform can base stations and wireless infrastructure to provide energy-efficient, low-power multi-core processors; provide scalable performance to meet smart phones, tablet PCs and cloud services bring massive data growth needs; embedded intelligence, can be used to determine flow, identification applications, provide appropriate traffic and at the right time in order to achieve real-time services such as mobile video. Through the the ARM Community and LSI network ecosystem, customers also have access to a wealth of third-party tools and support.
The innovative Virtual Pipeline patented technology to determine performance
Any routing combination of LSI Virtual Pipeline (Virtual Pipeline) patented technology developed for each packet classification decisions, each data packet or communications media stream prior to leaving the ACP can after engine CPU core. This flexibility is very powerful and convenient, and is conducive to the design of traffic flowing through the device.
Using patented technology hardware scheduler function with any-to-any data packet streaming combined, and thus needed to route traffic on-chip, able to achieve in the the acceleration engine multicore Commonwealth SoC subsystem components between smooth Communication chip. The flow from the input port is routed directly to the hardware acceleration engine, and then routed to the next acceleration engine, transmission path depends entirely on the processing requirements of specific traffic, regardless of whether or not to use the CPU core. Can achieve up to 20Gbps or more deterministic data throughput, and to achieve deterministic transmission and L2 performance in a longer transition period may be well suited for multi-protocol processing applications.
Figure 2. Virtual Pipeline message transmission of the highly innovative patented technologies.
For example, through the Virtual Pipeline patented technology can be first Ethernet interface receives traffic sent to the decryption engine to decrypt the encrypted traffic, and then routed directly to the content inspection engine contain viruses / spam or other malicious content traffic filtering. If the flow is considered safe, can be directly transmitted to the rear panel ports, without going through the CPU core. In addition, we also needed to flow from the input port or accelerate the engine is routed to the CPU core for further processing.
Wireless eco-system platform to reduce costs, accelerate time to market
Mark Hung, research director at Gartner, said: “built under the premise of controlling costs to meet the growing demand for mobile broadband network, which is a big challenge. Operators will benefit from a higher degree of integration of the mobile infrastructure system IC solve program, because they cost the transition to 4G networks. “
As mentioned earlier, Axxia platform provide highly differentiated multi-core chip and software architecture can achieve scalability and identify performance benefits to customers include: capital expenditures can be reduced by 50%; while the power consumption improvements reduce power consumption by 50% reduction of operating costs; simplified software architecture cocoa to help customers reduce software development work; the active industrial environment can be enhanced debugging capabilities, thus speeding up the listing process; while a high level of system integration can reduce the cost of materials (such as memory and switch) ; uncertainty platform can also shorten the delay, to improve the user experience, and so on.
Figure 3: the Axxia wireless platform ecosystem including IP cores, OS platform and developer tools for ISVs, ODMs, CMs and other partners, providing a strong industrial environment of support.
As service providers compete to deploy 4G wireless infrastructure, LSI is bound growth expected customer demand for reliable integration solutions, was founded a few years ago a the Axxia wireless ecological system, combined with IP cores, operating systems and tools various partners, developers, independent software developers (ISVs), ODM, CM, to the advantage of price, performance, and flexible power range of products both Axxia series to help wireless equipment manufacturers to accelerate time to market, reduce software investment.
LSI and its ecosystem partners recently announced the plans of the wireless platform, pre-integrated solutions to provide optimal performance for their own the Axxia wireless platform to provide stronger support industrial environment. LSI ecosystem partners are encouraged to focus on the benefits of development features, and performance differentiation, rather than using a dedicated interface.
This wireless ecosystem platform provides a proven, scalable, multi-function software platform to support multiple generations of Axxia product line; consistent software architecture to simplify the customer transplantation of the the Axxia products enable customers to choose the best. Framework API LSI architecture oversight functions allow open access to different ecosystem partners.Ecosystem partners committed LSI architecture to optimize performance and support the strategic objectives of the wireless platform.
For example, LSI is in cooperation with the main partners in the the Axxia wireless industry environment Radisys Trillium 3G and LTE wireless protocol software specifically for the LSI Axxia platform integration and optimization. Axxia platform so that you can take advantage of a unique, scalable capacity and performance, simple and convenient to deploy the Radisys wireless software.
Such wireless ecosystem platform plans to help the wireless OEM manufacturers and their suppliers ecosystem response to earnings challenges, accelerate time to market, lower total cost of ownership.Reduce software investment to achieve higher performance of OTB. At the same time minimizing the cost of the non-differentiated products. Reduce technical barriers, you can choose more cost effective, lower power consumption optimal product!
(This article is LSI Corporation feed)
Windows Azure Media Services OR Intel & Microsoft going together in the consumer space (again)?
With Intel Media: 10-20 year leap in television this year [Feb 16, 2013] and Microsoft entertainment as an affordable premium offering to be built on the basis of the Xbox console and Xbox LIVE services [Feb 13, 2013] this is a highly probable assumption.
There is other evidence as well. In fact plenty of them. Especially from Microsoft side:
The Entertainment and Devices Division (EDD) of Microsof is currently the place where all of Microsoft consumer-only activities are concentrated. EDD revenue, however, was 11% down for the latest quarter vs. that of a year ago. Moreover, it was just 17.6% of the overall Microsoft revenue vs. 20.3% in the quarter a year ago.
In addition:
– in Microsoft Reports Record Revenue of $21.5 Billion in Second Quarter [Microsoft press release, Jan 24, 2013] great progress was reported in the non-consumer segments of Microsoft:
“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” said Steve Ballmer, chief executive officer at Microsoft. “With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”
The Windows Division posted revenue of $5.88 billion, a 24% increase from the prior year period. Adjusting for the net deferral of revenue for the Windows Upgrade Offer and the recognition of the previously deferred revenue from Windows 8 Pre-sales, Windows Division non-GAAP revenue increased 11% for the second quarter. Microsoft has sold over 60 million Windows 8 licenses to date.
“We saw strong growth in our enterprise business driven by multi-year commitments to the Microsoft platform, which positions us well for long-term growth,” said Peter Klein, chief financial officer at Microsoft. “Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and the Microsoft Business Division.”
The Server & Tools business reported $5.19 billion of revenue, a 9% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.
“We see strong momentum in our enterprise business. With the launch of SQL Server 2012 and Windows Server 2012, we continue to see healthy growth in our data platform and infrastructure businesses and win share from our competitors,” said Kevin Turner, chief operating officer at Microsoft. “With the coming launch of the new Office, we will provide a cloud-enabled suite of products that will deliver unparalleled productivity and flexibility.”
The Microsoft Business Division posted $5.69 billion of revenue, a 10% decrease from the prior year period. Adjusting for the impact of the Office Upgrade Offer and Pre-sales, Microsoft Business Division non-GAAP revenue increased 3% for the second quarter. Revenue from Microsoft’s productivity server offerings – collectively including Lync, SharePoint, and Exchange – continued double-digit percentage growth.
– while Entertainment and Devices Division Performance and KPIs for Earnings Release FY13 Q2 [Microsoft Investor Relations, Jan 24, 2013] were reported as:
Continued leadership position in console market
- 5.9M consoles sold, down 28%
- Halo 4 best-selling title of gaming franchise
- Xbox LIVE members >40 million
- Windows Phone sales were over 4 times greater than last year
- 138 billion minutes of calls on Skype in quarter, up 59%
EDD revenue decreased, primarily due to lower Xbox 360 platform revenue, offset in part by higher Windows Phone revenue. Xbox 360 platform revenue decreased $1.1 billion or 29%, due mainly to lower volumes of consoles sold and lower video game revenue, offset in part by higher Xbox LIVE revenue. We shipped 5.9 million Xbox 360 consoles during the second quarter of fiscal year 2013, compared with 8.2 million Xbox 360 consoles during the second quarter of fiscal year 2012. Video game revenue decreased, primarily due to $380 million of revenue deferred associated with the Video Game Deferral. Windows Phone revenue increased $546 million, including patent licensing revenue and increased sales of Windows Phone licenses.
EDD operating income increased, due mainly to lower cost of revenue and sales and marketing expenses, offset in part by decreased revenue and increased research and development expenses. Cost of revenue decreased $544 million or 19%, mainly due to decreased sales of Xbox 360 consoles, offset in part by payments made to Nokia related to joint strategic initiatives and increased royalties on Xbox LIVE content and video games. Sales and marketing expenses decreased $92 million or 21%, primarily reflecting decreased Xbox 360 platform marketing. Research and development expenses increased $98 million or 25%, primarily reflecting higher headcount-related expenses.
– and here we should consider the following Segment Information for the Entertainment & Devices Division excerpted on Feb 17, 2013:
Entertainment and Devices Division (“EDD”) develops and markets products and services designed to entertain and connect people. EDD offerings include the Xbox 360 entertainment platform (which includes the Xbox 360 gaming and entertainment console, Kinect for Xbox 360, Xbox 360 video games, Xbox LIVE, and Xbox 360 accessories), Mediaroom (our Internet protocol television software), Skype, and Windows Phone, including related patent licensing revenue. We acquired Skype on October 13, 2011, and its results of operations from that date are reflected in our results.
Note here the inclusion of Mediaroom (MS IPTV platform) into the portfolio which was not in the FY12 portfolio as per Microsoft 2012 Annual Report [Microsoft Investor Relations, Oct 9, 2012]. Mediaroom is described by the Microsoft Mediaroom Newsroom [excerpt as of Feb 17, 2013] as:
Microsoft Mediaroom powers multi-screen entertainment services for consumers in partnership with operators. Visit: Mediaroom Website
Microsoft Mediaroom is the world’s most deployed IPTV platform. Mediaroom-powered TV services are being offered by more than 40 of the world’s leading operators, delivering services to more than eleven million consumer households equaling more than 22 million set top boxes deployed throughout the Americas, EMEA and APAC. Operator partners including AT&T, Deutsche Telekom and TELUS are already giving their subscribers the freedom to watch TV how they want, while gaining the most innovative ways to reach them wherever they are.
As another notable change according to Announcing the Windows 8 Editions [Building Windows 8 blog, April 16, 2012]
Windows Media Center will be available as an economical “media pack” add-on to Windows 8 Pro. If you are an enthusiast or you want to use your PC in a business environment, you will want Windows 8 Pro.
With further details provided in Making Windows Media Center available in Windows 8 [Building Windows 8 blog, May 4, 2012]
On the PC, … online sources [such as YouTube, Hulu, Netflix] are growing much faster than DVD & broadcast TV consumption, which are in sharp decline (no matter how you measure—unique users, minutes, percentage of sources, etc.). Globally, DVD sales have declined significantly year over year and Blu-ray on PCs is losing momentum as well. Watching broadcast TV on PCs, while incredibly important for some of you, has also declined steadily. These traditional media playback scenarios, optical media and broadcast TV, require a specialized set of decoders (and hardware) that cost a significant amount in royalties. With these decoders built into most Windows 7 editions, the industry has faced those costs broadly, regardless of whether or not a given device includes an optical drive or TV tuner.
Our partners have shared clear concerns over the costs associated with codec licensing for traditional media playback, especially as Windows 8 enables an unprecedented variety of form factors. Windows has addressed these concerns in the past by limiting availability of these experiences to specialized “media” or “premium” editions. At the same time, we also heard clear feedback from customers and partners that led to our much simplified Windows 8 editions lineup.
Given the changing landscape, the cost of decoder licensing, and the importance of a straight forward edition plan, we’ve decided to make Windows Media Center available to Windows 8 customers via the Add Features to Windows 8 control panel (formerly known as Windows Anytime Upgrade). This ensures that customers who are interested in Media Center have a convenient way to get it. Windows Media Player will continue to be available in all editions, but without DVD playback support. For optical discs playback on new Windows 8 devices, we are going to rely on the many quality solutions on the market, which provide great experiences for both DVD and Blu-ray.
Windows 8 Pro is designed to help tech enthusiasts obtain a broader set of Windows 8 technologies. Acquiring either the Windows 8 Media Center Pack or the Windows 8 Pro Pack gives you Media Center, including DVD playback (in Media Center, not in Media Player), broadcast TV recording and playback (DBV-T/S, ISDB-S/T, DMBH, and ATSC), and VOB file playback.
According to Should I Upgrade to Windows 8 Media Center? [About.com Guide, Nov 23, 2012]
The short answer? No. As of this writing, Media Center 8 is an exact duplicate of Media Center 7. No new features, no improvements, nothing.
So with Windows 8 Microsoft was clearly placing the bet on the on-line video!
Then we should consider also that Microsoft was just Announcing Release of Windows Azure Media Services [Scott Guthrie’s blog, Jan 22, 2013] supporting Xbox and IPTV (?i.e. when instead of Mediaroom –I would assume [to be verified!]– the content comes to the IPTV set-top boxes from Windows Azure Media Services?) as well:
![]()
with the following conceptual functionality (“architecture”) inside: ![]()
What was announced is the V1 of the cloud-based variety of the overall Microsoft Media Platform (built on foundations of Windows Azure, Internet Information Services, Smooth Streaming and PlayReady) as defined in Microsoft Media Platform: Encoding and Serving Choices and Migration Considerations [Microsoft whitepaper, Jan 2, 2013] (corrections, emphases and additions are mine):
Two Microsoft Media Platform Technologies are on-premises (that is, they run on servers placed directly in an enterprise), while the latest, Windows Azure Media Services, is cloud-based as part of Microsoft’s Windows Azure cloud computing platform ( http://www.windowsazure.com/).
On-premises media technologies:
- Windows Media Services (with versions for Windows Server 2008 and Windows Server 2008 R2)
- IIS Media Services 4.1 (which runs on Windows Server 2008, Windows Server 2008 R2, and Windows Server 2012)
Cloud-based media technologies:
The initial components of Windows Azure Media Services, including Ingest [Upload media], Encoding [encode assets using a range of standard codecs, including popular adaptive bitrate formats], Content Protection [store and deliver your content securely using Microsoft PlayReady DRM or Apple AES Encryption], and On-Demand [Streaming] [deliver a fast, smooth, and adaptive experience to users while leveraging format conversion on the fly], are available
or shipping soonwith this release. Advertising (Ad Insertion) is currently available through Client SDKs. Additional components, including Live Streaming and Analytics, will be rolled out as they become available. When all of the components are in place, Windows Azure Media Services will offer a complete end-to-end media services solution, including video ingest, encoding and conversion, content protection, on-demand streaming, live streaming, and analytics.…
The current environment for video streaming is experiencing new challenges. The video portion of Internet traffic today is significant and growing rapidly, as is the number of internet connected TVs and mobile devices. In this environment, video providers and broadcasters are switching to IP as the medium of choice to reach this wide diversity of endpoints.
To address these challenges, Windows Azure Media Services is designed to become a one-stop platform for securely encoding, packaging, and delivering video content from Windows Azure or CDNs, thus offering the scalability and reach of the cloud.
Some of advantages of migrating to Windows Azure Media Services are:
- Windows Azure Media Services has the scalability and reliability of a cloud platform and can handle large bursts in demand for video applications.
- It is widely available for a global audience and can use third-party CDNs like Akamai, Level3, or Limelight.
- Windows Azure Media Services has cloud-based versions of familiar Microsoft Media Platform and media partner technologies.
- As a Platform-as-a-Service (PaaS), Windows Azure Media Services is faster, cheaper, and lowers risk:
- PaaS is faster because there is less work for developers. End-to-end solutions benefit from a single platform that solves integration issues. As a result, applications can go from idea to availability more quickly.
- PaaS is cheaper because it offers less administration and management overhead, and greater economies of scale: you pay only for what you use, and large capital outlays for media servers and network infrastructure can be replaced by the more efficient operating expenses of cloud computing.
- PaaS lowers risk. Because the platform does more for you, there are fewer opportunities for error.
- Security Standards and Certifications: Windows Azure Media Services Security is working towards SOC2 (Service Organization Control 2) compliance and plans to complete a CDSA (Content Delivery and Security Association) certification process and an MPAA audit in 2013.
Windows Azure Media Services have the flexibility and power to enable you to create whatever media services solution that you envision. Some key usage scenarios are:
- Creating an end-to-end workflow in the cloud. For example, a content management service can use Windows Azure Media Services to process on-demand Smooth Streaming video and distribute it to a variety of mobile and desktop clients.
- Developing hybrid workflows that incorporate pre-existing on-premises resources. For example, a video production house might upload its finished videos to Windows Azure Media Services for encoding into multiple formats, and then use the Windows Azure Media Services Origin Service and a third-party CDN to deliver video on demand.
- Choosing to utilize built-in Media Services components, or mixing and matching your own custom components or components from third parties. Individual Windows Azure Media Services components can be called via standard REST APIs for easy integration with external applications and services.
[see more detailed information in the whitepaper itself and in the announcement blog referred earlier]
I should only highlight one particular additional feature with the V1 release from Announcing Release of Windows Azure Media Services [Scott Guthrie’s blog, Jan 22, 2013]
… our on-demand streaming support also now gives you a cool new feature we call dynamic packaging.
Traditionally, once content has been encoded, it needs to be packaged and stored for multiple targeted clients (iOS, XBox, PC, etc.). This traditional packaging process converts multi-bitrate MP4 files into multi-bitrate HLS file-sets or multi-bitrate Smooth Streaming files. This triples the storage requirements and adds significant processing cost and delay.
With dynamic packaging, we now allow users to store a single file format and stream to many adaptive protocol formats automatically. The packaging and conversion happens in real-time on the origin server which results in significant storage cost and time savings:
Today the source formats can be multi-bitrate MP4 or Smooth based, and these can be converted dynamically to either HLS or Smooth. The pluggable nature of this architecture will allow us, over the next few months, to also add DASH Live Profile streaming of fragmented MP-4 segments using time-based indexing as well. The support of HLS and the addition of DASH enables an ecosystem-friendly model based on common and standards-based streaming protocols, and ensures that you can target any type of device.
ADDITIONAL MPEG DASH / MICROSOFT RELATED INFORMATION:
– Microsoft Announces Support for MPEG-DASH in Microsoft Media Platform [Microsoft Media Platform team blog, April 16, 2012]
– Alex Zambelli of Microsoft at Streaming Media West – held on Oct 30-31, 2012 [streamingmediavideo YouTube channel, published on Jan 2, 2013]
as well as the quite universal aspect of multitargeting even in this V1:
Consume
Windows Azure Media Services provides a large set of client player SDKs for all major devices and platforms, and they let you not only reach any device with a format that’s best suited for that device – but also build a custom player experience that uniquely integrates into your product or service.
Your users can consume media assets by building rich media applications rapidly on many platforms, such as Windows, iOS, XBox, etc. At this time, we ship SDKs and player frameworks for:
- Windows 8
- iOS
- Xbox
- Flash Player (built using Adobe OSMF)
- Silverlight
- Windows Phone
- Android
- Embedded devices (Connected TV, IPTV)
To complement all that here is a brief introduction into the whole Microsoft Media Platform (the on-premises varieties as well) followed in details with how HTML5 is fitting into that, from streamingmediavideo YouTube channel [May 9, 2012]:
In Streaming Servers 2012: New Features, New Opportunities [StreamingMedia.com, Oct 24, 2012] the latest features of the streaming server/platform solutions from Adobe, Anevia, CodeShop, Microsoft, and RealNetworks are overviewed, together with some upcoming features. This shows quite well how much the Microsoft Media Platform is advanced and hence could be the best platform for such an effort as that of Intel Media.
There is a wortwhile comment as well from the same Microsoft specialist as already shown in the videos above:
Alex Zambelli · Seattle, Washington
Hi Tim,
Just a few corrections: The latest version of IIS Media Services, known as IIS Media Services 5.0 Premium, targeting OTT linear TV scenarios is available exclusively to Mediaroom customers as part of Mediaroom Component Technologies.
See also: How to Use Continuous Network DVR Feature in PlayReady Premium and IIS Media Services Premium? [PlayReady blog, Dec 29, 2012] “PlayReady 2.x Premium and IIS Media Services 5.0 Premium have enabled the following four key features which are needed for scalable live TV service:”
This is showing that Mediaroom is using the latest technologies available in the Microsoft Media Platform along with Windows Azure Media Services.
Finally Intel Media is heavily betting on the new H.265/HEVC standard. This is how the same Alex Zambelli (since January working for a premium video workflow services and products partner of Microsoft) is viewing this issue in his H.265/HEVC Ratification and 4K Video Streaming [Alex Zambelli’s Streaming Media Blog, Jan 28, 2013] post:
The media world today is abuzz with news of H.265/HEVC approval by the ITU. In case you’ve been hiding from NAB/IBC/SM events for the past two years – or if you’re a WebM hermit – I will have you know that H.265 is the successor standard to H.264, aka MPEG-4 AVC. As was the case with its predecessor it is the product of years of collaboration between the ISO/IEC Moving Picture Experts Group (MPEG) and the International Telecommunications Union (ITU) Video Coding Experts Group (VCEG). The new video coding standard is important because it promises bandwidth savings of about 40-45% for the same quality as H.264. In a world where video is increasingly being delivered over-the-top and bandwidth is not free – that kind of savings is a big deal.
What most media reports seem to have focused on is the potential effect that H.265 will have on bringing us closer to 4K video resolution in OTT delivery. Most reports speculate that H.265 will allow 4K video to be delivered over the Internet at bit rates between 20 and 30 Mbps. In comparison, my friend Bob Cowherd recently theorized on his blog that 4K delivery using the current H.264 video standard would require about 45 Mbps to deliver 4K video OTT.
While I think the relative difference between those two estimates is in the ballpark of the 40% bandwidth savings that H.265 promises, I actually think that both estimates are somewhat pessimistic. Given the current state of video streaming technology, I think we’ll actually be able to deliver 4K video at lower bit rates when the time comes for 4K streaming.
A common mistake that most people dealing with lossy video compression seem to make is to assume that the ratio between bit rate (bps) and picture size (pixels/sec) remains proportional and fixed as the values of both axis change. I don’t think that’s the case. I believe that the relationship between bit rate and picture size is not linear, but closer to a power function that looks like this:
In other words, I believe that as the pixel count gets higher a DCT-based video codec requires fewer bits to maintain the same level of visual quality. Here’s why:
The size of a 16×16 macroblock, which is the smallest unit of DCT-based compression used in contemporary codecs such as H.264 and VC-1, grows smaller relative to the total size of the video image as the image resolution grows higher. For example, in a 320×180 video the 16×16 macroblock represents 0.444% of the total image size, whereas in a 1920×1080 video the 16×16 macroblock represents only 0.0123% of the total image. A badly compressed macroblock in a 320×180 frame would therefore be more objectionable than a badly compressed macroblock in a 1920×1080 frame.
As many studies have shown, the law of diminishing returns applies to video/image resolution too. If you sit at a fixed distance from your video display device eventually you will no longer be able to distinguish the difference between 720p, 1080p and 4K resolutions due to your eye’s inability to resolve tiny pixels from a certain distance. Ipso facto, as the video resolution goes up your eyes become less likely to distinguish compression artifacts too – which means the video compression can afford to get sloppier.
Historically the bit rates used for OTT video delivery and streaming have been much lower than those used in broadcasting, consumer electronics and physical media. For example, digital broadcast HDTV typically averages ~19 Mbps for video (in CBR mode), while most Blu-ray 1080p videos average ~15-20 Mbps (in 2-pass VBR mode). Those kinds of bit rates are possible because those delivery channels have the luxury of either dedicated bandwidth or high-capacity physical media. However, in the OTT and streaming world video bit rate has always been shortchanged in comparison. Most 720p30 video streaming today, whether live or on-demand, is encoded at average 2.5-3.5 Mbps (depending on complexity and frame rate). 1080p30 video, when available, is usually streamed at 5-6 Mbps. Whereas Blu-ray tries to give us movies at a quality level approaching visual transparency, streaming/OTT is completely driven by the economics of bandwidth and consequently only gives us video at the minimum bit rate required to make the video look generally acceptable (and worthy of its HD moniker). To put it bluntly, streaming video is not yet a videophile’s medium.
So taking those factors into consideration, what kind of bandwidth should we expect for 4K video OTT delivery? If 1080p video is currently being widely streamed online using H.264 compression at 6 Mbps, then 4K (4096×2304) video could probably be delivered at bit rates around 18-20 Mbps using the same codec at similar quality levels. Again, remember, we’re not comparing Blu-ray quality levels here – we’re comparing 2013 OTT quality levels which are “good enough” but not ideal. If we switch from H.264 to H.265 compression we could probably expect OTT delivery of 4K video at bit rates closer to 12-15 Mbps(assuming H.265′s 40% efficiency improvements do indeed come true). I should note that those estimates are only applicable to 24-30 fps video. If the dream of 4K OTT video also carries an implication of high frame rates – e.g. 48 to 120 fps – then the bandwidth requirements would certainly go up accordingly too. But if the goal is simply to stream a 4K version of “Lawrence of Arabia” into your home at 24 fps, that dream might be closer to reality than you think.
One last thing: In his report about H.265 Ryan Lawler writes that “nearly every video publisher has standardized [H.264] after the release of the iPad and several other connected devices. It seems crazy now, but once upon a time, Apple’s adoption of H.264 and insistence on HTML5-based video players was controversial – especially since most video before the iPad was encoded in VP6 to play through Adobe’s proprietary Flash player.” Not so fast, Ryan. While Apple does deserve credit for backing H.264 against alternatives, they were hardly the pioneers of H.264 web streaming. H.264 was already a mandatory part of the HD-DVD and Blu-ray specifications when those formats launched in 2006 as symbols of the new HD video movement. Adobe added H.264 support to Flash 9 (“Moviestar”) in December 2007. Microsoft added H.264 support to Silverlight 3 and Windows 7 in July 2009. The Apple iPad did not launch until April 2010, which was also the same month Steve Jobs posted his infamous “Thoughts on Flash” blog post. So while Apple certainly did contribute to H.264′s success, they were hardly the controversial H.264 advocate Ryan makes them out to be. H.264 was already widely accepted at that point and its success was simply a matter of time.
More information:
– What Is HEVC (H.265)? [StreamingMedia.com, Feb 14, 2013]
– Episode 99 – Windows Azure Media Services General Availibility [Microsoft Channel 9 video, Jan 25, 2013]
In this episode Nick Harris and Nate Totten are joined by Mingfei Yan Program Manager II on Windows Azure Media Services. With Windows Azure Media Services reaching General Availability Mingfei joined us to demonstrate how you can use it to build great, extremely scalable, end-to-end media solutions for streaming on-demand video to consumers on any device and in this particular demo shows off the portal, encoding and both a Windows Store app and iOS device consuming encoded content.
For more information visit the Windows Azure Media Services page to learn more about the capabilities, and visit the Windows Azure Media Service Dev Center for tutorials, how-to articles, blogs, and more information and get started building applications with it today!
– How to build customized Media Workflows using the Media Services .NET SDK – Part I [Microsoft Channel 9 video, Feb 5, 2013]
In this two part video, Mingfei Yan will teach you how to use the Windows Azure Media Services .NET SDK to create your own media workflow including how to upload, encode, package and deliver your video assets. In this part you will learn how to create media asset and upload a video file from local drive.
After completing this part you can watch part II here. You can get started with Windows Azure Media Services today for free!
– How to build customized Media Workflows using the Media Services .NET SDK – Part II [Microsoft Channel 9 video, Feb 5, 2013]
– IMPORTANT: Client Ecosystem for Windows Azure Media Services [Mingfei Yan blog, Jan 14, 2013]
This blog gives an overview of what kind of client support Microsoft offers as part of Windows Azure media Services. On one side, you could create, manage, package and deliver media asset through Windows Azure media services. Many popular streaming formats are supported, such as Smooth Streaming, Http Llive Streaming and MPEG-dash. On the other hand, we provide various SDKs and frameworks for you to consume media asset by building rich media applications rapidly on many platforms, such as PC, XBox, mobile and etc.
– What is Windows Azure Media Services [Mingfei Yan blog, Aug 21, 2012]
– Introducing Microsoft Media Platform [Media & Entertainment Insights blog, April 12, 2011]
– Microsoft Media Platform – David Sayed interview [Quantel blog April 20, 2011]
– H2 2012 Media Platform Product Update Roundup [Alex Zambelli’s Streaming Media Blog, Nov 16, 2012]: “It’s been a busy summer with most of the team focused on Windows Azure Media Services, but I’d like to take a moment to highlight a few other Media Platform releases of the past few months:”
– Mediaroom 2.0 Unites Software and Cloud Services to Power New TV Experiences Across Three Screens [Media & Entertainment Insights blog, April 6, 2010]
Intel Media: 10-20 year leap in television this year
Updates: Coming Soon: Intel’s Must-See TV [Barrons.com, June 22, 2013]
The chip giant readies a TV subscription service powered by a set-top box unlike any other.
Full disclosure, dear readers—I’m not a TV viewer. I chucked the set years ago and mainly watch things on computers.
But then, television hasn’t changed much in decades, so I feel I’m still qualified to opine on the boob tube’s future. And two weeks ago, I was fortunate enough to glimpse a possible part of that future at the Santa Clara, Calif., headquarters of Intel (ticker: INTC), where I saw a TV service that is novel, elegant, and highly desirable, even to a television Luddite like me. The service faces a number of hurdles, including potential obstruction by the cable and telephone industries, but what I witnessed could take Intel in a thrilling new direction.
Sometime this year, the chip giant will offer a set-top box at retail, with a subscription service that brings you live television over your broadband Internet connection.
It is, in industry argot, an “over the top” video connection, requiring no actual TV package from the four major “multiple system operators,” or MSOs, as they’re called—Comcast (CMCSA), Cablevision (CVC), Time Warner Cable (TWC), and Charter Communications (CHTR)—or from Verizon Communications (VZ) and AT&T(T).
WITHOUT GIVING TOO MUCH AWAY, the user interface seemed to hover beautifully above the currently playing show. An elegant simple menu made it easy to switch between channels or to pick and rent a recent film. It was light years from the cumbersome garbage that takes up most of the screen when using a standard cable-channel picker.
There was a wide array of popular channels to choose from that would be familiar to any couch potato, though the final lineup is still being formulated. Equally important, when you hit the button on the remote, the TV seemed to jump to the next channel faster than is typical on cable. There also is a time-shifting aspect that goes beyond DVR, allowing you to go back through recent episodes.
One wonders: Why hasn’t TV always been this way?
Others who’ve viewed the project are enthusiastic, too. “The No. 1 thing I noticed was speed,” says Patrick Moorhead of Moor Insights & Strategy. Intel’s horsepower in the set-top is partially responsible for this, but multiple data centers that Intel is building to serve video also were a factor. “A lot of the value comes from what they’ve done on the back end,” says Moorhead. “They have the highest-performance Intel servers and video-encoding technology.” And he notes, “This is live television,” unlike other over-the-top offerings, like those from the TV network consortium Hulu, Apple‘s (AAPL) AppleTV,Netflix (NFLX), or closely held Roku, which merely provide on-demand content from a back catalog. “It’s something I’ve never experienced before” in an Internet offering, Moorhead adds.
No less thrilling is the fact that Intel, which makes $53 billion in yearly revenue from selling chips, and spends billions to make them, is becoming both a hardware and software vendor.
The project is the effort of Erik Huggers and his staff of 350 people. Huggers, 40, won praise for developing the iPlayer for the BBC, a piece of video software that allows one to follow the channel’s TV and radio broadcasts. He came to Intel two years ago to advance efforts to sell chips to set-top makers. He made a bold move in telling his boss that the $4.5 billion TV-chip market wasn’t desirable. “The market was split up between 20 or more silicon providers, and it was a race to the bottom on prices,” says Huggers. “I said, ‘I don’t know how we ever turn that into a profitable market.’ ” Instead, he pleaded, “Release me to go after the $500 billion television market in a very different way.” He got his wish.
Erik Huggers over het televisieproject van Intel (Erik Huggers ons the television project of Intel) [MT Management Team, May 13, 2013] the essence of which is summarized below (the quotes were translated from Dutch):
Hired in April 2011 and spending with 12 others 3 months on the plan Erik Huggers suggested that instead of manufacturing and selling chips for smart TVs and similar products Intel should take a different course of developing a complete TV solution. He got an approval for that in December 2011 and since he managed to grow the project to a 300+ people organisation working in tight separation from the rest of the Intel and in stealth mode typical of Silicon Valley. He used the so called acquihire approach (a novel thing although used by Facebook very much) to speed up the process when “you at once take a whole team of a company over, but not the company itself”. Intel Media bought in this way a number of “very targeted small businesses”. So it was only twelve months needed to arrive at “a device, the software, the user interface, design, packaging, branding, all services, the back-end and various deals.”
Such urgency was essential “because I think the time for over-the-top live television has arrived.” The product will initially be launched in the U.S. only as it is the largest media market in the world which also happens to be the most difficult one as it is so saturated and “ if you come up with something new, you have to have something very good.” They are going to offer “live TV, catch-up TV, Video On Demand as a transaction model, an iTunes-like service so that you pay per viewing time. And in addition, we will offer what they call in the United States electronic selltrue. You can buy a digital copy of a film in the cloud, which is playable on various devices.” That is there will be various payment models behind the television service of the Intel Media.
It was initially difficult to convince content providers to come on the board. He said that “there are a total of nine parties in America depositing content to consumers, plus another 5 or 6 providers like Comcast. It is a very concentrated market, where we now stand as a newcomer. The balance in this market is very, um, let me just say very interesting. The established parties are very close to each other and have a lot to do with each other. The idea to deliver video over the Internet television is as revolutionary. We will use the infrastructure of the cable company, which is the same infrastructure they sell to consumers. It was so difficult to explain that, now it’s purely for the execution.”
With 300+ people Intel Media will compete in such an environment. It is even more unusual as “we compete with companies like Comcast, which has 80,000 employees, and it’s just one of the many parties that are active in this market” he said. They are going to launch before the end of the year and see the iPod as an example to follow. He said: “Look at the rise of the iPod. Around 2004, in 2005 there were hundreds of MP3 players, but none worked really well. Then came the iPod and was at one time game over for all other players. The current state of affairs of smart television and streaming boxes is similar to the mp3 world for the introduction of the iPod. It is interesting that a lot like Apple, to date at least, very disappointing in television. Apple TV works fine, but it is not revolutionary. ”
Regarding his first public announcements two months ago (which is detailed in this original post below) he said: “The reason I sit at All Things Digital on stage was because we had to show. Just 4 or 5 weeks before, during CES, senior officials from the media industry had seen our product. Sometimes more than 10 people per company. So between 100 to 200 people have seen the device, and all like to talk. … In addition, we were just starting to roll out the product to Intel employees. First it was tested by fifty families, but we wanted to test it on scale. So currently it is used by 1,000 families in Arizona, California and Oregon. Soon we will go to 5,000 families. They are all Intel household, so with people who are with us on the payroll. Now as it is seen slowly but surely seen by more people, it is better to put a story myself. You don’t have control, but so you can do a twist of your own. You don’t want it through the back door on some blog. But we still have very many details omitted. That we keep it that way, until we are ready.”
End of updates
Excerpts from Video – Dive Into Media: Intel’s Erik Huggers on What’s Next for Web TV [Feb 12, 2013] – the full transcript will follow in a separate section later on:
[00:38] “We have been working for about a year now to set up a new group called Intel Media, … a new group focused on developing an Internet TV platform.”
[~2:00] “For the first time … we will deliver a new consumer electronics product that consumers will buy directly from us or through retail under a new brand. This is obviously associated with Intel brand. It is an Intel powered device, it is a consumer electronics product with beautiful industrial design powered by, obviously, an Intel chip. That’s not where it ends, it’s not just the device. Where it really gets interesting is, we are working with the entire industry to figure out how do we get proper TV delivered via the Internet to consumers.”
ADDITIONAL INSERT BBC iPlayer (Global) – Available for iPad, iPhone and iPod Touch! [BBCiplayerglobal YouTube channel, Sept 28, 2011]
[03:08] “At the BBC we launched the product in 2007 called BBC iPlayer. The iPlayer is the promise to consumers, to audiences that we would make the unmissible truly unmissible. And so what does that mean: basically all the BBC output, everything on radio and television networks, is available from transmission points plus seven days on over 650 different devices. And so this is not a cherry pick of a variety of products for output, this is literally everything. So if you missed something you don’t have to record it because it’s already there. It’s a cloud based service that offers you catch up. [03:50]
ADDITIONAL INSERT BBC WiE: Daniel Danker on evolving the BBC iPlayer [TheBBCAcademy YouTube channel, Aug 9, 2012]
– Android: An update [Dave Price, Head of BBC iPlayer on BBC Internet blog, Dec 12, 2012]: “Android as a platform is becoming increasingly complex and fragmented with a huge difference between video playback capabilities across the 1500+ Android devices.”
– BBC has new competitors, warns iPlayer boss Daniel Danker [BBC Ariel, Feb 8, 2013]
Daniel Danker, the general manager for on-demand and iPlayer, said that the BBC’s fiercest and most nimble competitors are no longer likely to be Sky, Channel 4 and ITV.
‘I think we are measuring ourselves against the wrong competitors, because actually the companies that are most likely to be disruptive in what we do are Google through YouTube, Amazon through LoveFilm and Netflix,’ he told Ariel in an exclusive interview on Thursday.
… Today, iPlayer reaches about 25% of the UK every month, he said, but YouTube reaches about 40%. …
… American giant Netflix is leading the way by releasing its drama House of Cards online to its subscribers. It took a gamble by releasing the entire series, a remake of a BBC political drama from 1990, immediately.
Danker, an Israeli-born American who spent 11 years at Microsoft, said the series is ‘pretty good’ and has attracted big names, including Kevin Spacey. He called Netflix ‘innovative and nimble’. …
… The iPlayer manager said that in YouTube’s Soho offices, artists and content creators are being asked to ‘professionalise their content’ at specially built studios. He predicted that it won’t be ‘skateboarding chimpanzees’ for much longer, but high-quality content. …
[~12:00] “I don’t believe that the industry’s ready for pure a’la cart [where you only pay for the channels you want]”, he stated and suggested that this would be a great opportunity to create offers that provide users with greater flexibility. “I believe there’s value in bundles, I believe that is a form of curation” he concluded.
[~ 13:30] “This thing looks like a leap in time of 10-20 years compared to what you have today. That is much more personal, that learns about you, that actually cares about who you are.”
[~14:00] “We think there’s real value in the ability to actually identify the various users. Today, television doesn’t really know anything about you. It’s the same television service for everyone in the household. In order to actually recognise who is there and to offer you your personal experience, rather than having to log in or put your fingerprint or do a retina scan whatever, to make it completely seamless you need a camera. If you don’t like the idea of a camera, you think it’s creepy there is a nice little shutter and you just close the camera” Huggers said.
[~19:00-20:00] “Intel is very interested in getting into consumer businesses, having a direct relationship with those consumers. Intel as a company is making a big shift towards, what Intel calls, becoming an experience driven company.”
[~22:00] “We have gone out of our way to bring a completely new class, new type of skill sets into this crew. And we’ve set the group up in such a way that it is run in its own building, complete own building, with our own security, we have our own culture. We are still proud to be part of Intel, don’t make any mistakes, but this is a new effort.”
[~25:00] “It’s not a value play, it’s a quality play where we’ll create a superior experience for the end user.”
[~35:00] “The model that we are envisioning is a model where live TV and catch up TV all live in the same paradigm. These are not different applications, and so if you’re a programmer why would you want your catch up programs to live in an app somewhere else? Why doesn’t that live under your brand?”
Video – Dive Into Media:
Intel’s Erik Huggers on What’s Next for Web TV – WSJ.com
[Feb 12, 2013]
Intel’s Erik Huggers on What’s Next for Web TV – WSJ.com
Intel’s Erik Huggers took the stage with Walt Mossberg at D: Dive Into Media on Tuesday [Feb 12, 2013] to talk about the company’s forthcoming TV device that he describes as revolutionary.
My transcript (lead reporter is Walt Mossberg, his second in command is Peter Kafka):
[00:38] We have been working for about a year now to set up a new group called Intel Media. It’s a completely new division with new people, sort of a mix of existing Intel people with a lot of people from outside the company. To give you an example we hired people from Apple, from Jawbone, from Microsoft, from the BBC, and the list goes on, even Netflix and Google. So it’s a new group focused on developing an Internet TV platform.
There’s no other Internet TV platfom?
There’s quite a few out there but my opinion is that not many have yet actually cracked it, not many have truly delivered.
Have any cracked it in your opinion?
No, actually. That’s my opinion.
Just to be clear. You are talking about becoming a pay TV service to deliver video over the web like instead of paying cable company for video I will pay you.
That’s right. And so for the first time what we will do we will actually deliver a couple things to consumers. We will deliver a new consumer electronics product that consumers will buy directly from us or through retail under a new brand. This is obviously associated with Intel brand. [01:56]
[02:12] It is an Intel powered device, it is a consumer electronics product with beautiful industrial design powered by, obviously, an Intel chip. That’s not where it ends, it’s not just the device. Where it really gets interesting is, we are working with the entire industry to figure out how do we get proper TV delivered via the Internet to consumers.
This is an over the top service where we will deliver both live television, broadcasts, cable nets and other output, but also have catch up TV and introduce that properly to this market Because I personally think catch up TV still really doesn’t exist here, not as it exists in Europe today. And will have on demand and a host of applications. [02:57]
[03:08] At the BBC we launched the product in 2007 called BBC iPlayer. The iPlayer is the promise to consumers, to audiences that we would make the unmissible truly unmissible. And so what does that mean: basically all the BBC output, everything on radio and television networks, is available from transmission points plus seven days on over 650 different devices. And so this is not a cherry pick of a variety of products for output, this is literally everything. So if you missed something you don’t have to record it because it’s already there. It’s a cloud based service that offers you catch up. [03:50]
In the UK with the BBC what happened was that iPlayer became sort of synonymous with on demand. Just like Xerox is copying and Kleenex is tissues. So I think that in this market we have yet to see a proper catch up TV service, like the one that I just described. [04:09]
…
[04:45] When you say proper TV, I was struck by the term of that, I like that, proper TV, because you are talking about what I get through my cable box. And this is the key, because I have a Roku, I have an Apple TV on my big television at home. They give me a lot of interesting things but they don’t get me cable. … the cable box right up to pay a lot of money to the cable company and the effect of three things. You tell me you’re going to be one thing that would do almost three things?
Our ultimate vision is you need one …
Ultimate vision? That means …
Ultimately we think there is an all in one solution. … Rome wasn’t built in a day. It takes time sometimes but where we will start, to be clear, is: we will have live TV, catch up TV, consistent. We will have on demand and we’ll have a set of applications. But the proper TV piece is something that I want to just pause for a second. Why do I say that?
[05:57] I think that what we’ve seen so far in the industry are sort of … it’s like the interface is that you have to date on all these variety of television connected devices [the so called smart TVs] they all look like Web pages from the 1990s blown up to ten foot. … They’re pretty clumsy to use, they are hard to use and … When I say proper TV the other thing I think about is I think about when my five year old came to me over the weekend literally, and he is — like probably every other five year old — a wizard with iPads and Android devices, he is completely self sufficient. Yet he comes to me on Saturday morning and gives me two remote controls and says ‘Daddy can you please put up …’ some PBS stuff, I forgot what it was, because he literally doesn’t know how to use it. It is impossible. [06:56]
[07:53] So are you doing something different or are you going to do what I am already getting?
We are going to do a lot of things different.
First of all, in the pay TV space today what you get from experience perspective is, let’s talk about the EPG (electronic program guide) for just a second. EPG today is equivalent to a spreadsheet, it’s basically columns and columns and rows and rows, and you have to go through and through and through it, until you’re blue in the face. It is not very friendly, it is not very easy to use, and it is sort of feels like, it reminds me of my days of my first computer, the Commodore 64. There’s a lot of room for improvement there. If you look at what people are used to today on iPads, on iPhones, on Apple TVs and other devices out there, there is a massive gap. So I think that’s one, the incredible user experience that is completely easy to use. [We have] the people that we brought over from the UK, the people that did the iPlayer UI. So we’ve got a team that really know how to do this sort of stuff.
[8:00] The second thing is that we’ll have a scenario where you don’t need a lot of different inputs anymore. You do not need to have all these different HDMI inputs. Today in my home I had to buy an HDMI switch because I have too many devices. [09:22]
[10:15] The bundle thing that Peter [Kafka] mentioned is really really important. It’s a piece of the puzzle. There’s loads of people who deeply resent their cable and satellite company, for a number of reasons, but one of them is this bundle. I have to buy all these channels, I don’t watch all these channels, I don’t want all these channels. … You are going to revolutionize TV, you are going to bring us this box, but a minute ago I heard you say you’re still going to have these bundles. Is that right?
[11:17] I agree with you that what consumers want is choice, control and convenience. I do believe that there is value in bundles actually. The whole world talks about curation because there’s such a mass of information out there. In a way if bundles are done right, bundles are bundled right, for the lack of a better way to explain it, then there’s real value in that. … I think there are opportunities out there to create a much more flexible environment where the end user has more control than what they have today. I don’t believe that the industry’s ready for pure a’la cart. [11:56]
[12:19] All I’m talking about … is the fact that I believe there’s value in bundles. I believe that is a form of curation. [12:27] … it’s somewhere in the middle [between current bundles and pure a’la cart] [12:34]
So it’s still bundles, but more intelligent bundles, or smaller bundles …
That’s a great way to explain things.
… things that are more logical to me as a consumer?
As a consumer.
I may be so glad to not see the bundle Comcast makes me buy that I’ll say these guys at least giving me a better set of choices
That’s the hope.
It’s not a pure a’la cart but at least a better set of choices
It’s way towards more control, more choice for audience. [13:00]Are we going to save money?
What this is not about for sure, it’s not about a value play. … What I believe is that if you get a vastly superior experience where the delta literally, when you get to see it ready to show you, this thing looks like a leap in time of 10-20 years compared to what you have today. That is much more personal, that learns about you, that actually cares about who you are versus being just … [13:40]
The boxes would be a caring box?
We hope so. …
… There is a less positive way to spin that caring box, this is the box that watches what you are watching, and targets you with advertising …
We think there is real value in the ability to actually identify the various users. Today TV doesn’t really know anything about you. It’s the same TV service for everyone in the household.… little creepiness here?
I don’t think so because one of the features we put on there is, in order to actually recognize who is there and to offer you your personal experience, rather than having to log in or put on your fingerprint or do a retina scan whatever, to make it completely seamless, you need a camera, but if you don’t like the idea of a camera, you think it’s creepy there is a nice little shutter and you just close the camera and off your uncle. [15:00]
… But cameras in iPads [etc.] are for those people to turn them on if they want to have a chatter, to take pictures something with it. It’s not looking at them for the purpose of serving up ads based on them. …
[15:58] But there is value. Let me talk about the value of a camera if we have to explain that. Imagine a scenario where you are watching your favorite TV show whenever that may be. … The idea of television back when I grow at least was that it was truly a social experience, a family experience. You’re together in the living room. What if you could actually watch that episode completely synchronized across the country and have a real social experience.
… but we are talking about the camera watching you for the purpose of targeting, and that’s not the same as voluntarily Peter and I turning on the camera
[17:02] I didn’t talk about that we will use the camera for targeting. What I’ve talked about … it’s gonna watch you because: imagine the following scenario … I’ll give you another example. I have a Netflix account, and my five and nine year old will use that Netflix account all the time. When its my time to use that Netflix account with my wife the recommendations that I get are usually cartoons. They are not relevant to me because it’s a household account versus a personal account. That sort of the enviropnment is the living room. But if I can just … Want your kids a separate account. I’m cheap I am Dutch. … If you have the ability to actually distinguish that it’s you or Peter, or me or the kids, or me and the kids, then you can create an environment where you can recommend me ads actually relevant for you.
[18:14] Why is Intel getting into the consumer business?
Over the weekend I visited the Intel museum for the first time. … Tjere was a quote on the wall that actually stuck with me. One of our founders, Robert Noyce, he said, apparently, don’t be encumbered by past history. You go off and do something wonderful. So that’s what we’re trying to do. We’re trying to get closer to the end user. We understand that the end user audiences have a much bigger control these days over the direction of travel.
[18:56] When you use the term end user then you’re not all the way there yet?
Audiences, audiences … We talk about one thing. Back of our card, of the Intel Media card, it says: the audience is at the heart of everything we do. So we really care about audiences.
[19:32] Is it just because Robert Noyce said … or is it because Intel’s principal business making chips for PCs has been flat or down in recent years?
Intel is very interested in getting into consumer businesses, having a direct relationship with those consumers. Intel as a company is making a big shift towards, what Intel calls, becoming an experience driven company. So if you think about it what better way to learn what experience driven is all about than through digital media, through a service that directly relates to audiences, that directly delivers experiences to audiences. [20:16]
…. [Will the coming CEO sign off for that as well?] …
[20:40] Intel Media is governed by a small board, some of the most senior people at Intel. While our CEO is certainly a very important proponent of what we’re doing here with Intel Media there is a very broad support for …
[20:58] Why are you going to be better at having that kind of resonance with the consumer than big companies that happened to have a lot of consumer wealth already? Apple, Microsoft … Google. These are not companies that have to come from someplace different. They are right there in the consumer space. Look at this room and look at the logos of the devices, and they don’t say Intel. Intel somewhere in the device but … The point is what makes you thinking to compete with these guys?
In the end of the day all comes down to people … people, people, people. I spent the last twelve months putting together an incredible leadership team. We have a lady from Apple who’s been there for literally twelve years. She launched most of their iProducts. She’s our head of marketing. We have a gentleman from Jawbone who put Jawbone, the Bluetooth company, in twenty thousand retail outlets around the world. We have a gentleman from Microsoft who built the Mediaroom platform that AT&T U-verse runs on. The list goes on and on. We have gone out of our way to bring a completely new class, new type of skill sets into this crew. And we’ve set the group up in such a way that it is run in its own building, complete own building, with our own security, we have our own culture. We are still proud to be part of Intel, don’t make any mistakes, but this is a new effort. [22:43]
In many ways I sort of compare it with … when I’m [going] back in the day when I was at Microsoft, many years ago, there was this moment when Microsoft indeed got into the gaming console business, and a lot of people said what are they doing, you make enterprise software you don’t know anything about this space. Yet ten years later or maybe more it’s the enormous success … [23:10]
[23:26] Why do you think no one else [from those already consumer companies] has stepped forward [in the TV space] so far?
I don’t know frankly. It’s hard to tell. I mean those companies [already in the consumer space and trying] should speak for themselves.
[24:16] We’ve taken the leap of faith that time is here. I mean broadband capability is here, it works. Compression of video is completely changing landscapes again. I mean we are moving to a new codec HEVC [H.265] which again compresses fifty percent better than H.264. So the ability to deliver super high quality video via the Internet live and on demand is here today. We have the silicon and the software, and the knowledge and the know how to create an incredible product with an incredible UI, with a new user paradigm. Rather than wait for others to jump into that market and see it take off we’re jumping in, and we’re going to try and make … [24:57]
[25:22] But it’s not a value play, this is not a kind of cutting our cable bill
It is not a value play, it is a quality play. It is a play where we will create a superior experience for the end user.…
[30:57] You’ve got all these connected devices already. Why just not build apps for them?
When we started the discussion we talked about the fact that I built this thing called iPlayer in the UK. We made that service available to over 650 different devices. Everything from phones to tablets, to game consoles, to smart TVs, to Blueray … literally anything that plays back audio and video as I play on it. … It’s fair to say that with the experience that we’ve had over there in the UK, this is definitely a direction that we’re going to follow with this as well.
Why build the device it’s an excellent question. I happen to believe that if we want to deliver the experience that we have in mind for the living room there is no platform out there today where we can do that. In order to deliver on our vision of that new experience you need to control everything, you need to control the chip, you need to control the operating system, you need to control the app players, you need to control the sensors etc. That sort of the reason why we were there. If there were platforms out there where we could deliver exactly what we have in mind there wouldn’t be a need to do it but there isn’t. [32:15]
[32:30] At the end of the day I believe in the world where you have a good, better, [and] best experience. The best experience that we have in mind. We will deliver on that device that we will ship and sell to audiences.
[32:55] The programmers are taking billions and billions of dollars from the cable companies. What incentive do they have to unbundle and work in different ways? No matter how beautiful your devices are going to be, what incentive do they have to break their established business models and give you some of their content, no matter how much are they getting paid for?
[33:12] First of all I didn’t say that we will unbundle. What I said we will create new bundles. … But your question is a very valid question.
Let’s take a look at history. We went from over the air television to cable TV, to satellite TV, to telco driven television. Constantly there were new forms of distribution out there. For programmers to get new distribution is a good thing in the end of the day. So I believe that this is just another step in the evolution of distribution. The internet has finally got to a point where you can deliver a true television experience where channel zapping becomes the same experience that we lost twenty years ago when we went digital. In the analog days when you zap to channel it was instant. In today’s digital world if you zap a channel you have 2-3 seconds of nothing in your waiting. We can bring an incredible TV experience via the Internet to consumers, and that is a real opportunity for programmers.
The final thing I would say is that the model that we are envisioning is a model where live TV and catch up TV all live in the same paradigm. These are not different applications, and so if you’re a programmer why would you want your catch up programs to live in an app somewhere else? Why doesn’t that live under your brand? If you were an NBC or something like that, why do I need to go to the service provider catch up service to find the NBC programs when actually I wanted to find it through … [34:58]
[35:14] The ability to wirelessly beam things from these devices to your TV, which Apple brands AirPlay and other companies have something like it, but I think Apple’s is the only one that’s really taken off and a lot people use so far, is that can be a feature of what you do? Wireless beaming from my other devices?
This is certainly something that we’re looking for sure. It is an important use case where consumers have obviously a multitude of media capable devices, whether it’s photos, audio or video. The ability to display that on another screen a certain something I’m of intense interest.
Historical evidence
Insight: Intel’s plans for virtual TV come into focus [Reuters, June 8, 2012]
Intel is counting on facial-recognition technology for targeted ads and a team of veteran entertainment dealmakers to win over reluctant media partners for its new virtual television service
But so far it’s proving a challenge to get the service off the ground, thanks to an unwillingness on the part of major media content providers to let Intel unbundle and license specific networks and shows at a discount to what cable and satellite partners pay.
Intel, the world’s largest chipmaker, has kept its strategy to launch a slimmed down cable TV service under wraps as the tech giant risks getting into a completely new line of business.
According to five sources who have been negotiating with Intel for months, the company is emphasizing a set-top box employing Intel technology that can distinguish who is watching, potentially allowing Intel to target advertising.
The set-top box pitched by Intel doesn’t identify specific people, but it could provide general data about viewers’ gender or whether they’re adults or children to help target advertising, two sources said.
Intel’s plans put it in the middle of Silicon Valley’s battle for the living room. Heavyweights such as Apple, Amazon and Google believe the $100 billion U.S. cable television ecosystem – dominated by major distributors such as Comcast and DirecTV Group and program makers like Walt Disney Co and Time Warner Inc. – is ripe for disruption for reasons ranging from shifting viewer habits to ever-increasing programming costs.
While none of these companies have so far been able to make major inroads, Intel thinks it can build a better set-top box and over-the-top subscription service to deliver TV content to consumers, even though the initiative catapults it into virgin market territory. A successful TV service showcasing Intel technology could be a big step toward making its chips prevalent in more living room devices.
“If they can create a virtual network and it incorporates proprietary Intel technology, they could certainly bring something different to the subscription TV model.” said JMP analyst Alex Gauna.
Intel’s offering aims to exploit one of the TV industry’s major issues: the reliability, or lack thereof, of Nielsen ratings data on audiences. Nielsen has long been the dominant provider of TV ratings, but the accuracy of its data has come under attack by some network programmers, who argue that its polling system of 50,000 homes is antiquated for the digital age.
For its part, Intel claims that the new interactive features in its set-top box would add greater value to TV advertising and help offset reduced revenue from licensing fees for network owners.
“They’ve told us the technology is going to be so much more interactive with ads that you can make more money. But it’s just a little unproven,” said one executive who has been involved in the talks.
An Intel representative declined to comment for this story.
Chip features making it easier for Hollywood studios to protect content streamed to computers, as well as tools for detecting faces and analyzing audiences, are examples of current proprietary technology that Intel would like to see widely adopted.
BEYOND PCs
While Intel’s processors power 80 percent of the world’s PCs, its chips have not achieved a significant presence in smartphones, tablets and other interconnected devices. Intel executives say they are eager to make sure its semiconductors play major roles in new markets with big growth potential.
According to a company source, ensuring that its chips become prevalent in home entertainment devices would be the driving reason behind any Internet TV service it launches.
Comcast, for instance, recently announced the gradual rollout of an Intel-based set-top box that customers can control with their smarpthones. Called “X1,” the platform will rely on data centers packed with high-end servers — which typically also use Intel chips.
Intel last year wound down a push to make chips specifically for “smart” TVs after Google TV, which it had backed, failed to make a major splash with consumers.
At the same time, it formed the Intel Media business group with a mandate of promoting digital content on Intel-based platforms.
According to sources, Intel is proposing to media companies a service could include both a bundle of TV channels similar to a normal cable package and an on-demand component.
ENLISTING HEAVYWEIGHTS
Intel is intent on launching its video service before the end of the year, sources said. Original plans called for it to be launched by November, said one of the sources, but that deadline likely will not be met.
The biggest problem Intel faces is its inability to reach deals with major content providers, which are reluctant to license their networks and TV shows at rates that could undercut their larger established cable and satellite partners.
Intel wants to keep its costs down by licensing smaller packages of TV networks instead of replicating the basic cable TV bundle of more than 100 channels. But network owners won’t agree to smaller bundles without being paid a premium for the channels they choose to license.
“Why would I want you to take subscribers away from another distributor at a lower price?,” asked the same media executive who spoke with Reuters on condition of anonymity.
To change that mindset, Intel has assembled a team of television industry veterans well-schooled in negotiating distribution deals. Leading the group as head of Intel Media is Erik Huggers, who worked on media at Microsoft before going to the BBC. Huggers enlisted as an adviser Garth Ancier, who most recently served as president for BBC Worldwide America and before that worked at NBC, FOX, and Disney.
In addition to Huggers and Ancier, sources said, two other names prominent in TV circles have emerged as consultants for Intel: entertainment lawyer Ken Ziffren and former MTV executive Nicole Browning.
Browning, who previously negotiated on the other side of the table for MTV, has been handling some of the talks with partners, sources said.
Ziffren built his reputation representing Hollywood talent – he was instrumental in negotiating the deal that returned the “Tonight Show” to Jay Leno. Lesser known is his firm’s work negotiating deals for DirecTV’s video-on-demand service and carriage agreements for pay-TV network Starz.
But even that quartet of executives may not be enough to resolve an intractable problem, which is that content companies have little incentive to offer their channels to Intel at a discount and Intel is loathe to pay a premium.
“They’d love a better deal but they won’t get one,” said Needham & Co analyst Laura Martin of Intel. “The industry has always worked on volume discounts.”
Underscoring the difficulty insurgent tech companies face in securing content, Microsoft in January indefinitely postponed plans for its own online TV subscription service after deciding that licensing costs were too high, according to people familiar with those discussions.
And therein lies that dilemma that Intel and other insurgent over-the-top providers must tackle before their big plans can be realized.
Intel eyes Internet-based TV service: WSJ [Reuters, March 12, 2012]
Chipmaker Intel Corp is developing an Internet-based TV service for consumers and has been promoting it with media companies, the Wall Street Journal said, citing people familiar with the effort.
The world’s top chipmaker plans to create a “virtual cable operator” that would offer media companies’ TV channels in a bundle over the Internet, the WSJ said.
An Intel spokeswoman declined to comment on the story.
The product could use an Intel set-top box and Intel’s name, and the chipmaker has told its potential partners it wants to start the service before the end of the year, the WSJ said.
In October, Intel wound down its efforts to make chips for digital “smart” TVs, although it continues to make chips for set-top boxes.
At the same time, it formed the Intel Media business group, headed by former BBC executive Erik Huggers, aimed at promoting digital content on Intel-based platforms.
Intel winds down smart TV business [Digital TV Europe, Oct 13, 2011]
Intel has ditched its move into internet connected TVs after closing its Digital Home Group.
The company will continue to supply chips to gateway devices and set-top boxes but will wind down its Digital Home business. Digital Home Group staff will be relocated to focus on netbooks, smartphones and tablet devices.
Erik Huggers, a high profile appointment from BBC Future Media in January, will remain at Intel where he will lead a new group called Intel Media.
Intel’s decision is reportedly due to a lack of demand for its chipsets for internet-enabled flatscreen TVs. Intel’s Atom CE4100 chips currently are used to power to a variety of devices including Sony’s Google TVs and the Logitech Revue Google TV-enabled set-top, but also the D-Link Boxee box as well as French ISP Free’s Freebox Révolution and Liberty Global’s Samsung-built Horizon set-tops.
Intel Looks Beyond Smartphones, Tablets & TVs [Information Express blog, Oct 19, 2011]
– Appoints Huggers to Found & Run New Intel Media Group
– Digital Home Group Merged into Netbook & Tablet GroupIntel, under the hands-on direction and guidance of CEO Paul Otellini, wants to look beyond smartphones, tablets, TVs and consumer PCs, way beyond, so it can plot a course for its future, not just for the near term. To that end, Intel has taken two giant steps.
It has created a new group called Intel Media that Erik Huggers will head. Huggers’ Digital Home Group, except for smart TVs, will be merged into the existing Netbooks and Tablets Group that Doug Davis will continue to operate. The smart TV operation is being closed down except for existing customers.
…
Intel sees the TV market as currently being a “footage per dollar” one. Consumers set a budget for what they can spend and then try to buy as big of a screen as possible for less than their budget. Evidence of that is 60-inch TVs that are going for $1,200 and a 42-inch LED smart TV from LG, this year’s model, being sold by Amazon for $650 including delivery to the home and the chip making giant Broadcom exiting the market a few weeks ago.
The economic downturn and increased competition has put brand name makers of TV sets under tremendous pricing pressure. Sony, once the king of high-end TV sets, has lost billions of dollars in the TV market and says it expects to lose millions more. Sony, Toshiba and Hitachi are working together with a government-backed fund to spin off and merge their LCD businesses. (Why not? The US did almost the same for US car makers with loans and advances for “green” cars.)
No one has cracked the smart TV platform yet and that’s why so many have popped up. In some respects Intel is doing what the smart TV industry will have to do at some point: stop and ask where we are going. It’s like the early days of MP3 players, Huggers said, when there were lots of MP3 players but no one was buying. Suddenly Apple entered the market with the iPod and the iTunes store and player, perfectly synched, and consumers started buying millions of its players and songs from iTunes.
Perhaps the straw that will break the camel’s back in TV pricing is that two major new factories are being built in China to make displays, according to Intel. The golden age for buying TV sets will continue but goodness help you if you’re trying to make them for a profit.
As long as the pricing pressure on TVs continues, TV set makers don’t want to add any feature they don’t have to — although it’s widely acknowledged that the tipping point for smart TVs has been passed. All TV sets will be smart, just like they all now have color.
There’s another reason for Intel to meld IPTVs and tablets. As Apple has clearly shown, successful CE makers will have one silicon and one ecosystem. Apple, for example, is not going to use a different silicon family or ecosystem for apps and online store than the ones it uses for iPhones and iPads if it were to launch a line of TV sets.
Let Us Praise the Dead Digital Home Group
The Digital Home Group had some notable successes handling the CE versions of the Atom processor:
– The Boxee Box
– The failed (through no fault of Intel) Google TV that Sony andLogitech made
– The IPTV STB Comcast ordered from Pace
– The snazzy Samsung STB that Liberty Global’s UPC ordered
The follow up on those and others like them will be handled in Intel’s Netbook and Tablet Group.
Intel sees a major opportunity in IPTV boxes — media processors and the gateway/home network businesses. It sees the synergy that’s emerging between tablets and smart TVs plus other smart consumer devices.
The move to all-IP infrastructures by the cablecos and the links between TV sets and tablets were loudly obvious at The Cable Show in Chicago.
The world’s telcos started with IP for their TV technology and the cablecos are rushing to catch up. The race to integrate tablets and TVs takes two forms:
– The use of the tablet as a second viewing device — a mobile TV within the home.
– The tablet and smartphone becomes a companion screen to what’s on the TV, one where viewers can chat with friends and the show’s stars about what they’re watching. It goes beyond allowing viewers to “click” on advertising links to learn more about a product. Ask any parent of teenagers about it.Intel spokesman Claudine Mangano said, “We believe the future of TV is in IP delivery and multi-screen usages and are aligning our focus to these areas, and with other top corporate imperatives that include ultrabooks, smartphones and tablets.” She made it clear that Intel is not abandoning its existing smart TV customers.
Intel Media Looks Way Ahead
Intel Media is being founded to look beyond the current generation of smartphones, tablets, TVs, PCs and IPTV. It is mandated to answer, “What technology will be needed as the digital media industry progresses?”
Intel is not clear publicly on what Intel Media’s mandate is but in Erik Huggers it has put one of the industry’s leading digital media executives in charge. Huggers is not talking about it very much except to say Intel is very, very serious and ambitious in digital media and that he is super-excited by Otellini’s challenge.
Huggers was previously at the BBC as director of the its future media and technology division until Intel hired him earlier this year. Before that he worked for Microsoft in various digital media projects.
With impossible hurdles in front of him, Huggers led the technology dinosaur BBC into the digital media era. He oversaw the launch of the BBC’s iPlayer for catch up TV. Launched in 2007, it was years ahead of its time and still ahead of anything in the States.
He nearly led the BBC to the forefront in smart TV platforms with Project Canvass, now called YouView. It is an attempt to develop a standard smart TV platform that lets developers easily add apps and CE makers to easily add to their gear. Unfortunately the BBC Trust, which runs the BBC, decided to play politics instead of getting out of the way.
It forced the BBC to bring in seven other companies such as BT, each with a different opinion as to what should be done, to help develop and deploy YouView. Know the story about the committee and the camel? Well, that’s what happened. YouView is still not on the market and the rival HbbTV standard is becoming dominant on continental Europe.
A common smart TV platform would have benefitted consumers and CE makers just as Windows did for PC makers and consumers. Instead the world is awash in smart TV platforms — all incompatible and inconsistent in their user interface — and with some companies changing platforms from year-to-year.
The closest Huggers comes to revealing anything about Intel Media is to say, “For Intel to be successful in digital media, it must have the best access to digital content.” He then says that Amazon is showing the way with its Kindle Fire.
Intel wants Intel Media to sail out into the future of digital media and see what’s there. It has selected the best man for that task. Perhaps Huggers will again be called “director of future media and technology” as he was at the BBC.
Innovation in Media [Erik Huggers on Intel Capital, Global Summit 2011, Nov 15, 2011]
Huggers joins CMI supervisory board [CMI press release, Oct 27, 2011]
Consolidated Media Industries, the innovative European digital media group, is delighted to announce that Erik Huggers is joining its Supervisory Board. The Intel Executive and former BBC Future Media & Technology director, has an extensive international track record at the forefront of digital media innovation.
“Erik Huggers really understands how innovative technology is changing the behaviour of media consumers worldwide,” said CMI President and CEO Bart-Jan van Genderen. “He will play a key role in the realization of CMI’s international ambitions. Erik’s experience and vision on global media, innovative consumer services and digital content creation are of tremendous value to us. We’re delighted such a talented person is joining our Board to share his insights and expertise.”
“CMI is one of the most digitally savvy media enterprises in Europe” said Erik Huggers, Corporate Vice President of Intel Media. “I feel privileged to join this team and look forward to working closely with the other Board members during this important phase of CMI’s growth.”
Erik Huggers Career
Erik Huggers is currently Corporate Vice President and General Manager of Intel Media and a member of Intel’s Management Committee. Erik’s mission is to establish Intel as a global leader in consumer software and digital media services.
Prior to his position at Intel, Huggers has worked with Endemol Entertainment as Director of Business Development for its interactive division. He then joined Microsoft, where he led the global business development for Windows Media Technologies.
He joined the BBC in 2007 and became a member of the BBC’s Executive Board. He was appointed Director of BBC Future Media & Technology and during his tenure was responsible for the successful roll-out of BBC Online, BBC iPlayer, Mobile and Red Button services. All these technologies were designed to help audiences enjoy easy access to BBC content, on demand and on any device. Huggers also held responsibility for managing the Broadcast and Enterprise Technology group, BBC Archives, as well as leading the Research & Development department.
Intel Names BBC Executive to Lead Digital Home Effort [Intel Newsroom post, Jan 18, 2011]
Intel Corporation today announced that Erik Huggers will serve as corporate vice president and general manager of the company’s Digital Home Group and become a member of Intel’s Management Committee. Huggers is director of the BBC’s Future Media & Technology division and serves as a member of the BBC’s Executive Board. He replaces interim general manager Brad Daniels.
“Erik Huggers’ proven track record of managing a variety of digital media businesses will be an extraordinary asset to Intel’s digital home initiative,” said Intel President and CEO Paul Otellini. “Erik’s background and vision for delivering new platforms, interactive content and services to consumers are an outstanding fit for Intel, and I am thrilled to welcome such a talented person to drive this key strategic business for Intel. We look forward to him joining our team.”
Huggers joined the BBC in 2007 and is responsible for delivering BBC content over the Internet, interactive TV and mobile, helping audiences enjoy programming using a wide variety of devices from any location. He is also responsible for managing the BBC’s Broadcast and Enterprise Technology Group and BBC Archives, as well as leading the BBC’s Research and Development activities.
Huggers has long been at the forefront of digital media innovation. Prior to joining the BBC, he was with Microsoft where he led the global business development for Windows Media Technologies. Before joining Microsoft, Huggers worked with Endemol Entertainment as director of business development for its interactive division.
“I look forward to joining one of the leading technology companies in the world,” said Huggers. “This is a tremendous opportunity to build a new business for silicon, software and services to unlock the potential of high-quality connected media experiences in the living room.”
Intellect Consumer Electronics Conference 2011 – Keynote presentation by Intel’s Eric Huggers [IntellectTechnology YouTube channel, Aug 2, 2011]
One on One with Erik Huggers [Intel Free Press, Aug 18, 2011]
Former BBC executive heading up Intel’s consumer electronics efforts on management, smart TV and life.
When Intel went looking for a new leader to replace departing executive Eric Kim as head of the Digital Home Group, they went to someone who knew very little about silicon.
But through his work at the British Broadcasting Corporation (BBC) as director of the Future Media & Technology organization, and Microsoft, where he drove a wide variety of digital media initiatives, Erik Huggers is no stranger to digital media innovation.
In the following Q&A, Huggers, a native of The Netherlands, talks about why he joined Intel, how the company needs to get into the heads of digitally savvy teenagers, and why his new user experience design team is in London is a key asset.
Since joining Intel 4 months ago, have you ever asked yourself, “What have I gotten myself into here?”
On day one. I’ll tell you the honest truth. Let me first say, I do not regret joining Intel for a second. I’ve been overwhelmed by the warm reception I’ve gotten.
When I was at the BBC as an executive board member in a media and entertainment company, you get a certain set of privileges when it comes to office spaces.
I had a proper executive suite on the top of the building, lots of windows, a living room set up in my office, projectors, televisions. That’s how it’s done for those companies for the last 90 years.
When I arrived here on day one and they showed me to my cube on floor five [in the Robert Noyce Building of Intel’s Santa Clara, Calif. headquarters], I literally thought, what have I done?
I’ll adapt, don’t get me wrong. But the delta on day one between the executive suite and my new cube (laughs). I had a bit of detox to go through, I think.
So when I moved [in 2007] from Microsoft to the BBC I had people in front of BBC Television Centre dressed up in these chemical nuclear suits picketing against my appointment.
At Intel, I’ve only been warmly welcomed by colleagues and folks around the business. And so far, it’s been an amazing 4 months.
During your short tenure at Intel, have you seen areas where we can improve?
As someone who’s been here for 4 months, I don’t claim to have tons of wisdom. I was surprised by the number of steering groups and meetings that happened. Some of these meetings are like professional debating societies, where there are armies of Intel people talking about incredible minutia. I would’ve thought we would be fleeter of foot.
In these meetings, I am surprised by the number of people doing email. If you don’t want to be in a meeting, get out. Don’t do mail. Close your laptop.
One of the things that I really learned being in the media industry directly and indirectly for 15, 20 years now, is that what those industries do really well is put the audience at the heart of everything they do. I don’t think that’s what we do today.
What we talk about is valid stuff like the next process node, or putting more transistors on a die, or can we do more gigahertz or flips or flops or whatever we measure, and we get really excited — for good reasons. But what’s more important is: What does this stuff enable for the consumer?
And I’m not talking about the people who buy our technologies and build end-products. I mean the person who buys the end-product. How is what we build valuable to a 15-year-old who’s completely connected?
We need that hardcore technical super-engineering capability that we have in spades here. But we also need the audience insight.
Finally, I’m a big supporter of our investments in software development, and I think that’s absolutely critical. We need to attract the best possible engineering talent in order to take a bit more control over our own destiny as a company.
Can you talk more about user experience?
Everyone talks about user experience at Intel these days. I’ve come to the conclusion that most people don’t know what they’re talking about.
We have great talent inside Intel, don’t get me wrong. Genevieve Bell and the team [Interaction and Experience Research (IXR) group in Intel Labs] clearly get it.
We need to bring top talent that can execute on that user experience and design piece into Intel so that starts to influence our culture, our way of thinking, how we think about products, the audience. So, we just hired a user experience design crew in London.
Why London?
Here in the Silicon Valley, when it comes to those sorts of skills, it’s impossible for us to — well not impossible — but it’s very difficult for us to compete, because you’re competing with Facebook, Apple, Google. We don’t have that same sort of competitive situation in the UK right now, and traditionally the UK has been a hub for design talent.
Plus, the people that I’ve been able to attract I know very well, because they worked in my organization. These are the guys that have designed industry award-winning services across television, telephone, tablets, PCs.
I think bringing that expertise into Intel will influence the direction of travel for whatever we do in next-generation silicon, next-generation software, next-generation services, so that we start with that audience in mind, and then we work our way back.
So in 2 years, where do you see smart TVs and Intel’s play?
My hope is that our play in smart TV is going to be more than just silicon. Silicon is absolutely a critical element to get right, and I would argue that the silicon engineering team has performed miracles.
Just having that platform in your living room means nothing if there’s no content, no services, no applications, if there isn’t a vibrant ecosystem of third party ISVs and media companies who target that platform as a means of reaching the consumer and building a viable business.
So is DHG only about smart TV?
I think it’s important to realize that we have some pretty interesting early momentum. Getting Comcast to work with us is a huge milestone. Getting other service providers to take us seriously, like Free in France, a wonderful success story, and Sony on Google TV. As Intel, we’re going beyond the PC. We have early glimpses of what that world could look like in DHG. We have shipping products, we have customers.
My entire career has been dedicated to digital media. And consumers do not care whether it’s consumed on a TV, a PC, a phone or a tablet. It doesn’t matter.
Consumers today are hungry for taking control over their digital media consumption.
And so to me, DHG is not just about television. DHG can potentially help the rest of Intel with our digital media ambitions.
How would people at the BBC and Microsoft describe your management style?
In some cases, if a project is going completely off the rails, maybe the management style is slightly more autocratic and directive and hands-on and micromanaging. In other cases, you have a great leadership team in place and they’re ticking along quite well, it’s much more coaching and supporting and helping resolve blocking issues. I don’t think there’s such a thing as a single style.
Dutch people are very direct, and they call it as they see it, and I think that’s very important.
Is there some area of management that you’ve had to improve upon?
No one’s perfect. Everyone has opportunities to improve their day to day work, the way they interact with others. I think everyone always has to work on communication style and over-communicating, because just because you think something doesn’t mean that everyone automatically understands what you’re saying.
What I’ve found is that when I get bored of the message, that’s when it really starts to ring through with other people.
Who was your best manager?
Two individuals that I have in mind were both entrepreneurial, self-starters, not afraid of managing up or managing down.
They also were able to create teamwork, group spirit, and didn’t necessarily pit their best people against each other. A bit of creative tension is good, but animosity and negativity, that’s simply not good.
What made you decide to come to Intel?
[President and CEO] Paul Otellini convinced me that he was absolutely, completely, and utterly dead serious about moving Intel beyond the PC.
The PC was going to remain critically important as were servers, but he was dead-set on making sure that we as an organization were going to be successful in phones, in tablets, in television, and whatever other form or factors comes along. We’re going to move from a PC company to be a compute company.
How do you balance work with life?
I’m passionate about what I do. This is not for me about a paycheck. I want to be part of an organization and contribute to an organization and lead an organization that has the ambition to change the world, change the industry.
When you’re mission-driven like that, putting in the long hours doesn’t matter. You’re passionate about it, you love what you do, you enjoy it, that’s what gets you out of bed every day. And so, work/life balance is tough, but I’m fortunate that I’ve got a brilliant wife who’s very understanding and forgiving.
How do you relieve stress?
What I do is I talk all day with customers, with partners, with employees, with colleagues. To relieve some stress, I like to be quiet. Maybe simple stuff like watch a movie or go for a walk.
What are your hobbies, besides traveling?
I’m passionate about technology, keeping up-to-speed with the latest and greatest of what’s happening on the web, what’s happening with consumer electronics. I get the latest widgets and gizmos and try them out.
My wife is a Formula 1 fan, and because of her, I get kind of forced into it.
Media City Forum : Erik Huggers Presentation [SalfordUniversity YouTube channel, March 5, 2010]
Microsoft entertainment as an affordable premium offering to be built on the basis of the Xbox console and Xbox LIVE services
OR create interactive content as a premium offering together with partners using Kinect technology as a starter OR moving Microsoft Xbox 360 to ‘entertainment console’ OR leaving the good quality commodities to others and going for a premium brand with Xbox as well OR Xbox 360 and Microsoft’s Gaming Future – D: Dive Into Media [WSJDigitalNetwork YouTube channel, Feb 12, 2013]
[04:26] “Our focus is to really transition [Microsoft’s Xbox] to an entertainment device,” Nancy Tellem said Monday at All Things D’s D: Dive Into Media in Laguna Niguel, Calif. “We have thousands of movies, sports events, live events.” [04:34]
[05:14] “We’re looking at a whole variety of types of content. What I call it premium, which is aligned with HBO and Showtime quality, networking cable quality” she said. “Then, of course we’re looking at alternative, reality, live events. All of the premium. It’s a premium service. Also we are looking at each content as what it would be best. Whether in format, whether in time. So we are not constrained in the same way traditional media distribution companies are, having to produce something at certain length. We have 46 million global users all connected. With all the premium service we offer may be behind, being part of the the membership.” [06:05]
In addition to producing content internally, Tellem said she was also looking at partnering with “traditional media partners, studios and creatives.”
“[The] Xbox brand stands for the best, most interactive, most amazing entertainment you can get,” Yusuf Mehdi said, comparing it to low-cost media streamers like the Roku. [08:35] “Our current and future investment is about doing the things that are big and premium. Let really do things that are amazing for customers.” [08:43]
Would you become a pay-TV provider? [09:18] “For questions like this it always goes back to what do we feel we can really be best in the world we are doing, what’s our value add” he said. “Our value add is not being another distributor of content that comes from many good sources today, it’s about adding that level of interactivity, creativity, fidelity that makes it come alive.” [09:36]
[12:46] Nancy Tellem: “I think one of the perfect example of more live events as you’re looking at, this is more hypothetical as obviously we’re not there yet, but certainly if you do a comedy show, and you can actually from a transactional standpoint know where the comedians going to be performing, buy tickets, that’s an example. You can also, not just from a Twitter standpoint, but actually share with your friends, actually experience it together. He or she may be on the other side of the United States or in anthor country, Ireland or wherever, that’s kind of the real time experience that really is quite unique. We’ve already done a joint venture with Sesame Street where from children’s programming the kids can actually interact with the video itself and have a real interactive experience with …” [13:50]
She saw episodes ranging from as short as 10 minutes to an hour and a half, multiple episodes being produced, and using Xbox’s interactive capabilities, be it the voice-and-gesture-enabled Kinect or the second-screen SmartGlass app.
Xbox Execs Talk Momentum and the Future of TV [Microsoft feature story, Feb 11, 2013]
Living room entertainment is in its largest evolutionary period since the transitions of black-and-white to color, and from standard definition to high definition. The Xbox 360, alongside Microsoft’s entertainment industry partners, is at the forefront of that evolution as one of the only devices that brings all forms of entertainment together in one device, while making access to content easy and providing new ways to interact with existing programming. In 2012, the amount of TV and other entertainment offerings on Xbox almost tripled, now surpassing 100 custom, voice-controlled TV and entertainment apps on Xbox LIVE.
“Yes, we started with video games, but we have been on a journey to make Xbox the center of every household’s entertainment,” says Yusuf Mehdi, corporate vice president of Microsoft’s Interactive Entertainment Business.
Today Mehdi, along with Nancy Tellem, president of entertainment and digital media at Microsoft, participated in a D: Dive into Media session, facilitated by Peter Kafka, to discuss that journey and the opportunities that lie ahead. Mehdi revealed some new data that illustrates how entertainment usage on the Xbox has exploded during its living room transformation, and Tellem shared more about her newly created Los Angeles-based Xbox Entertainment Studios.
Today, there are more than 76 million Xbox 360 consoles around the world. That’s three times the number of original Xbox consoles sold. And a Kinect sensor now sits next to roughly one third of those Xbox 360 consoles; the company has sold 24 million Kinect sensors since launch.
Social has been an important part of Xbox from the beginning, and that’s true today more than ever. The Xbox LIVE community has grown to 46 million members, a 15 percent growth since last year.
2012 also marked the Xbox’s biggest year for entertainment and games usage. Users enjoyed more than 18 billion hours of entertainment in 2012, with entertainment app usage growing 57 percent year over year globally. Last year in the United States, Xbox LIVE Gold members averaged 87 hours per month on Xbox, an increase of 10 percent year over year.
Those numbers strongly indicate that consumers enjoy all kinds of entertainment via Xbox, and Mehdi believes the future of entertainment is even brighter, as Microsoft plans to keep the momentum rolling.
“We believe that Xbox is being used by more people in the household, during more hours in the day and for more forms of entertainment,” he says. “People are using Xbox in the morning to work out with the Kinect Nike+ Fitness program, kids are watching cartoons, families are enjoying movies, and of course people are playing blockbuster games like ‘Halo 4.’”
The Future of TV Is Interactive and More Engaging
According to Mehdi, Xbox has something in the living room no one else has – a large installed base of devices already in the home, connected to TVs, and over half of those are already linked together, delivering amazing personalized and social entertainment experiences via the Xbox LIVE network.
Microsoft believes that the future of TV and entertainment is one where the TV becomes interactive and more engaging, Mehdi and Tellem explain. Microsoft sees that viewers want to do more with their TV shows, movies, sports and other forms of entertainment.
“We believe that we are at the start of the next wave of truly interactive entertainment,” Tellem says.
Tellem is spearheading a new L.A.-based studio called Xbox Entertainment Studios, where the mission is to create true interactive content for Xbox and other devices that will change the way entertainment content is experienced and delivered. Tellem also now oversees live event programming for Xbox LIVE. Xbox has had success with live events such as the Elections 2012 Hub on Xbox LIVE, which aired the presidential debates with an added interactive polling capability. Viewers submitted 3 million answers to on-screen questions during the live telecast of one of the debates. More recently, Xbox aired an interactive red carpet experience for this year’s Grammy Awards and will be doing the same for the 85th Academy Awards.
“When I worked in traditional TV, we would find ourselves saying things like ‘Wouldn’t it be cool if we could add an interactive aspect directly into the show and engage directly with the viewers?’” says Tellem. “With Xbox, that is possible today.”
Xbox already offers content such Kinect Sesame Street TV, which blurs the lines between traditional linear TV show and interactive experience, where a kid can jump into their beloved Sesame Street and throw coconuts at Grover.
But it’s not just about new types of entertainment; it’s also about new business models and new engagement opportunities for advertisers. Mehdi called the launch of NUads – a new ad format that harnesses Kinect and natural user interface – an important moment for TV advertising. NUads deliver what is most scarce to advertisers today: consumer engagement. NUads enable natural interactivity using the simplicity of a spoken word or the wave of a hand. The first wave of NUads, which launched last fall with interactive polling, saw a record level of consumer engagement with 37 percent of people responding. With this model, passive TV advertising is transformed into engaging and actionable experiences.
Pioneering the Future of TV
In addition to Xbox Entertainment Studios creating content that will highlight what’s possible and demonstrate the capability of the Xbox platform, Microsoft will continue to partner with content creators, networks, aggregators and advertisers to “pioneer the future of TV,” says Tellem.
During 2013, Microsoft is planning to launch more than 40 new voice-controlled, customized TV and entertainment apps on Xbox.
“We want to partner with the industry to bring entertainment into a new era,” she says. “It’s an era when interactive entertainment becomes the greatest form of all entertainment – and we couldn’t be more excited to play a part in it.”
Will Next Gen Xbox Win With Premium Media Combo? [Breaking Analysis] [siliconangle YouTube, Feb 12, 2013]
See also:
– Xbox LIVE Turns 10: A Decade of Entertainment [Microsoft feature story, Nov 15, 2012]
– The New Entertainment Experience From Xbox [xbox YouTube channel, Oct 25, 2012]
– Xbox Music [xbox YouTube channel, Oct 14, 2012]
To understand the outstanding leadership in that Microsoft entertainment effort see this earlier Microsoft’s Yusuf Mehdi at MIXX 2009 [IABtv YouTube channel, Oct 8, 2009] presentation:
Xbox Beyond the Box [The Official Microsoft Blog, May 29, 2012]
Next week, the Xbox team heads to Los Angeles for E3. Having recently joined the team, I have the benefit of fresh perspective, and one of the things that has struck me is the amount of opportunities we have ahead.
Before joining Xbox, I had the fortune of being a part of some incredible periods of innovation and incubation such as in the early days of Windows and Internet Explorer, and, more recently, with the creation of Bing. I have also had a great passion for gaming and entertainment, and watched the growth of MSN into one of the world’s largest media sites on the Internet.
Similar to many of those experiences, the Xbox has arrived at an important inflection point in its growth and development. In particular, in the last year, the Xbox has transcended from a gaming console to a broad entertainment device inclusive of movies, TV, music and sports. I will give you an example of what that means.
A few weeks back, my family and I decided to escape a rainy Sunday afternoon by watching a movie. The need for indoor entertainment in Seattle in May is (sadly) no surprise, but what really struck me was the way my son went about finding a movie. After my children finished a heated rock-paper-scissors battle to determine who got to choose what we would watch, my son sprinted to the Xbox 360. He didn’t first turn on the TV or go to our relatively hefty collection of DVDs. For him, the Xbox is now the gateway to what he wants to watch.
Now, my household may be a little biased, but my son isn’t alone. Xbox will always mean games, but for tens of millions of people around the globe, it also means music, TV, movies and more. Xbox LIVE subscribers now spend an average of 84 hours per month on the console. For comparison, the average American watches a little more than 150 hours of TV in the same period. The more entertainment options we add, the more time people spend on Xbox. In the last six months, we’ve grown our entertainment library on Xbox to include more than 60 voice controlled applications and more than 200,000 premium movies and TV shows.
As a result of people engaging with Xbox more frequently for more entertainment activities, we have been able to defy gravity compared to where consoles traditionally are at this point in their lifecycle. Sales for Xbox 360 in year five were greater than in year four, sales in year six were greater than in year five, and sales in year seven were greater than in year six.
Since 2005—when we launched Xbox 360—we have sold 67 million consoles and have generated more than $56 billion at retail, and we’re still going strong in our seventh year. With 47 percent share of the current-generation console market in the U.S., we are hitting our stride largely as a result of the success of Kinect for Xbox 360 (19 million sold worldwide) and the flood of new entertainment options through Xbox LIVE (40 million members worldwide).
To date, our success with Xbox has been led by a box in the living room. Moving forward, Xbox will go beyond the box to reach all new families of devices. Just as Xbox has grown to mean more than just games, it also is more than just a console. This year, Xbox becomes the premium entertainment service for Microsoft. Whether on your PC, tablet, TV or phone, Xbox will be a gateway to the best in music and video, your favorite games and instant access to your friends. With the launch of Windows 8, we’ll bring Xbox entertainment to everyone. With Xbox on Windows 8 devices, we rapidly accelerate the reach of Xbox entertainment from more than 60 million people to hundreds of millions of people worldwide.
We understand that entertainment has become a multi-screen experience where you and your friends are watching TV, listening to music, and playing games while interacting with your tablets and phones in new ways. We’ve got ideas for making all the entertainment you love more personal, interactive and social across the devices you love—and on the phenomenal Windows 8 devices that are to come.
You’ll see the first of that next week at E3 where we will showcase the very best of Xbox. We’ll unveil new games, show new ways to enjoy the entertainment you love and, as always, we’ll have a few surprises to share!
We can’t wait. We kick things off on Monday, June 4 at 9:30 a.m. PT. You can watch us on live TV though our partnership with Spike TV, on the Web (Xbox.com), and for the first time ever – on Xbox LIVE.
Posted by Yusuf Mehdi
Chief Marketing Officer, Interactive Entertainment Division, Microsoft
Introducing the New Entertainment Experience from Xbox [The Official Microsoft Blog, Oct 22, 2012]
Below is a post from Yusuf Mehdi, Chief Marketing Officer for Microsoft’s Interactive Entertainment Division, announcing details about a major new update to the Xbox dashboard and the launch of Xbox SmartGlass, which brings games, music, TV and movie experiences off the console and onto your phone, tablet and PC.
Steve Ballmer recently stated that 2012 will be “the most epic year in Microsoft’s history.”
Not only do we have major releases coming to the PC, tablet and phone, but we have worked extremely hard to ensure those screens work together with the other major screen in peoples’ lives, the television. People often call out the role Microsoft design style is playing in this new wave of experiences from the company. Whether you are using a phone, PC, tablet or console that is running our software you have an experience that is distinctively Microsoft, elegant, intuitive and integrated.
Now, there is another common thread that ties all of these experiences together – Xbox entertainment.
Today marks the beginning of two major launches for Xbox entertainment.
First, on top of what is the greatest year for games in Xbox history, beginning today a brand new update will roll out broadly for every Xbox 360 owner in the world that brings entirely new TV entertainment experiences. We are bringing the Web to the TV like never before with Internet Explorer, launching a brand new music service, and making it even easier to find the entertainment you love using Kinect and Bing voice search. This release is the next step in our journey to transform Xbox 360 from a games console to an all-in-one entertainment system.
Second, we are bringing Xbox Entertainment off the console to your phone, tablet and PC to deliver great games, music, TV and movie experiences. And as a part of this effort with Xbox SmartGlass we are going to introduce amazing multi-screen entertainment experiences.
Back in June, we talked about how this is the year Xbox becomes the premium entertainment service for Microsoft. While our success with Xbox to date has been led by a box in the living room, we’re now reaching individuals in new and exciting ways across PCs, tablets and phones. Xbox will be a gateway to the best in movies, TV shows, music, sports, your favorite games and instant access to your friends, wherever you are.
This week, with the launch of Windows 8, followed shortly thereafter by Windows Phone 8 devices, we’ll flip the switch on that transformation with the launches of four new experiences that make entertainment better on every screen in your life:
At that moment, we will rapidly accelerate the reach of Xbox entertainment from more than 67 million consoles to literally hundreds of millions of devices worldwide. Also this week, we will take our biggest step ever to increase our global reach, extending Xbox entertainment experiences to 222 countries from 35.
We realize some may ask, “Why are all these apps called Xbox, isn’t Xbox just a game console?” For us the decision to have Xbox stand for our broad entertainment efforts was a simple one. It is a natural evolution of our consumer offering. Even as Xbox has become the number one game console in the world, and continued to deliver arguably the best line up of games in our history, we have seen the use of Xbox broaden to watching TV/movies and listening to music.
During the last couple of years, we have grown our global entertainment portfolio to more than 62 TV and entertainment partners. Our Xbox LIVE subscribers now spend more time enjoying entertainment apps than multiplayer games. And this is occurring even when multiplayer gaming is also growing on our console.
Also, we live in a multi-device world. The millions of people enjoying entertainment on their Xbox are doing so within arm’s reach of another device. We believe your entertainment should travel seamlessly across devices, that devices should work together to make your entertainment more accessible and create entirely new experiences. We knew we needed a single name for all entertainment experiences from our company and nothing means entertainment at Microsoft more than Xbox.
Xbox SmartGlass is a great example of our approach to multi-screen entertainment. With SmartGlass we are focusing on two key objectives:
- Make discovering and controlling your entertainment simple, no matter the device you’re using; and
- Ensure you get more from your entertainment experience.
Xbox SmartGlass is a free downloadable app that takes your Windows 8 and RT tablets and PCs, Windows Phone 8, iOS and Android devices, and converts them into smart second screens for the entertainment you are enjoying through your Xbox.
Today, we are unveiling our first wave of experiences and partners for Xbox SmartGlass. They are the first of many to become available over the coming months.
Navigate your Entertainment – Your phone and tablet will become the best remote controls in your house. Use the touch screen on your smartphone or tablet to control your Xbox 360, and use your devices to pause, rewind or advance entertainment.
TV & Movies – With Xbox Video, start a TV show or movie on your Windows 8 tablet and finish it on the big screen through Xbox 360; see the names of cast and crew for the film you are watching and discover related films. To give you one example of what you can expect, coming next season, HBO GO’s “Game of Thrones” will offer groundbreaking Xbox SmartGlass experiences.
Sports – While watching the game, use a second screen to follow real-time stats, player bios, news and highlights you may have missed. All of this and more will be available for NBA Game Time, ESPN and UFC in the coming months.
Music – Control your Xbox Music experience on the TV using your smartphone or tablet, discover related artists and songs, cue up additional music, read artist bios and more.
Internet Explorer for Xbox – The Web comes to TV like never before with Xbox 360 and Xbox SmartGlass. With your smartphone or tablet, pan or pinch and zoom to explore the Web on the largest and best screen in the house, enjoy easy text entry with the keyboard on your tablet or phone, and then move your browser back to your device to take it on the go.
Games – Get more from your game when you can use a second screen. Turn you phone or tablet into a virtual GPS in Forza: Horizon. Don’t stop the dance party in Dance Central 3 by going back to the menu to choose your next song. Instead, queue it up on your tablet or smartphone. In HomeRun Stars, use SmartGlass on your favorite device to throw a surprise pitch to your friend up at bat in front of Kinect. See detailed stats on how you are progressing in Halo 4, or check up on friends. All of these features and much more will be available when your favorite game extends to multiple screens.
And we’ve only begun to scratch the surface of what’s possible. In the future, new games will be created, TV shows and movies will be re-imagined, and sports will be broadcast from the ground up with Xbox SmartGlass in mind.
Moreover, we are making it easier than ever to buy an Xbox 360 console. Starting this fall, we are rolling out the “Entertainment for All” pricing plan that enables you to buy an Xbox 360 for $99 when you sign up for 2 years of Xbox LIVE. Entertainment For All Plan will include U.S. retailers: Best Buy, GameStop, Walmart, Toys R Us and the Microsoft Store.
With these new technologies, services and pricing, Xbox entertainment has never been:
- More simple and engaging
- Available on so many new devices; and
- More affordable.
So, yes, this is certainly an epic year for Microsoft. But more importantly, it’s an epic time for all of you that love amazing entertainment.
Then there is certainly Nancy Tellem:
Microsoft Names Longtime Entertainment Executive Nancy Tellem Entertainment & Digital Media President [Microsoft press release, Sept 18, 2012]
Microsoft Corp. today announced that Nancy Tellem, former president of CBS Network Television Entertainment Group, has joined Microsoft as Entertainment & Digital Media president.
In her role reporting to Phil Spencer, corporate vice president, Microsoft Studios, Tellem will oversee the launch of a newly created production studio in Los Angeles that will develop interactive and linear content for Xbox and other devices. In addition to running the production studio, she will help spearhead the company’s efforts to turn Xbox into a destination where consumers can enjoy all their entertainment in one place.
Tellem and her group will collaborate with the creative community to develop unique, compelling storytelling experiences for the Xbox brand. More than just a gaming console, Xbox has evolved into a consumer destination for the world’s most popular TV, movies, music and sports content. With a roster of more than 65 entertainment apps, including Netflix, Hulu Plus, HBO GO, MLB.TV, ESPN, YouTube and VEVO,global video consumption on Xbox LIVE has increased 140 percent during the past year. In addition, this September, Microsoft will introduce 2-way TV experiences from renowned entertainment partners Sesame Workshop and National Geographic that will further expand the Xbox platform beyond games, offering entertainment options for everyone in the family.
“I am excited to be a part of the continued evolution of Xbox from a gaming console to the hub of every household’s entertainment experience,” Tellem said. “The Xbox is already a consumer favorite, and we now have a tremendous opportunity to transform it into the center of all things entertainment — from games, music and fitness to news, sports, live events, television series and movies — so consumers have one destination for all their entertainment needs. I look forward to building a studio team that embraces the challenges of creating true interactive content that the Xbox platform supports and to work with talent to create content that will change the way entertainment content is experienced and delivered.”
“Whether you are voting for your favorite contestant on a TV show or playing a game, entertainment is becoming more personalized and social, driven by the Internet and new tools to interact with content,” Spencer said. “We are embarking on a new chapter with the creation of a studio dedicated to making original interactive and linear content, and I’m excited to have Nancy leading this effort.”
“With her impressive background in entertainment innovation, I am thrilled to have Nancy join our team,” said Don Mattrick, president of the Interactive Entertainment Business Group at Microsoft. “Under her direction, we look forward to building and extending our creative offerings from the living room to all your devices.”
Tellem has been a CBS executive since 1997, most recently as senior adviser to CEO Leslie Moonves, where she explored business and strategic opportunities — domestic and international — involving content partnerships, new production models, emerging media and technologies. As president of the CBS Network Television Entertainment Group, Tellem supervised programming, development, production, business affairs and operations. She oversaw the network’s prime-time, daytime, late-night and Saturday morning lineups (with shows like “CSI,” “Survivor,” “Everybody Loves Raymond” and “The King of Queens”). Before joining CBS, Tellem was executive vice president of Business and Financial Affairs for Warner Bros. Television and was part of the team that launched the landmark programs “Friends” and “ER.”
In 2006, Tellem was inducted into the Broadcasting & Cable Hall of Fame for her contributions to the electronic arts. In 2008, Forbes ranked her 32nd on its list of “The World’s 100 Most Powerful Women” and Entertainment Weekly named her the third-smartest person in TV for quickly restoring CBS’s entire primetime lineup after the 100-day writers’ strike. That same year, the National Association of Television Program Executives awarded Tellem a Brandon Tartikoff Legacy Award in recognition of her “extraordinary passion, leadership, independence and vision in the process of creating TV programming.”
About Xbox
Xbox is Microsoft’s premier entertainment service for the TV, phone, PC and tablet. It’s home to the best and broadest games, as well as one of the world’s largest libraries of music, movies, TV and sports. With Kinect, Xbox 360 transformed gaming and entertainment in the living room with a whole new way to play games and find entertainment — no controller required. More information about Xbox can be found online at http://www.xbox.com.
Nancy Tellem: Why Microsoft’s Looking for TV Hits on XBox Live (Q&A) [Hollywood Reporter, Jan 4, 2013]
The entertainment and digital media president on why she left CBS, how she’d handle Angus T. Jones and why she’s not into violent entertainment: “I don’t like blood.”
Nancy Tellem, who had been a consultant to CBS chief executive Leslie Moonves for nearly three years after stepping down as president of the CBS Network Television Entertainment Group in 2009, became entertainment and digital media president at Microsoft on Sept. 18. One of her primary mandates: to create a TV studio in Los Angeles during the next year, where she and her staff will make original content for the 40 million customers worldwide who subscribe to Xbox Live, which already features fare from Netflix, ESPN, HBO Go, Amazon Prime and other providers. Tellem, 58, a mother of three sons who is married to sports agent Arn Tellem — and who spends what little free time she has bicycling, reading and doing yoga — spoke with THR at her temporary office at Wasserman Media Group in Los Angeles.
Nancy Tellem, who had been a consultant to CBS chief executive Leslie Moonves for nearly three years after stepping down as president of the CBS Network Television Entertainment Group in 2009, became entertainment and digital media president at Microsoft on Sept. 18. One of her primary mandates: to create a TV studio in Los Angeles during the next year, where she and her staff will make original content for the 40 million customers worldwide who subscribe to Xbox Live, which already features fare from Netflix, ESPN, HBO Go, Amazon Prime and other providers. Tellem, 58, a mother of three sons who is married to sports agent Arn Tellem — and who spends what little free time she has bicycling, reading and doing yoga — spoke with THR at her temporary office at Wasserman Media Group in Los Angeles.
The Hollywood Reporter: Is it scary to move from traditional TV to a tech company?
Tellem: For me, it was a natural next step. I was always interested in where the next distribution platform was happening and was very engaged with talking to tech companies.
THR: Xbox Live already gives users access to tons of video. Why do you need original content?
Tellem: Incredible content really raises the brand — look at Mad Men with AMC. So original programming gives us an opportunity to kind of brand the Xbox. And looking at the technology the Xbox console provides, we are really a bit ahead of the more traditional media companies in having the ability to develop and produce interactive content.
THR: What types of shows do you plan to make?
Tellem: We’re looking at all forms of content for every member of the family. So that certainly covers live events, reality, game shows, documentaries and scripted comedy or drama. We’ll cover it all. We’re figuring this out as we go. But we certainly intend to produce things with high production value, with the same breadth of storytelling that you see on traditional TV.
THR: Interactive TV hasn’t taken off yet. What are you going to do differently to make it popular?
Tellem: We’ve all tried to produce multiplatform programming, but the difficulty has been that you don’t have the technology to support it. This is where Microsoft and Xbox are in a unique position. The technology is there, not only for the audience that just wants to watch passively, but also for those who want to engage the content more, whether by mobile, tablet or on TV.
THR: Will you be able to attract major TV talent to make shows for a tech company?
Tellem: I certainly hope so. I know that before my arrival, they were able to attract a certain level of great talent. I invite everyone to come and listen to what we want to do. There’s a great playground we have here.
THR: What agents and talent have you spoken with so far?
Tellem: I’m somewhat overwhelmed by the interest, but I can’t say. It’s a little too early.
THR: Have you made any major hires yet?
Tellem: Not yet. We’re obviously taking advantage of all the existing people we have in Seattle, but at the same time we want to build a top-notch staff in L.A. for what will certainly be a full-fledged production studio.
THR: Why did you leave CBS?
Tellem: It’s probably the toughest decision I’ve made in my career. I’m very, very close to Leslie and close to all the executives there. We’re like a wonderful family. I just felt that I had done the job, and hopefully I did it well, and there were new challenges I wanted to take on. I wanted to be a little less comfortable, and I was always so intrigued with where television was going.
THR: What exactly did you do as an adviser to Moonves?
Tellem: I’ve always been interested in looking at the next generation of television. In the early days, I ran CBS.com before CBS acquired CNet, and I initiated the mobile strategy. So I’d try to embrace what’s on the horizon. I was also interested in the global production model, so I did a lot of that, going to places like India and exploring.
THR: Can you give me an example of a crisis at CBS when you were there and how you handled it?
Tellem: I don’t want to be specific, but there are situations where talent has personal issues and it’s like an athlete: Do you throw them out in the field if it hurts them but helps the team? Ultimately you have to think about the well-being of the talent. I guess I’m referring to the Charlie Sheen, Angus T. Jones type of situations. But among the executives, it should be a collaboration, and we should listen to different points of views to come to a conclusion we can live with while also protecting the show.
THR: How would you handle the controversy over Two and a Half Men star Jones’ plea for people to stop watching the show because it’s “filth”?
Tellem: I was just thinking this morning that it’s a good thing I’m not at CBS. Nina [Tassler, CBS Entertainment president] and Leslie and the Warner Bros. people are handling it appropriately. Who knows what motivates these things, but I think his apology was correct. We’re all blessed to be in this business.
THR: Is any part of traditional TV in jeopardy because of advancing technologies?
Tellem: It’s certainly disruptive. We always compared ourselves with the music industry and said we had to be much more nimble and accepting of change. The TV industry has done just that.
THR: How does the industry combat DVRs and ad-skipping?
Tellem: With VOD and embracing the whole concept of giving consumers their content where and when they want it. And there have been studies — and I do this also — where I watch the commercials because I forget I’m watching a recorded show. Ratings aren’t reflecting what’s really happening. It’s interesting, though, that when you download something, you end up watching the commercials, because you’ve made the decision to watch it free with ads instead of paying for it without ads. Because of that proposition and the intimate relationship people have with their computers and tablets and such, people are accepting commercials and watching them more.
THR: What was your favorite CBS show with which you were involved?
Tellem: Oh my God. You know, it’s like, as Leslie would always say, “They’re all our children.” But obviously, the things that made a huge difference in turning around that network were shows like CSIand Survivor and, my gosh, Everybody Loves Raymond.
THR: What do you like to watch now on TV?
Tellem: I’m quite enthralled with Game of Thrones. I’ve been watching Newsroom a lot on HBO. I love Homeland, of course, because everyone does, and Modern Family. I hate to admit it, but I agreed with most of the Emmy Awards this year. I love television. I spent the last 25 years in it, you know?
THR: Now that you’re at Microsoft, is there pressure to become a gamer?
Tellem: I love FIFA and I play Madden and golf games, and I think it’s due to the influence of my kids. I was aware of Halo, Call of Duty and the shooter games, but I didn’t play Halo until four days ago. It’s really amazing, but shooter games aren’t my cup of tea.
THR: Do you have a political problem with them?
Tellem: It’s funny. Like in television, we’re all fine with violence but not sex. The shooter games are much like procedural series, which I’ve never embraced. I don’t like blood.
And that’s not all as Microsoft Names Longtime Technology Entrepreneur Blake Krikorian Corporate Vice President in Its Interactive Entertainment Business [Microsoft press release, Jan 10, 2013]
Proven innovator and leader in media and technology brings strong entertainment background to Xbox team.
Microsoft Corp. today announced the appointment of Blake Krikorian as corporate vice president for its Interactive Entertainment Business (IEB). Krikorian will report to Marc Whitten, chief product officer for IEB. This announcement follows the acquisition of Krikorian’s company, id8 Group R2 Studios (R2 Studios).
“We are thrilled to have Blake join the Xbox team,” Whitten said. “He’s a proven innovator and well-respected leader in both the media and technology industries, having created simple, elegant products that have transformed the way people engage with and consume content. We look forward to his contribution to our team as Xbox continues to evolve and transform the games and entertainment landscape.”
“I am excited to join Microsoft and be a part of the Xbox team. As a 10-year Xbox LIVE subscriber, I have seen firsthand how Xbox has delighted us by reinventing how consumers experience games and entertainment,” Krikorian said. “I look forward to helping the team define the future of entertainment and contribute to the next decade of continued innovation.”
Krikorian most recently founded R2 Studios. Before that he served as the co-founder, chairman and CEO of Sling Media Inc., inventors of the Emmy® award-winning Slingbox®, which is now owned by EchoStar Corp. Krikorian served on the board of Amazon.com Inc. and also co-founded the Philips Mobile Computing Group where he co-led the team that created the award-winning Velo 1 handheld PC running Windows CE. He has received numerous lifetime achievement awards including the Lifetime Technology Leadership Award from Broadcasting & Cable, as well as the TechFellow Award for Disruptive Innovation from TechCrunch, Founders Fund and NEA.
Microsoft has acquired id8 Group R2 Studios [Neowin.net, Jan 10, 2013]
… Microsoft apparently was the winner in the race to acquire R2 Studios with Google and Apple both reportedly also interested in buying the company. R2 Studios’ only product was a $99 Android app, R2 Control For Creston, which allows users to remotely control devices such as security systems, lighting and more on an Android smartphone or tablet.
This move could be a signal that Microsoft’s next version of the Xbox console will have some kind of expanded remote control features. The company has already launched Xbox SmartGlass apps for Windows 8, iOS and Android device owners for use as a “second screen” experience for some Xbox 360 games and media.
R2 Android App Controls Crestron Systems [CrestronElectronics YouTube channel, Sept 23, 2010]
Slingbox® Inventor And Crestron Collaborate To Bring Android™ OS Support To The Crestron Platform [Crestron press release, May 17, 2011]
R2 Control App For Android™ is Now Available
Slingbox® inventor, Blake Krikorian and Crestron today announced the release of the R2™ Control™ for Crestron, a software app that turns virtually any Android™ smartphone or tablet into a fully-functional Crestron touch panel for residential and commercial applications. Utilizing the R2 app and Crestron processors, customers can now control AV, lighting, thermostats, security systems, and thousands of other products via their Android device from anywhere in the world.
R2 was initially unveiled at the Crestron booth at CEDIA Expo last September. Since then, R2 conducted a seven month private beta test program consisting of hundreds of residential, commercial and government Crestron-authorized integrators from around the world. The input from this beta team helped R2 achieve a sophisticated solution compatible with a multitude of Android devices.
R2 was developed by id8 Group Productions, a product development and technology lab. Co-founder and inventor of Emmy award-winning Slingbox, Blake Krikorian founded id8 Group Holdings (parent company of id8 Group Productions) in 1999. R2 is the first product developed by id8 Group since Slingbox expanded in 2004 to form Sling Media®, Inc. Sling Media was subsequently acquired by Echostar Corporation in 2007.
“We are thrilled to have the opportunity to collaborate with an innovator like Blake and officially support Android,” says Fred Bargetzi, Crestron VP of Technology. “The R2 control app for Android is the latest development in our ongoing open-standards platform which also includes integration with iOS, MAC OSX and Windows.”
Krikorian initially conceived of R2 for his own use. “In addition to being able to control aspects of my home via Crestron remote controls and iOS devices, I really wanted to be able to use my new Android-based phone,” says Krikorian. “I desired a software platform that allowed me to further optimize the home control experience for general purpose smartphones and tablets, beyond the industry’s current state of the art. R2 and Android provides the flexibility to do just that.”
R2 Key Features
- Communicates with Crestron 2-Series and 3-Series™ control systems via WiFi and cellular network
- Controls multiple systems/homes from one Android device
- Uses the same Crestron development tools to create projects for R2. R2 touch panel projects are created using the existing and familiar development tools such as SIMPL Windows, VTPro-e®, D3 Pro® and System Builder.
- Compatible with Crestron Mobile Pro®/Mobile Pro G™ apps: runs projects created for iOS devices
- Quick access: ability to disable screen unlock requirement; Device’s built-in proximity sensor can automatically wake device
- Automatic project UI scaling: resizes Mobile Pro and Mobile Pro G projects to the native resolution of any Android device
- Visual, haptic and audible feedback: provides clear confirmation of key presses
- Optimized performance for Android: takes advantage of Android’s multitasking and flexibility to deliver an experience optimized for home and building control
- Support for multiple and custom resolutions: in addition to R2’s built-in UI display scalar, an upcoming VTPro-e add-on (coming soon) enables developers to optionally create pixel-perfect projects for any screen size.
If you have any questions, please contact: r2control@crestron.com.
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About Crestron
For 40 years Crestron has been the world’s leading manufacturer of advanced control and automation systems, innovating technology and reinventing the way people live and work. Providing integrated solutions to control audio, video, lighting, computer, IP and environmental systems, Crestron streamlines technology, improving the quality of life for people in corporate conference rooms, hotels, classrooms, auditoriums, and in their homes.
BYOD trends vs. Mobile enterprise platform trends
With the literal explosion of mobile computing devices there is a huge challenge both on the enterprise computing vendor and customer sides. The easiest way of looking at those challenges is analyzing the so called BYOD (Bring your own device) and mobile enterprise platforms trends on the market where customers and suppliers meet each other.
Note as well that these are all parts of a bigger trend, the so-called “consumerization of IT” which I already covered from an overall leading vendor point of view in the Pre-Commerce and the Consumerization of IT [Sept 10, 201] post on this site. Please read that before looking at the current trends discussed here in the below detailed sections. Then I will recommend to read The Changing Of The Enterprise Guard [TechCrunch, Jan 19th, 2013] article by the CEO of Box.com, the most successfull rising star in the enterprise IT vendor space. Even the ex MS leader Steven Sinofsky was recommending it in his Twitter meassage as:
Interesting thoughts on enterprise computing http://techcrunch.com/2013/01/19/the-changing-of-the-enterprise-guard/ … from Aaron
@levie
Note that the BYOD trend I will present mostly through the Middle-East area where to solve the BYOD issue properly for the true enterprise space is the most pressing one in the world.
BYOD trends
Bring your own device [Wikipedia article, started on Jan 1, 2012]
…
History
BYOD first entered in 2009 courtesy of Intel when it recognized an increasing tendency among its employees to bring their own devices to work and connect them to the corporate network.[5] However, it took until early 2011 before the term achieved any real prominence when IT services provider Unisys and software vendor Citrix Systems started to share their perceptions of this emergent trend.
In 2012 the Equal Employment Opportunity Commission adopted a BYOD policy, but many employees continued to use their government-issued BlackBerrys because of concerns about billing, and the lack of alternative devices.[6]
Issues
BYOD has resulted in data breaches.[citation needed] For example, if an employee uses a smartphone to access the company network and then loses that phone, any unsecured data stored on the phone could potentially be retrieved by untrusted parties.[7]
It is important to consider damage liability issues when considering BYOD. If an employee brings their personal device to work, and it is physically damaged through no fault of their own it is unclear whether the company is responsible for repair or replacement.[citation needed]
Pros
Business
A business that adopts a BYOD policy allows itself to save money on high-priced devices that it would normally be required to purchase for their employees. Employees may take better care of devices that they view as their own property.[citation needed]Companies can take advantage of newer technology faster.[citation needed]
Employees
Employees who work for a business with a BYOD policy are able to decide on the technology that they wish to use for work rather than being assigned a company device. This is thought to improve morale and productivity.[8] Exclusive control of features is given to the employee.
Cons
- Business
- Company information will often not be as secure as it would be on a device exclusively controlled by the company.[citation needed] (Security professionals have termed it ‘Bring Your Own Danger‘ and ‘Bring Your Own Disaster‘.[9]) The company may have to pay for employee devices’ phone service, which they use outside company time. BYOD is an extreme case of the end node problem.
- Employees
- Due to security issues, the employees often do not have true full control over their devices[citation needed], as the company they work for would need to ensure that proprietary and private information is secure at all times. It is an out-of-pocket expense for the employees. They would be responsible for repairs if their devices were damaged or broken at work.[citation needed]
Businesses that fall under compliancy rules such as PCI or HIPAA must still comply when using BYOD.[citation needed]
Prevalence
The Middle East was reported to have one of the highest adoption rates of the practice worldwide in 2012.[10]
…
[10] El Ajou, Nadeen (24 September 2012). “Bring Your Own Device trend is ICT industry’s hottest talking point at GITEX Technology Week”. AMEinfo.com. Retrieved 26 September 2012.
Frost & Sullivan: Consumerisation of Smart Phones and Bring Your Own Device (BYOD) are the biggest trends driving the Network Security Market in the Middle East [Frost & Sullivan press release, Nov 12, 2012]
Dubai, the U.A.E., 21 November, 2012 – With an increase in the number of Advanced Persistent Threats (APTs), information security risks are becoming a major concern for organisations globally. Enterprises are swiftly adopting and deploying applications and new services to combat the same. In their quest to obtain high levels of security assurance and develop advanced intelligence technologies, organisations in the Middle East are increasingly adopting methods such as virtualisation and cloud computing. Over the past few years, this has led to increased Government investment in information and communication technology (ICT)-related projects in the Middle East and this is expected to proliferate further in future. To address these threats to enterprise security and brainstorm best-in-class Enterprise Security Solutions and Strategies, Frost & Sullivan convened the best minds in enterprise security at its Middle East Enterprise Security Summit 2012 on November 21, at Habtoor Grand Beach Resort, Dubai, U.A.E.
Held for the first time in the Middle East, the Summit was attended by CIOs, CISOs, CTOs, Vice Presidents, General Managers, Network Managers, Enterprise Security Architects, Internet Security Architects, Compliance Officers, and Department Heads from across a variety of industry sectors such as Banking, Finance & Insurance (BFSI); Telecom; IT; Manufacturing; Government; Education; Healthcare; Media and Entertainment; Retail; and Automotive and Logistics.
According to Frost & Sullivan, consumerisation of smart phones and Bring Your Own Device (BYOD) are the biggest trends driving network security issues in the Middle East today. The network security market is in a high-growth stage. Frost & Sullivan anticipates that technology convergence, regulatory compliance, and continuous growth of network infrastructure will continue to drive up sales for security suppliers in the Middle East during the period 2012-2018.
Frost & Sullivan’s Middle East Enterprise Security Summit 2012 Summit began with an inaugural address by Andy Baul-Lewis, Director, ICT Practice, Frost & Sullivan, describing the prevalent enterprise security landscape in the Middle East. “Building security for electronic assets is one of the most critical tasks facing organisations today. In a converged world, where the threats of each system are multiplied; getting advice, sharing best practice, and talking to partners is a vital part of the construction process. This is what Frost & Sullivan endeavours to provide through this interactive Summit,” stated Mr Baul-Lewis at the Summit.
The Summit included in-depth discussions and case studies on enterprise security management. The first of these was, ‘The Evolving Role of a Chief Information Security Officer’ by Roshan Daluwakgoda, Senior Director – Security Strategy Planning Risk Assessment and DR at Emirates Integrated Telecommunication Company, du, Dubai, the U.A.E. This was followed by a thought-provoking presentation on ‘Information Security Management – When the Going Gets Tough,’ by Kamran Ahsan, Head of Information Security, Injazat Data Systems, the U.A.E. Bashar Bashaireh, Regional Director, the Middle East, Fortinet, gave a presentation ‘How to Make your Security Aware in a BYOD World’. Thameem Rizvon, IT Director, Kamal Osman Jamjoom Group LLC (KOJ) presented, ‘Learn from your Peers: Security Implementation in a Retail Environment’. The session on Secure the Cloud,’ by Joe So, VP Business Sales, Huawei;was followed by a panel discussion on ‘Security Convergence and its Impact on Business.’
Speaking on the occasion, Kamran Ahsan stated, “Information security is increasingly emerging as a critical concern in today’s modern business environment. This trend is very much evident in the Middle East, where enterprises have experienced information-related threats such as infiltration, data leakage, and cyber warfare among others. Injazat Data Systems will highlight how enterprises can proactively address these challenges and mitigate risks associated with business assets and services of enterprises. Moreover, with the best minds in enterprise security attending this Event, we expect to have an in-depth discussion of new trends and developments in information security in the Middle East.”
Sharing his views on the Summit, Bashar Bashaireh said, “Information Technology has become central in driving the business processes of enterprises. However, as trends such as mobility, cloud computing, and BYOD are fast gaining momentum in the U.A.E., helping drive business profit and innovation; they are also bringing forth new challenges to IT security. Organisations in the U.A.E. should act now to regain control of their IT infrastructure by strongly securing their network and applying granular control over users, devices, and applications. The Summit organised by Frost & Sullivan is a great platform for us to share with end customers our insights on the new approach aimed towards IT security.”
Talking about Securing the Cloud, Dong Wu, Vice President, Huawei Enterprise Middle East said, “As organisations roll out cloud-based models into their business infrastructure, the issue of security becomes an ever increasing concern. The Middle East Enterprise Security Summit is a way for Huawei and other industry leaders to come together and discuss how businesses can be better secured and protected from the fast-evolving cyber threats that exist today. At the summit, we look forward to sharing our insights on how organisations can improve their planning processes before making their move into the cloud.”
The Summit was supported by Injazat as Platinum Partner, while Fortinet and Huawei were the Event’s Silver Partners. Telecom Review, Teknotel and Connect-World Magazine supported the Summit as Media Partners; with Tech Channel MEA as the Online Partner for the event.
If you are interested to know more about insights shared at the Middle East Enterprise Security Summit 2012 then send an e-mail to Tanu Chopra/Deepshri Iyer, Corporate Communications, at tanu.chopra@frost.com/deepshrii@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, and country.
For more information on the Summit, please visit: http://www.frost.com/EnterpriseSecurityMiddleEast
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants.
Our “Growth Partnership” supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.
- The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including research, analysis, strategy, vision, innovation, and implementation.
- The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360-degree research, comprehensive industry coverage, career best practices, as well as our global footprint of more than 40 offices.
For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector, and the investment community. Is your organisation prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics, and emerging economies?
Mobile application management [Wikipedia article, started on Oct 17, 2011]
Mobile Application Management (MAM) describes software and services responsible for provisioning and controlling access to internally developed and commercially available mobile apps used in business settings on both company-provided and “bring your own” smartphones and tablet computers.
Mobile application management differs from Mobile device management (MDM) in the degree of control that it has over the managed device. As the names suggest; MAM focuses on application management, but stop short of managing the entire device. MDM solutions manage the down to device firmware and configuration settings and can include management of all applications and application data.[1]
History
Enterprise mobile application management has been driven by the widespread adoption and use of mobile devices in business settings. In 2010 IDC reported that smartphone use in the workplace will double between 2009 and 2014.[2]
The BYOD (“Bring Your Own Device”) phenomenon is a factor behind mobile application management, with personal PC, smartphone and tablet use in business settings (vs. business-owned devices) rising from 31 percent in 2010 to 41 percent in 2011.[3] When an employee brings a personal device into an enterprise setting, mobile application management enables the corporate IT staff to download required applications, control access to business data, and remove locally cached business data from the device if it is lost, or when its owner no longer works with the company.[4]
Use of mobile devices in the workplace is also being driven from above. According to Forrester Research, businesses now see mobile as an opportunity to drive innovation across a wide range of business processes.[5] Forrester issued a forecast in August 2011 predicting that the “mobile management services market” would reach $6.6 billion by 2015 – a 69 percent increase over a previous forecast issued six months earlier.[5]
Citing the plethora of mobile devices in the enterprise – and a growing demand for mobile apps from employees, line-of-business decision-makers, and customers – the report states that organizations are broadening their “mobility strategy” beyond mobile device management to “managing a growing number of mobile applications.”[5]
MAM system features
An end-to-end MAM solution provides the ability to: control the provisioning, updating and removal of mobile applications via an enterprise app store, monitor application performance and usage, and remotely wipe data from managed applications. Core features of mobile application management systems include:
- App delivery (Enterprise App Store)
- App updating
- App performance monitoring
- User authentication
- Crash log reporting
- User & group access control
- App Version management
- App configuration management
- Push services
- Reporting and tracking
- Usage analytics
- Event management
…
The Middle East angle #1:
Mitigating the Risks of BYOD with MAM [ITP.net, Nov 14, 2012]
Organizations need to decide how to manage BYOD, says Johnny Karam, Regional Director, Middle East and French Speaking Africa, Symantec
…
According to a recent Symantec survey, 59% of enterprises are making line-of-business applications accessible from mobile devices in an effort to increase efficiency, increase workplace effectiveness and reduce time required to accomplish tasks.
…
The average annual cost of mobile incidents for enterprises, including data loss, damage to the brand, productivity loss, and loss of customer trust was $429,000 for enterprise. The average annual cost of mobile incidents for small businesses was $126,000.
According to Symantec’s State of Mobility Survey, 67% of companies are concerned with malware attacks spreading from mobile devices to internal networks. In addition, Symantec’s latest Internet Security Threat Report highlighted that mobile vulnerabilities increased by 93% in 2011.
…
To manage or not to manage:
The first question every business must ask around BYOD is: How much management of user-owned devices connecting to corporate resources does the company want? This is critical because the degree to which an enterprise is involved in managing various aspects of user-owned mobile devices has consequences. For example, a key anticipated benefit of implementing BYOD means often no longer having to fully manage employees’ mobile devices. In return, support costs are hopefully reduced.
However, fully managing user-owned devices often results in intruding on the personal information and activity of those devices. This might include enforcing device-level authentication and encryption policies and complete device remote locking or wiping, including users’ personal content.
…
Delivering corporate [apps and] resources
…
Securing corporate [apps and] resources once they are delivered
…
The Middle East angle #2:
BYOD is not a new problem [Gitex Review 2012 published on ITP.net, Nov 18, 2012]
Cloud and big data were the big talking points during GITEX Technology Week 2012. Leading UAE and global companies discuss those trends.
Florian Malecki, head of product marketing at Dell SonicWALL, says that enterprises need to be prepared to allow employees to use their toys.
Ilike to be a bit controversial over the growing BYOD trend. If you listen to the analysts; IDC, Gartner, Forrester; they are all predicting that the number of smartphones being sold by 2014-2015 will outgrow the number of laptops being sold.
We all say that the employees want to use their own device, but if you look at what they want to use, it is either a tablet or a smartphone, so companies and IT managers have to accommodate all users needs.
We did a survey and we looked at what devices our customers are supporting or are open to support, and there is no clear winner. If you look at it from a device point of view, there are people who want to use tablets (about 60%), people who want to use smartphones and people who want to use laptops.
How to start
A good way to start BYOD and try to minimise risks is by using an SSL VPN gateway. The beauty of an SSL VPN gateway is that you are able to identify the user and the user profile as well as identifying the device and setting up a profile for the device. You could have a profile that is a managed device or a personal device, but registered within the corporate ID system. Any organisation whether an SMB or enterprise, if they don’t really know where to start the BYOD journey, if they start looking at implementing an SSL VPN solution like the Dell SonicWALL solution then they probably meet 90% of employees requirements when it comes to BYOD.…
How to control BYOD
The threat of personal devices on a corporate network is a big problem, according to Darren Gross, EMEA senior sales director, Centrify, and companies must be able to control information on those devices.Security compliance experts Centrify have released mobile device management software, which integrates one single identity for each individual employee within an organisation, so wherever they go the company can control where they are going and what they are doing, through policies and security settings.
“There is a lot of competition in that space, but we are quite unique because we come from an angle of joining the system to Active Directory, so if I leave my iPad on the train, help desk can go and remotely wipe that device so there is no threat to the enterprise,” says Darren Gross, EMEA senior sales director, Centrify.
Enterprises also need to look at mobile device configuration to prevent viruses from accessing the corporate network.
… <LONG>
People that use mobile devices tend to have no passcodes on them. Centrify is able to enforce passwords and encryption on a personal device accessing the corporate network.
Cloud
The company is also developing authentication for off premis cloud software and service type applications so for example SalesForce and WebEx.“Users will be able to sign on with one identity within Active Directory so you control what a user is doing and see where they are going, there is full accountability to what individuals are doing within the organisations,” said Gross.
…
Disaster recovery in the region
Yasser Zeineldin, CEO, eHosting DataFort, says the company is offering regional enterprises the opportunity to develop DR sites.We offer clients both in UAE and the Middle East region the ability to have a hot disaster recovery site where data is replicated between their production system and the disaster recovery system that is hosted with us. This means that in real time if there is a failure in the primary system they can switch over to the secondary system.
…
<BIG DATA PART OF THE REPORT>
Mobile enterprise computing platform
Hal’s (Im)Perfect Vision on a possible (and much needed) further direction by Microsoft :
There is no ARM in Windows RT [Jan 2, 2013]
Windows RT is the name of Microsoft’s version of Windows 8 for ARM processors, right? It’s aimed primarily at Consumers, right? It’s role in business is primarily in the BYOD realm, right? That’s so 2012! Let’s talk about strategy and where I think Microsoft will go with Windows and particularly Windows RT. And how their strategy may become more obvious in 2013.
The name Windows RT wasn’t chosen to convey a message about Windows moving to ARM processors. Nor was it chosen to convey that it was a Tablet OS. The name appears to have been chosen primarily for one reason, it is an operating system devoted to running Windows RunTime apps. It splits the mainstream Windows product into two families. Windows for running Win32 “desktop” and Windows RunTime applications and Windows RT that drops the legacy Win32 application support. Windows RT is Microsoft’s go forward client operating system, while Windows is the operating system Microsoft will need to keep selling and enhancing for a transition that will last a decade or more, but it will eventually be considered a legacy.
I know I just sent a lot of people’s blood pressure through the roof because today they either (a) dislike Metro/Modern/whatever-you-call-it ,Windows RunTime, or the Start Screen and/or (b) the new environment isn’t really suitable for their usage scenario. But keep in mind I’m talking about where things are going over several releases of the re-imagined Windows. There will be many refinements, improvements, and changes before Windows RT replaces Windows as Microsoft’s primary client operating system offering.
The desktop lives forever, right? Well, on Windows yes but not on Windows RT. Today Windows RT only needs the desktop for two reasons. First, many traditional utilities from the File Explorer to much of system management are only available as desktop apps. Second, Microsoft Office is only available as desktop apps. But in each release going forward this will become less true. A Metro File Explorer will become standard. More and more system management will move to the new model. And eventually Microsoft will remove the desktop from Windows RT. Then it will be able to remove many pieces of legacy (including Win32), making Windows RT smaller, faster, and more secure (via smaller attack surface) than it’s Windows sibling.
Microsoft started the ball rolling with Windows RT on ARM because that was the most practical thing to do. With ARM unable to run existing x86 apps Microsoft had to decide if it would evangelize conversions of existing applications to ARM or put the energy into getting developers to write new Metro/Modern apps. And without a library of Modern apps it was unlikely that any of the x86-oriented OEMs would create an x86 Windows RT system. No rational amount of pricing difference on Microsoft’s part would encourage a OEM to use an operating system with no applications when they could just as simply use one with a huge, if aging, library. ARM thus became the obvious place to introduce Windows RT.
As the library of applications in the Windows Store grows it becomes more and more likely that Microsoft will introduce Windows RT for x86 systems. Will that happen in 2013? By the end of 2013 the Windows Store will likely have in excess of 150,000 Apps. Perhaps in excess of 200,000. Assuming that the quality is there (meaning they are the apps people want and are equal to their iPad and Android equivalents) the market for systems with no need to run legacy desktop apps will have grown dramatically. Microsoft, many of its OEMs, and Intel (of course) will want the option of using Clover Trail (and its follow-ons) in those systems. So it is quite possible that Microsoft makes Windows RT available for Clover Trail-based systems in 2013, and it seems a certainty for 2014.
As a side note this is something that Paul Thurrott will probably not be happy about. Paul has called on Microsoft to use Clover Trail in its next generation of the Surface so that it would have the full Windows experience. But I expect that if Microsoft did use Clover Trail in a Surface (as opposed to Surface Pro) replacement that system would still run Windows RT. Sorry Paul
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If Windows RT for x86 is speculative in 2013 here is something I think is a surer bet. Windows RT will expand into a family that mirrors the editions of Windows. I expect that in 2013 we will see a Windows RT Enterprise (and perhaps Pro as well) edition. Why? Well the current edition of Windows RT is missing some key functionality that would accelerate its adoption within Enterprises. And I’m not even talking about UI or Windows RunTime changes that would increase the application space it was applicable to. I’m talking purely about lower level operating system features.
Being able to participate in a domain is part of Microsoft’s secret sauce for enterprises, and today Windows RT can’t do that. A Windows RT Enterprise edition would bring the ability to join a domain, use DirectAccess, use BitLocker, fully participate in Microsoft’s management capabilities, etc. Whereas the solutions introduced in 2012 are acceptable for BYOD situations and some limited application scenarios, an Enterprise edition would allow Windows RT systems to participate as full members of the enterprise computing environment.
Windows RT Enterprise will not allow side-loading of desktop applications, but it may allow side-loading of limited types of system software. As great as DirectAccess is (and given my involvement in it I’m biased, but then I also lived with it as my “VPN” for a year so know how fantastic the user experience is) most enterprises use Cisco VPNs. And while Windows RT is certainly adequately protected with Windows Defender, IE SmartScreen, etc. most enterprises will want at least the management capabilities of enterprise-oriented security products and probably the ability to use their corporate standard (i.e., Symantec, McAfee, etc.) products and infrastructure. Unless Microsoft addresses these adoption of Windows RT will be much slower than desired.
And what about requirements for access to desktop applications on Windows RT systems? Many, perhaps most, enterprises are fine with using VDI to allow users of these systems to access desktop applications. Some are downright enthusiastic. But many do not want that access occurring off their corporate network. Hence the need for the ability to join a domain, and use DirectAccess or VPNs when users need remote access. You then run VDI over the corporate network.
Now we get to another wildcard in all of this, Office. Today’s situation with Office being a desktop Win32 application on Windows RT, and only being available in the Home and Student edition, represents a major drag on Microsoft’s ability to move Windows RT forward. Microsoft needs to either allow upgrade of the edition of Office on Windows RT to an Enterprise edition (including, for example, making Outlook available) or to move Office fully to Metro/Modern (likely in multiple editions). They may do both given the time it could take to create a true Office RT.
An Office RT would benefit the entire Windows RT and Windows 8 market and is the logical direction for Office to go. But I find it hard to believe they can get to full equivalence with the Win32 Office apps in a year, let alone in a traditional longer release cycle. We’ll see some, perhaps substantial, movement in this direction in 2013 but I don’t know how far Microsoft will get. In the mean time they may find it prudent to release Office 2013 Enterprise (standalone and/or as based part of Office 365) for Windows RT systems. However this rolls out, Microsoft will substantially improve the Office for Windows RT situation in 2013.
Finally, let me reinforce a point I’ve blogged about before. Microsoft is moving to annual (or more frequent) updates as a (at least unofficial) corporate standard for release cycles. There may be exceptions from time to time, but I’d expect pretty much every actively developed product to have annual releases. That means faster evolution in smaller chunks is the norm. You don’t like how the Start Screen works today? By the end of the year there will no doubt be improvements that address major complaints. Windows RunTime missing an API that keeps you from creating a Metro/Modern version of your App? You might have it later this year. Can’t stand that the Share contract doesn’t work with Outlook? Again, a solution may appear faster than Microsoft customers have ever imagined possible.
2012 was an exciting year for Microsoft and its customers. 2013 may be even more exciting, and delightful.
But there are new contenders for the enterprise IT space not based on any earlier paradigms, neither on the enterprise desktop and notebook (like Microsoft’s Professional and especially Enterprise editions of Windows) evolved from the PC platform, nor on the web browser based enterprise thin client (from the Java-like Apex code programmable Force.com PaaS platform usable along with standard HTML, JavaScript and CSS in the browser, to a wide range of JavaScript frameworks of a kind of “enterprise quality” which include even versions for mobile browsers) evolved from the web platform.
A typical new contender, differing from both of the two earlier platforms in that by its very nature of cloud based file sharing can best exploit the power of new mobile computing devices, is the Box (service) [Wikipedia article, started on Nov 15, 2006]
Box (formerly Box.net) is an online file sharing and Cloud content management service for enterprise companies. … A mobile version of the service is available for Android, BlackBerry, iPhone, iPad, WebOS, andWindows Phone devices.[4]
…
Products
The core of the service is based around sharing, collaborating, and working with files that are uploaded to Box. Box offers 3 account types: Enterprise, Business and Personal.[12] Depending on the type of account, Box has a number of features such as unlimited storage, custom branding, administrative controls and 3rd party integrations with applications like Google apps, Gmail, NetSuite and Salesforce. The service also has a variety of social features such as discussions, groups and an update feed.
…
Sharing
Box is a file sharing network, which saves and stores the information uploaded by the customer to their web site. They have the full legal right to demographic information about their customers, sales, and traffic to their partners and advertisers. Even though this company does not have the right to give, sell, rent, share or trade any personal information uploaded to their web site by their customers unless consent is given by the user of an account, a third party may be able to view some information. For which some terms and policies have been set forth, to protect the web site as well as the customers alike to establish a full functioning informative and well organized sharing network.[22]
With the users consent, and if they are to choose they can share their private details with other customers such as:[22]
To see your name, Email address, Photo, Profile information
Chosen files to share –where comments can be made, and others can contact the user by email. People you invite as editors can also edit your shared files, upload documents and photos to your shared files, share those documents outside of Box, and give other users rights to view your shared files.[22]
On the website its platform services for Enterprise IT are described in the following framework:
Consolidate File Services: Consolidate All Your Content Services on Box
Box – the single, secure solution for content access, sharing and collaboration – lets you replace a myriad of file transfer systems and unsecured, consumer-focused tools like YouSendIt and Dropbox. Bottom line: You reduce content silos, lower costs and give users the simplicity and functionality they want with the security IT requires. Learn more
- Replace NFS, FTP, MFT and consumer file-sharing and sync tools
- Streamline system administration and reporting
- Reduce IT resource requirements while effortlessly meeting increasing storage needs
Enterprise Mobility: Support Mobile Content Management
Box works with any mobile device, giving remote workers access to critical content they need to succeed. Simultaneously, Box features a comprehensive and sophisticated security suite – and its seamless integration with third-party mobile device management tools like Good Technology and MobileIron provide an additional layer of data protection.Learn More
- Users get anywhere, anytime access to critical content; and that content is synced across all their devices
- IT enjoys remote device management coupled with auto logout and locking while sanctioning the use of specific mobile devices and apps
- IT also gains a new level of content visibility, with insight into how content is managed and accessed in the organisation – and beyond
Cloud Content Management: Discover Content Management in the Cloud
As a Web-based service, Box is up and running in minutes and deployed in days. There’s no hardware to maintain or software to update and it complements existing content management platforms.
Learn more
- Start working in the cloud immediately: no on-premise installation, provisioning, maintenance or DMZ setup
- Enable employees to access and share enterprise content quickly and securely, both internally and with external partners and vendors
- Significantly lower hardware and storage costs
Security and Architecture: Ensure Your Corporate Information is Secure
It’s true: Box is a leader in content management security and makes ongoing investments in the safety of our data centres and corporate operations. Box has been issued an SSAE 16 Type II report, and our solution also features Safe Harbor certification and provides easy-to-use configuration tools, so you can tailor Box to meet your security requirements. Learn More
- Global permission controls and detailed audit trails
- Full data encryption plus data centre backups and redundancy
- Guaranteed 99.9% uptime
The Box Platform: Extend Box With Our Platform and Integrations
Box is more than just a Web application; our comprehensive yet flexible platform lets you easily integrate, extend and customise your cloud deployment. Connect Box to the leading SaaS applications you already use, integrate it into your IT infrastructure or build apps designed to do whatever your business needs. Learn more
- Easily connect to other business applications like Salesforce, NetSuite and Google Apps
- Extend Box to meet additional needs with our 120+ Box Apps including eFax, DocuSign, FedEx and mobile Box Apps like Quickoffice
- Create custom mobile, Web and desktop applications powered by Box
Professional Services: Deploy Easily With Professional Services
Our Customer Success team offers a comprehensive range of professional and client support services, from end-user training to systems integration and performance tuning. Learn more
- Content migration services transfer your existing data to Box quickly and securely
- Custom implementation road maps streamline deployment across the enterprise
- A dedicated Customer Success representative gives you the responsive, personalised support you deserve
The current state was described in Box Platform: Announcing v2 API in GA and Year in Review [on box blog by Chris Yeh, VP of Platform, Dec 14, 2012]
2012 has been an amazing ride for the Box platform, and I’m excited to announce that we’re ending the year on a high note with the general availability of the Box v2 API. First released back in April in beta, we’ve made tremendous strides to bring our partners, developers and customers a simple, elegant and intuitive API that will power the next generation of business collaboration.
Our v2 API represents a major step forward for Box. It is RESTful, implements the OAuth2 spec to standardize user authentication, has much improved error handling and it is well documented. Our Platform Manager Peter Rexer has a deep dive into all the details of the v2 API here. We’re also introducing Box developer accounts, which offer developers access to all of Box’s enterprise features through both the Box web app and the API. In celebration of our new API, we’re offering 25GB of Box free for any developer account created before January 18, 2013.
API Momentum in 2012
Our new API is being launched at a time of tremendous platform growth for Box. In 2012, every API metric that we tracked grew significantly. Here’s just a sample of some of the massive traction we’re seeing with the Box API:
- 129%: growth in third party developers using Box
- 140%: growth in number of third party API calls per month
- 133%: growth in apps in the Box Apps Marketplace
- 200%: growth in number of weekly users of third party apps on Box
Of course, we wouldn’t have seen such strong platform growth and API engagement without the efforts and work driven by the amazing Box platform team and our ecosystem of third party developers. We built industry-first products including Box OneCloud and Box Embed, travelled the world meeting amazing companies along the way and got together as a community to hack some pretty cool projects. Here’s a brief look back at an amazing 2012.
Box OneCloud
In April, we introduced Box OneCloud for iOS, the first mobile cloud for the enterprise. OneCloud helps you discover useful productivity apps that are deeply integrated with Box for productivity on common business tasks like document editing, PDF annotation, e-signature, etc. We launched on iOS with 50 apps and shortly thereafter brought this to Android. By year’s end we’ll have nearly 300 OneCloud app integration partners across both iOS and Android. 40% of all Box’s Fortune 500 customers are using Box OneCloud.
Box Platform on the Road – New York & London
In New York this spring, we announced our v2 API in beta, 100 new OneCloud apps and partnerships with General Assembly and TechStars. We welcomed over 650 attendees to Skylight West to hear from Box CEO Aaron Levie, Take Two Interactive CEO Strauss Zelnick and former Editor-in-Chief of Wired Chris Anderson. Later, everyone danced to cool tunes spun by Elijah Wood. Our friends in New York include the Bizodo team, which makes a great form-filling app that puts content into Box. We also hung out with the Handshake team, which created a rich order-taking app useful in many business and retail settings. When the Handshake logo appeared on our OneCloud billboard on the 101, they tweeted that it was the startup equivalent of your voice dropping. One of the most interesting things about New York is the concentration of enterprise-focused startups. For example, we’re really pleased to support Jonathan Lehr’s NY Enterprise Technology Meetup and Nick Gavronsky’s New York City Startup Weekend, which just occurred last weekend.
In late August, we parachuted into the middle of Carnival week in London to talk to analysts, press, London-based startups and supporting government organizations. We hosted a developer meet-up at Shoreditch House and were awestruck by the energy in London, particularly in Tech City. We spent time in Google’s shared space in London, where we first met Ben Wirtz, CEO of Unifyo, which brings together multiple sources of customer data to provide enterprises with a singular view of customers. We wandered down to Chelsea to meet Will Lovelace, CEO of Datownia, a company that allows the easy translation of Excel spreadsheets into APIs for external consumption. And we visited the lofty digs of the Chelsea Apps Factory, a super high quality app consultancy and production company.
It’s great to meet with so many wonderful people and even better when you can get together and build some really cool things.
Box Hack Event
Full disclosure, our first public hack event at Box HQ was not intended to be thematically linked to astronauts shooting each other, but that’s another story. At this event, called “Redefine Work,” 150 hackers stayed overnight creating more than 40 contest entries. Participating technology partners included TokBox, Firebase, Mashery, Twilio, Parse, Iron.io and SendGrid. Our winning hack, called OMGHelp, is an application that improves the technical support experience by allowing a customer to use a smartphone camera to show a technical support person what they’re doing. If you’re interested, here is a really nice recap of our event that was created by Mashery’s Neil Mansilla on Storify.
We closed out our active year in October with…
BoxWorks Dev Day
At BoxWorks, we announced a brand new technology that lets you quickly and easily extend the full Box experience anywhere you work. We call it Box Embed, our robust HTML5 framework for adding Box directly into the user interfaces of other applications. We launched with ten partners, including NetSuite, Jive, Conur, Oracle and others and we plan to continue adding to that number. Box Embed is particularly exciting to us because it’s one of the easiest ways for our partners to help make the content you have stored on Box accessible from anywhere.
We also ran an un-conference-like Developer Day where hundreds of developers joined us to hear about the latest web development technologies and learn about enterprise development. We ran a well-attended startup camp with Boxers from various departments (design, sales, marketing in addition to developer evangelists) providing consulting. And we concluded with one of my favorite reporters/writers, Drew Olanoff of TechCrunch, interviewing one of my favorite “startup” CEOs, Jeff Lawson of Twilio, about the ways that developers should think about using APIs in their apps.
We were fortunate to have many of our platform partners join us at BoxWorks this year. Jesse Miller and the attachments.meteam met with Box customers on the main show floor. David Klein and the SlideShark team presented in one of our sessions, as did Milind Gadekar from CloudOn.
As you can see, we’ve had an amazing year. Thanks to all of our platform partners, big and small, for working with us. We look forward to reaching the next level in the new year.
2013: Looking Forward
As 2013 approaches, we’re working on making it even easier for developers to work with Box by focusing on our SDKs and other developer tools. We’re also excited to be building new platform products. On one front, we’re working on new developer-focused metadata tools. On another, we’re looking at allowing developers to hook into workflow products that will allow content to move through Box in various business flows.
We’re sure that it will be a fun ride. Happy holidays to all and we’ll look forward to working with you in 2013!
Regarding the most demanding enterprise customers of Box.com here are few excepts from Why Box.com is king of enterprise cloud storage [CNET, May 15, 2012]
It may be known to some as the Dropbox-for-the-enterprise, but Box.com could be forgiven for insisting on its own identity.
With more than 120,000 customers, including 82 percent of the Fortune 500, the company has made a name for itself as one of the leaders in the enterprise cloud storage and data management space. And though Box.com has Microsoft, and more recently, Google breathing down its neck, CEO Aaron Levie doesn’t appear the least bit nervous.
That may be because the company has spent seven years building its business and solidifying a technology platform that gets more sophisticated — and cost-effective — every day. And as it has evolved into occupying a sizable Silicon Valley building, and employing more than 400 people, Box is now setting its sights on new businesses, including providing customers with the infrastructure on which to build cloud-based applications.
Last week, the 27-year-old Levie sat down with CNET in a conference room at Box.com headquarters for an interview about the state of his company, the competitive landscape in the cloud storage and service space, and even the value of wearing a hoodie in a meeting with potential investors.
…
How do you pitch Box.com to customers?
Levie: So many different kinds of businesses out there are all going through the exact same challenge and transition. It’s almost counterintuitive how predictable everybody’s situation is. Because whether you’re in construction or finance or real estate or consumer or media tech, every CIO we talk with, and these are companies that are 5,000, or 10,000, or 50,000 employees, they’re going through the same kind of transition and they’re at the same junctures as organizations, where they have decades of legacy technologies that they’re still managing. And it’s, How am I going to build an IT and technology strategy for the next five to ten years. And often, if you look at how vast the change has been in the landscape, the technology strategy they’re going to end up with is very different than the one they just came from.So what is Box.com?
Levie: The vision of Box is to make it easy for customers to share, manage, and access information from anywhere. That means we need lots of different kinds of technologies to make that happen, including technology that will sit on your iPhone, your Mac, your Android device or your Blackberry. And we just announced something with Nokia with their Windows Phones and tablets. We’re a 100 percent enterprise-focused company, and all the technology we’re building goes towards asking how do we make it easier or more scalable, or simpler, and just a better way for businesses to share and manage and access this data.Any regrets on being 100 percent enterprise?
Levie: God, no. Our thesis is basically that if you look at the cost of storage, it goes down roughly about 50 percent every 18 to 24 months. So our hard costs are about a tenth of what they were when we started the company seven years ago. And you can predict that in the next five to ten years, we’ll have another 10x improvement in storage density and performance. Eventually you’ll get to a point where storage is infinite and free, because companies like Google, and Microsoft, and Apple can essentially subsidize the cost of storage for their consumers because it’s so cheap and the value of keeping people locked into their system is so great for them. But in the enterprise, storage is critically important, so we had to give people lots of space, but what you pay for is the security, the platform value, the collaboration, and the integration into your enterprise, and this is where we can build differentiated technology instead of just being measured on how much storage we give you and at what price.…
Who poses the biggest threat to your business?
Levie: I would say Microsoft knows the most about the enterprise of any of these players. Google has a phenomenal brand, but it’s getting to be a broader brand, because it’s everything from your wallet to your car to your TV to your phone. The other thing that gets lost in the entire conversation because Google and Microsoft and Apple are so aggressive about this space, is the big transition companies are going to do from Oracle, IBM, EMC, and a lot of these traditional enterprise infrastructure players. Because as these dollars, and as your computing goes to the cloud, it moves away from implementing on-premise systems. It’s not going to be that Dropbox or Apple or Google loses. It’s going to be a lot of the legacy systems that we were spending lots of money on. As the $290 billion enterprise software market moves to the cloud, an entire new landscape of players and vendors are going to be the beneficiaries of that, unless these legacy vendors really get their act together.…

IT managers are under increasing pressure to boost network capacity and performance to cope with the data deluge. Networking systems are under a similar form of stress with their performance degrading as new capabilities are added in software. The solution to both needs is next-generation System-on-Chip (SoC) communications processors that combine multiple cores with multiple hardware acceleration engines.


