TO ALL WHO MIGHT NOT FOLLOW RB OR BE ABLE TO ACCESS IT:
Following is Snorri's post of today with his excellent and professional review of the Forrester contract research report done for Preview, which has previously been discussed here, and which basically dismissed as too complicated WAVE's content metering, encryption and security system:
ragingbull.com
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By: snorri
Reply To: None
Monday, 7 Jun 1999 at 12:09 PM EDT
Post #42093 of 42114
Snorri's review of Forrester report:
I promised an in-depth review and here it is. Here are their major points: 1. Content producers expect digital downloads to be huge. Rather than security, ease-of-use is the number one issue confronting users. 2. The technology and services required to support e-commerce are unproven or non-existence, and security and delivery are 74% and 70% built in-house. [This is the nature of an immature market, ripe for picking when the appropriate technology/services are offered.] Compared with marketing costs, technology is not seen as a large budget item.
The report plots 15 separate digital content markets on a grid of file size and persistent value, which is interesting. These are all good markets for Wave. A considerable amount of ink is expended using a Star Wars metaphor of rebellion, engagement, and accommodation and then fitting the various markets fit into this sequence. I believe all of this presentation of data and markets is well put together and worth the read.
Action points:
1. Make ease-of-use the priority.
Wavoids will agree here. Anyone who has set up a Wave account knows that we win hands down.
2. Don't worry about security too much.
Forrester assumes all security is hackable, because they have discounted the existence of Wave's solution. "Don't waste time trying to build bombproof protection. A well-funded professional pirate can break any scheme. Instead, use relatively simple encryption wrappers to limit abuse to determined attackers." Wavoids will agree, I think, that our system is not only inexpensive, it's un-hackable, and for content producers very little time is required to get going. So Forrester's point on security is ill-considered, if not completely erroneous.
3. Published content in a format that protects itself.
No bone of contention here.
4. Separate keys from content.
A nonissue with Wave.
5. Don't shackle the hardware.
"Firms including Wave Systems and Aladdin have launched hardware-based protection schemes that require either annoying dongles or costly coprocessors." It is true that dongles are historically perceived as annoying. If you ever used a software application which is protected by a dongle, you'll know what I mean. You spent $500 to $1500 (they come with expensive software), the dongle prevented you from running it on two computers simultaneously. Or you lost it or left it in the wrong place and couldn't use your software. The Atmel dongles and USB keys don't prevent you from using something you already bought (deny access), instead to allow you to purchase content which is otherwise unavailable (they allow access).
"This approach will fail for all but the most expensive niche products because digital file formats can change so quickly and inserting the required hardware into all players is impossible." Wave has cut its teeth in the micro-transaction market, so the expensive niche argument falls short. Wave's system is independent of file format, so the second bit falls short. And finally, Wave's relationships with chip makers for PCs and STBs are now a matter of public record, making the last bit a false statement. This will go down in the history books like IBM's statement in the 1950s that the total market for computers was two. Or Ken Olsen's (founder of DEC) comment "who'd want a computer in their home?"
The final points in the report are not particularly pertinent, except the one which mentions DVD as a clear winner in the future of media, because of its superior security features. "Content owners will shift away from these unprotected physical formats and will embrace DVD as the most secure digital media." If the writers were more objective, they might extend this to encryption itself, and say "content owners will shift away from hackable encryption formats and will embrace hardware based encryption as the most secure for digital media."
The Grapevine section at the end of the record demonstrates how easy it is to influence opinion of Forrester. In my previous job we would strategize as to how to get them to write something in report. Precomposed sound bites which were a) spoken repeatedly during the interviews, and b) highlighted in the written materials left with Forrester, I believe was the preferred method.
For instance:
How fast is bandwidth really growing?
Joel Ronning, CEO of Digital River, reports a tremendous increase in sales to businesses buying over T1 lines. "We ship thousands of apps that are larger than 50 MB. Our download times have shrunk about 50% in the last six to eight months, and we've seen our file size increase 100% in the last nine months." Sounds like the pipes are indeed getting bigger. Those firms selling the biggest files on-line -- ones that are more than 100 MB -- should target the corporate market in the short term until cable modems and DSL lines begin to work their way through the neighborhood.
Is clearly in DR's interest to promulgate this information. It is not necessarily inaccurate, but it has also not been verified by Forrester. The statements made in the little paragraph about Wave, I'm guessing, come from a similar statement made orally and on paper by one of Wave's competitors, and included in the report without additional research by Forrester. The whole discussion is very "Software & IT" oriented in terms of its understanding of market dynamics, the positioning of players, and lessons learned. This is because Forrester's customers (the people they talk to most) are in that market.
Summary:
The entire report was written prior to, or without reference to, Wave's announcements in March, April, and May. It is no accident that this was posted on a competitor's Web site. It's their last chance to stop the Wave. On several occasions in '97 and '98 I attended industry conferences, as a speaker, a sponsor, and attendee. I broke bread with these people (CyberSource, Digital River, Preview, Portland, Wave, TechWave, etc. etc.). They are very competitive with one another, but all of them without exception made a big point of looking down their noses at Wave. They were full of public disdain. That's when I realized how scared they all were. Right now, they're more than scared. Wave is eating their lunch, and the market they thought was so big (for them) is shrinking beyond recognition. Wave has the ocean, and they are battening down hatches, patrolling a small gulf (software downloads).
So this was a great report, in terms of how it covers are market. Is most remarkable however, on account of its having missed what has happened since January. I will be very interested to see the next version of "Digital Distribution Wars".
Sincerely,
Snorri
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It is worth rereading the Forrester Report, remembering that it was a contract research document sponsored by a client with a specific "view", looking at Snorri's comments, and then looking at the list of sources contacted to see who was, and more importantly who was not, contacted for this "independent" study.
Thanks Snorri.
Steve |
