I was excited to read an article in the New York Times by Quentin Hardy* about the potential analytics as a service offering from Amazon. While Mr. Hardy was somewhat unclear regarding what type of analytics service Amazon may provide, the article seemed to indicate that they are interested in developing a predictive analytics service. Predictive analytics is incredibly valuable to marketers as it allows brands to analyze volumes data, such as purchase history or social analytics chatter, to determine when will segments of consumers are most likely respond to a marketing tactic or to complete a purchase.

Mr. Hardy’s idea of an Amazon predictive analytics service is within the realm of possibilities. A prediction engine requires copious amounts of data to learn from and Amazon can easily use their data storage infrastructure (aka Amazon Simple Storage Service) to handle this responsibility. Amazon has already proven that they can build a service that appeals to mass markets: in early 2011 Amazon released Simple Email Service, an email delivery engine. While the service is still in beta, Amazon recently announced incremental improvements to the service, which indicates that they are committed to keeping such a service going. The combination of this and the fact that Amazon regularly releases new offerings on AWS solidifies the notion that a prediction analytics service may be in the cards for 2012. One thing to note is that if such a service does come to fruition, it will instantly face competition from two worthy opponents: Google, a cloud veteran that has been pushing their developer-friendly Prediction API since 2010 and Zillabyte, a stealthy startup with a user-friendly prediction service, is due out later this year.

Since there are no details on the service, it is premature to guess how it may impact the predictive analytics industry. While there’s certainly lots of interest, we simply have to wait and see.

*PS I’ve actually met Quentin at the Lithium UP conference last year. I know that he knows people who know things so I’ll give this rumor a 70% chance for happening this year.

How can Boxee dominate the market?

Content is king and Boxee aims to bring all of your home media content together in one device. With Boxee, users can scan/access their music library from another computer, a feature that is missing from both Google TV and Roku. Ronen anticipates using the funds to grow their development team and introduce additional (paid) content on their device. According to the support forum, requests for Amazon Video Streaming integration have become extremely popular ever since the announcement of free movie and TV content streams for Amazon Prime members so I believe that Boxee may focus on supporting this in the next release. With the major networks blocking access to their free streams, Boxee is better served by focusing on integrating with partners that want to share content.

The Boxee team also plans to expand on the embedded software front. In addition to serving as an interface for an Iomega home media storage device, the Boxee software will soon be integrated into ViewSonic TV’s. This should solidify Boxee as a software solution that can complete with the Google who has partnered with Logitech and display vendor Samsung. Boxee will hopefully leverage their already active developer community to expand the availability of content (and functionality) on their offering.

This exciting news signals additional interest and trust in the future of interactive TV.

Consumption of video content is primarily conducted on the web. According to a recent report by Nielsen on video consumption, usage in January in the U.S. is up considerably from the same time last year as time spent viewing video on PC/Mac/laptops from home and work locations increased by 45%. And Netflix users on average spend 11 minutes watching videos, which is more than double the amount of time spent by Hulu subscribers.

When considering these numbers, it is clear to see that video on demand services are an integral component of next generation TV or interactive TV (iTV). This begs the question: how will Amazon’s service impact Netflix? To best answer this question, one may want to look at a few factors:

• Number of subscribers. According to a recent report on Neflix vs. Amazon via Investor Business Daily, roughly 13% of Amazon’s 130 million active users are Prime members. Netflix has 20 million subscribers for its streaming and DVD-by-mail services in the U.S. and Canada. So Netflix is only slightly ahead of Amazon in regards to users.
• Availability of Titles. Based on the 20 current bestselling videos on Amazon (see table below), Netflix hosts only 65% of them as video streams while the remainder are available as a only DVD rentals. Unfortunately, these titles are mostly two years old (in some case much older!) which make less attractive in comparison to Netflix which features multiple 2010 and 2011 titles.
• Device Support. While Amazon is only available on Tivo, Google TV, and Roku, Netflix is available on these devices and more, including favorites like the Boxee Box, Apple TV, multiple blue-ray DVD players and Apple’s iPad and iPhone mobile platforms.

It seems that Amazon Prime subscribers would logically try out the service and a fraction would defect to Netflix once they understand the value of unlimited streaming service and the expanded availability of content by latter provider. While Amazon’s foray into unlimited streaming may appear to be a total bust, in actuality it will benefit Amazon as Netflix fully transitioned to Amazon’s cloud infrastructure in 2010. So Amazon will make money out of this deal even if it is only through growing consumer awareness/demand.

The only potential wrinkle in the future of streaming video is broadband metering. While the battle has just begun in the US, Netflix is already contending with ISP’s charging overage fees for video consumption. Netflix has to convince the FCC in the US that unlimited broadband is important for competitive pricing.

While earning points or rewards can make the check-in experience entertaining and interactive, LBS applications take it a step further by allowing shoppers to expose a storefront and/or products to an entire network of friends. Knowing that we tend to socialize with friends with similar values, tastes and interests, retailers can expect that the exposure will not only bring foot traffic but it will actually attract shoppers that are motivated to make similar purchases. Considering that retail sales were relatively flat in August according to MasterCard Advisor’s SpendingPulse (August 2010), retailers should be looking for every trick in the book to encourage consumers to open up their wallets this final quarter of the year and beyond.

While Roeding is promoting the success of his Shopkick mobile application with retailers American Eagle and BestBuy in the video, retailers can find the same functionality in applications from competitors, such as WeReward and SCNVGR (NOTE: SCVNGR recently integrated their application with Facebook Places). Several retailers, including Domino’s Pizza and AT&T, have recently launched LBS campaigns with these mobile applications and the campaigns  appear to be increasing both traffic and loyalty so retailers are not stuck with a single choice.

Considering the above, what other value do you see in location based services?

Second, I learned that Pandora had to be upgraded in order for the “new” multitasking feature to work. As a fan of music, I’ve been using another application called Electric FM which allows me to listen to music in the background (as a stream within Safari) since February 2010. And there have been no freezes as recently reported by some iPhone users! So for me, multitasking really isn’t revolutionary. I guess that a side benefit of introducing this feature will be that some iPhone app developers will get called to upgrade their app and subsequently the iTunes app store will get refreshed.

My last disappointment about iOS4 is that iPhone 3GS owners don’t get to enjoy the new feature called FaceTime, which allows users to conduct video conferencing calls. Granted, marketers can’t really take advantage of this new feature but it is still cool in concept. FaceTime to me is evolutionary — it introduces an set up from a phone call — an untethered (but not to be confused with mobile) video conference for the masses, or so I thought. While my device is missing the rear facing camera, I expected my processor to be good enough to support the demands of this feature. I imagined that when I would engage in a FaceTime based conversation, I would be use only the forward facing camera on my iPhone 3GS which is no major loss. So I’m perplexed by Apple’s decision to not add this feature to my iOS 4 upgraded device. It definitely feels like Apple see me as a second class citizen unless it is a ploy to simply force convince me to buy the new iPhone 4. Really? It has had to come down to this arm twisting contest where I can only use the Knocking Live application?

Last year, Apple acquired streaming music service Lala.com. Lala was unique in that members could listen to new tracks in their entirety (iTunes only allows you to listen to a clip) and then purchase the rights to stream the song for pennies. Timing of the deal was suspicious as Apple swooped in just as Lala announced the pending approval of their iPhone app, which would allow members to access their music catalog via an iTouch or iPhone. While some question Apple’s motive to make the deal (because as a standalone service Lala would pose a competitive threat to iTunes), most expected to Apple bring Lala into the iTunes Store “fold” and give members a choice to either purchase music download or streaming rights.

Lala Shutdown Notice

Unfortunately, in Microsoft-esque style Apple has pulled an embrace, extend and extinguish move with Lala. According to an announcement on the Lala website, the service will shut down on May 31, 2010. Some sites, including Gizmodo, are already questioning if this move will be followed by the release of a streaming service within iTunes but most think not. As a fan of Apple, I just find it amusing that the company, who is at odd with Adobe because of Flash performance concerns (which are valid; see my prior post on HTML5 and Flash) may get a pass for exterminating a competing music service.

While I’m not about to call Apple evil, I think that it is time for other fans to admit that Apple is no different than Adobe or Microsoft — it is all about business!

For the non-technical person reading this post, rich media files are typically read or decoded by an external application that’s associated with your brower using a codec. With HTML5, the codec is directly embedded into the browser. This is smart approach because recent tests of HTML5 demonstrate that video playback requires fewer CPU cycles. And this translates to less expensive, longer-lasting netbooks and mobile devices since they require cheaper CPU’s or chips that consume less battery power. The downsides to this approach are a lack of support or even absence of a standard. NOTE: Internet Explorer, the most dominant browser, provided hints of HTML5/video support in a recent demo of IE9.

The reasons behind media killing Flash are based on the most recent developments in the advertising world. Several notable newspapers and magazines, including the Wall Street Journal, GQ and Men’s Health have planned to be available as digital editions when the device hits store shelves on April 3 (some are opting for special apps!). Interestingly, many of these magazines are reporting that advertisements for the premier issue have already sold out on the iPad. This is a first for traditional media to sell out of ads, who in 2009 lost 25% of page ads.

Flash is used primarily for advertising. Based on a survey by Mochi Media of 1,100 Flash developers, the majority of respondents, or 58 percent, indicated that they have advertisements within their Flash game. In fact, 2009 rich media ad spend in the US was at $2B – $3B dollars and trends indicate that rich media ad spending in 2010 will grow at a healthy clip of 5.5%. With that kind of budget, it is advertising that has the necessary financial backing to make an impact. Money talk, right?!

We’re already seeing some initial indication of what the future holds. On the video front, Brightcove released a solution this week to its Fortune 500 clients that allows for seamlessly conversion of Flash video to HTML5. Additionally, rich media ad platform Greystripe enables clients to convert existing Flash ads into the HTML5 format.

In my mind, this is the tip of the iceberg. As advertising agencies and companies turn to these offerings, Flash will become less and less necessary, and relevant.

Well over the weekend, FourSquare sent me an alert that one my friends was at the Nike Factory Store, a nearby discount outlet. As soon as I saw it, I wanted to send him a note and ask him if there are any good deals on Nike running gear (I think that their Dri-FIT products are the ultimate but that’s a topic for another blog). While I could have called or sent him an email, I wanted to sent him a text and ask but that feature wasn’t available. I swear that I looked EVERYWHERE and came up empty handed.

While FourSquare is a great tool that allows you to keep up with your friends, it is missing a texting feature that allows you to quickly “chat” with them. Text messaging is the preferred mode to communicate, especially when you’re mobile (source). If it was there, I would have another reason to get out and stimulate the economy.

In my discussions with Marketers, I’m regularly asked whether iPhone app development or iPhone mobile campaigns make sense considering the dominance of rival smartphone devices such as RIM’s BlackBerry. There’s valid concern if you consider only the number of mobile devices but that number isn’t as important when you consider usage. While RIM currently outsells Apple in smartphone devices (RIM sold 10.1 million devices in the quarter ending November 28, 2009 whereas Apple sold 7.4 million iPhones in about the same period), the iPhone accounted for 60% of page views AND 75% of mobile revenue at the top online retailers this past holiday season according to Omniture (source). So while BlackBerry devices are more prevalent, users avoid using this device to browse the web. This decision is likely based on the poor web browsing experience. And Marketers that are considering the accessibility of their website should optimize it for the iPhone.

So Marketers that want to interact with the largest group of mobile users should first focus on the iPhone platform — nothing else compares. But besides usage, Apple provides plenty of additional reasons for why the iPhone platform will also win in the long run:

• The current quarter’s iPhone unit sales numbers exclude the 55% year-over-year growth in sales of the iPod Touch. The iPod Touch is a Wifi-enabled mobile device that supports many of the iPhone applications. The iPod Touch user segment represent a group that is not bound by telephony service but are still connected (likely to be a younger demographic).
• Sales growth was driven by strong global demand. This implies that marketers can now expose their application/campaign or brand to an international audience (while facing the challenges that come with such a relationship).
• With the introduction of the iPhone 3GS, demand for the iPhone has spilled from the consumer market over to the enterprise market. Apple reported that 70% of the Fortune 200 are either deploying or piloting the iPhone. While marketers may have previously focused on the business to consumer or B-to-C market segment, they now have an opportunity to create applications that address the needs of the business to business or B-to-B market.
• Apple continues to invest heavily in customer service, whether it is through training of mobile carriers on device or one-on-one coaching of new customers at their 283 stores (currently present in 10 countries). This is a critical tactic for Apple to attract and service an older demographic of users that may not be as comfortable with touch-based technologies.
• The numbers did not account for the  upcoming product introduction of a tablet-like device. This highly anticipated announcement is expected tomorrow but the value of this news is that Apple will give marketers yet another device that will support mobile applications. The segment of the users that select and use this device is still unknown but it is potentially a new group of untapped users.
• Lastly, Apple has completed two recent acquisitions: music streaming service Lala and mobile advertising platform Quattro. Both represent the company’s continued future-looking view on revenue generation and demands.

Apple seems to be benefiting from a positive feedback loop. While the iPhone does have its flaws (it is not a perfect mobile device!), Apple has built an elegant smartphone unit that is extremely user-friendly. Additionally, iPhone users regularly promote their smartphone to other non-users in their social circles so the masses are choosing iPhone when deciding to go mobile (source). For brands that are still on the sidelines or ones that are only focused on the alternatives (which is a mistake; source), there’s no better time than now to jump on the iPhone platform bandwagon.

A few weeks ago, I tweeted about the streaming service from Comcast called Fancast. While other streaming services allow you to watch videos from the major networks, none give you streaming content from premium channels like HBO, Cinemax and Stars. So when my DVR started being flaky this past Saturday night, I decided to give it a try.

The log-in process was painless and the search functionality worked well. To watch premium content, the service required a special Adobe AIR player, which I promptly downloaded and installed. Everything was smooth sailing until up to the point when I tried to start Watchmen. For some reason, the service kept displaying a message that I was an HBO subscriber thought I was. After reading the FAQ’s, I confirmed that was I logging in with my primary Comcast.net account, which is a requirement, so I decided to call in to Comcast’s local customer service. After waiting on hold for a short while, the representative confirmed that all of my account settings were correct but indicated that another department would be better equipped to handle the issue. She tried to switch me to that department by I kept getting disconnected.

When I called in to customer service again, I spoke with another representative but the second one didn’t even know about Fancast. Yikes! Even though I explained to her how the service worked, she questioned me whether it was something that Comcast offered. My wife, who was sitting in the room, was rolling on the floor laughing as I attempted to convince the woman to help me. When the rep tried to switch, I was promptly disconnected again. So, I searched Fancast and (finally) found the toll-free number for support. When I called it, the Fancast rep informed me that my account was working correctly but error that I kept getting was due to an issue that Comcast/Fancast has been having for a week. And there’s no ETA for when it will be fixed. Now that’s a bummer!

While most would chalk this up to Comcast’s poor service, I think that the issue is actually a combination of poor user experience and internal communication/training. NOTE: I challenge you to name a cable television provider that you think is doing a great job these days! While the integration between Comcast and Fancast isn’t where it should be (and there’s a myriad behind the scenes reasons why that’s the case), I would have liked to see a simple error message that indicates that the service is currently down and that they’re working on it. Also, it would have been nice if the customer service reps at Comcast get training on Fancast so that customers like me don’t have to feel like I’ve just made a prank call. Lastly, both Fancast and Comcast should communicate on a regular basis about system status — it would have been much better if the Comcast rep told me that the service was down and to try again later instead of trying to fix my when in actuality it wasn’t the problem.

Comcast must be feeling the pressure to adapt to shifting consumer behavior and increasing pressure from competitors. According to eMarketer, nearly 25% of all TV content watched each day will be time-shifted, on-demand, on the Web or on a mobile device by 2012 (source). Viewers are abandoning television for the internet. Also, both Apple and Google are looking to challenge traditional video distribution channels by offering their own subscription services (source and source). While the service is still in Beta, it is just a shame that Comcast wasn’t able to deliver on the concept.

After spending more than an hour trying to use Fancast, I’ve decided that I need to give Comcast another few weeks to work out the bugs — eventually this service is going to be Comcastic.