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In Memoriam: Randy Pausch, 1960-2008

If you were to list the most influential people in your life a year ago, the name 'Randy Pausch' probably wouldn't have come up.

But thanks to a series of improbable events, there are tens of millions of people whose lives have changed because of this man, who died earlier today of pancreatic cancer in Chesapeake, VA. He was 47.

Dr. Pausch and his family recently moved to Chesapeake so that his wife and children would be near family after his death. (Pictured above: Randy Pausch with his three children Dylan, Logan and Chloe.)

Most people wouldn't know what to do if they knew the end was upon them. Dr. Pausch knew he wanted to say something to his students and leave something for his three children. Dr. Pauch's valentine to his kids was a deeply moving speech on the subject of "how to live your life" and in a lecture filled with both laughter and tears, resulted in a scene that might have come out of the movie Dead Poets Society. Some of the more popular quotes from his so-called "Last Lecture" are: 

• "...The brick walls are there for a reason. The brick walls are not there to keep us out; the brick walls are there to give us a chance to show how badly we want something. The brick walls are there to stop the people who don't want it badly enough. They are there to stop the OTHER people!"

• "...when you see yourself doing something badly and nobody's bothering you to tell you anymore, that's a very bad place to be. Your critics are the ones telling you they still love you and care."

• "It's not about how to achieve your dreams, it's all about leading your life. If you lead your life in a right way, karma will take care of itself. And dreams will come to you."

Dr. Pausch was not wealthy in the way that far too many people think about wealth. Instead, he dared to dream of a better life. Dr. Pausch lived that life in accordance with certain ideals, and he shared those ideals with great warmth and humor, first with his family, then with his colleagues and students, and thanks to YouTube, with the world.

After his last lecture, Dr. Pausch was named "Person of the Week" on ABC's World News with Charles Gibson, appeared on The Oprah Winfrey Show, became a member of the Pittsburgh Steelers for a day during their regular practice, filmed a role in the upcoming J.J. Abrams Star Trek movie, and was the subject of an hour long Diane Sawyer feature.

As I write this, Carnegie-Mellon server has been brought to its knees by all of the web traffic from people who have heard of Dr. Pausch's passing and were looking for some of his last thoughts.

It is critically important to keep Dr. Pausch’s message, "to make every day matter in the fight against pancreatic cancer," moving forward. The family requests that donations on his behalf be directed to the Pancreatic Cancer Action Network, 2141 Rosecrans Ave., Suite 7000, El Segundo, CA 90245, or to Carnegie Mellon's Randy Pausch Memorial Fund (www.cmu.edu/giving/pausch), which primarily supports the university's continued work on the Alice project.

We will miss him.

Inside the iPad: Why a $100 Apple Laptop Is Probably Inevitable

Almost three years ago I guessed, correctly, that Apple would follow its amazingly successful iPod with a phone.

It's been a habit of mine -- since I wrote software for the first company to make a portable Mac years ago, I've not only bought into their big hits, but also their big misses like the Motorola Marco (the first wireless Newton) and Apple interactive TV (in 1991 they gave me one of their very first universal remotes).

Today, I'm quite certain that come September, Apple will come full circle with a mobile device that acts like an inexpensive laptop, which I'm dubbing the iPad. Given their recent investor conference call, I'm optimistic that Apple will sell the iPad within spitting distance of the first iPhone's price point  ($499), with the following hardware specs:

• Powered by the SFF (Small Form Factor) version of the Centrino 2.
• Use Apple's increasingly useful multi-touch technology to power a virtual keyboard that you can "feel" when you touch-type, even though you're really using a solid slab of glass.
  
• Support wireless standards like Bluetooth and a more robust version of WiFi that works at distances of up to 1 kilometer (compared to 100 feet today).
  
• Have a moderate battery life (normally 2-3 hours, but about 90 minutes when using multimedia).
  
• Include USB and the multi-use connector launched with the MacBook Air.
  

On the software side, this iPad is likely to:

• Use a new version of OS X that will not work with older PowerPC users (the last PowerMac G5 was released in October 2005). Today you can expect to pay $129 for the latest Apple operating system. I'm betting the price of the next revision to the OS will be around $69, less for education.
• Include the Safari browser and provide a full suite of web-based Office-software (word processing, spreadsheet, presentations, and email).
• Use only a few watts of power, compared to 100 watts or more with today's machines.
• Use MobileMe (Apple's flavor of cloud computing) to quickly share data with existing computers, iPhones and other iPads. MobileMe's launch with the iPhone 2.0 was a trojan horse designed to facilitate iPad adoption.
• Play new music, video and apps purchased from iTunes (since the iPad won't come with a DVD slot).
• Use iTunes to purchase and subscribe to digital versions of books and other print products, putting the iPad into competition with the Amazon Kindle.
• Eliminate the Carbon API (which until now has been critical for legacy Apple apps) and instead use the Cocoa platform (the old NeXT object-oriented platform).
  
• Support the authoring of full iPhone and iPad applications...making the iPad the cheapest software development platform yet.
  

So what does this mean?

First, with iPhones at $199 and iPods for as little as $49, I'd argue Apple has clearly abandoned their premium pricing strategy. When asked if Apple has changed its philosophy on margin and volume, Peter Oppenheimer had this to say:

"...We're delivering state-of-the-art products at price points that our competitors can't match, which has resulted in market share gains in each of our products. We plan to continue this strategy and to deliver great value to our customers while making a reasonable margin but not a margin so high as to leave an umbrella for our competitors."

Today, so-called netbooks are reportedly being sold for as little as $240. I don't believe Apple will try to match this price. But given the steep drop-off in Apple's projected gross margin to 30%, I believe a revolutionary pricing model is in the works. I believe Apple learned how to obsolete their own products with the iPod, and replicated the experience/cost curve with the iPhone. Now they have captured lightning in a bottle twice in a row, they have the confidence to price incredibly aggressively and are now asking Wall Street to buy into this vision. I believe Apple will price the iPad at $499, "...(riding) the cost curves down with value engineering and volume manufacturing, leaving us far ahead of our competitors."

Next, computers at this price point will transform the lives of people everywhere. We're going to see incredible computational capabilities come into new markets like hospitality and retail. I'm guessing we'll soon see educational iPad pricing for around $250. It wouldn't surprise me to see a sub-$100 version available within 3-5 years to rural communities in out-of-the-way places like India and Africa. Apple has already filed patents on the kind of solar cell technology needed to fully power such devices.

Lastly, Steve Jobs has learned the importance of locking in a huge developer community.Today, the iPhone software developer kit ("SDK") is free, but in order to write an iPhone app, you must use an Apple computer. I believe Apple wants to make software development as affordable as possible for as many people as possible. To do that, they are reducing the costs of the SDK, the operating system, the hardware, everything. 

To summarize, the iPad "razor" may only cost $499, but 25 million app downloads show a tremendous untapped market for razorblades, to the tune of 30% gross margins.

By making a huge strategic bet on inexpensive computing just as global demand for a better life really starts to kick in, it wouldn't surprise me if Apple managed to build a worldwide developer community just as fanatical as its iPhone user base.

Related Link: Apple F3Q08 Earnings Call Transcript and above quotes from the transcript (in italics) courtesy of Seeking Alpha

Oct 10 Update: Based on this link, it appears that this unit will actually be priced at $800. Not quite "spitting distance" from $499, but still, a remarkable price departure.

JCDecaux: The Biggest Outdoor Media Company You've Never Heard Of

Here's the next outdoor display concept destined to burn brightly, if only for awhile: 65 inch Sharp PN655R LCDs acting as "digital posters", courtesy of Engadget.

They're super-crisp, and if you've seen them at CES, you know how amazing it looks up front.

Yet every time I see a technology like this, I'm reminded of a little French company called JCDecaux, and how the latest technologies are frequently humbled by unexpectedly primitive alternatives.

JCDecaux happens to be #2 only to Clear Channel in outdoor media. Slowly but surely, JCDecaux has become the outdoor media magnate of choice not only in Europe and the US, but also in emerging markets like China. They've done it not by relying on the latest technology, but by providing a brightly lit image that rolls up periodically to reveal the next image, and securing important rights-of-way with cities and other property managers. If you've visited high-end properties managed by Simon, Taubman or Westfield you've probably seen JCDecaux displays in the common areas.

Outdoor media is important because the next generation of consumers will base their life around the mobile phone. If you can't count on your message being the top icon on every consumer Blackberry or iPhone, then you're going to need outdoor media to provide the call-to-action. I know that many people swear that people will become more accepting of mobile coupons automagically personalized to individual preferences and delivered to phones via Bluetooth; but somehow that only makes me admire JCDecaux a little bit more

What Restaurants Should Learn from Apple's iPhone Event

The day should have been a milestone. Instead it was a disaster.

Apple sold one million 3G iPhones over the weekend, but the blogosphere went nuts over the repeated inability to activate those phones. Steve Smith of the Mobile Insider had a decidedly negative experience with his daughter. 

To its credit, Apple did everything they could to minimize disappointment. When the 16Gb black models were dwindling, or hours later when the white models were almost out of stock, Apple employees did their best to keep people informed of what was happening.

Retailers should take note because they will soon be sharing Apple's pain.

In the retail business there's an old saying about the difference between driving sales and driving traffic. You can have an incredible event that fails to pay for itself, because the people that go to that event aren't there to buy, and they squeeze out the people that are there to buy.

Going forward, I think retailers will need to figure out how to level peaks and fill valleys.

They will need to find ways to mollify customers who show up -- and are disappointed -- when there is a ton of traffic. And they will need to find ways to boost traffic during non-peak hours.

Traffic peaks used to be so predictable. Black Friday. The day after Christmas. When a radio station announces gasoline for a buck a gallon.

Today is a different story. The local CVB or the hotel a mile away might be hosting a conference that fills the tables. Or, a single blogger with a timely message and a receptive audience can trigger a stampede.

When business spikes like that, it may seem like a godsend. But to your clientele, especially people who think of themselves as repeat customers, that one negative experience may be the one thing that causes them to never return. Going forward, retailers should learn from Apple's experience by:

• Keeping in contact with the local CVB and local hotels to see when large conferences are scheduled. You shouldn't indiscriminately add extra staff, but you should have some of your better off-duty people on hand in case traffic improves dramatically.
• Give your customers a Plan B. If you're completely full and people just drove a half hour to visit you, have a list of suggestions available -- and better yet, take a few minutes to make arrangements with the other restaurant to make sure you don't strand your customers. Sure, you hate to refer customers to competing places, but it's better than ignoring your customer's needs.
• Visit websites like Cornell's Center for Hospitality  Research -- look for articles on revenue management and use their free tools. For example, in just a few minutes you can calculate what level of staffing will provide the best service while maximizing your profit.

Debunking the Long Tail: Separating Reality from Wishful Thinking

For years, we've believed that the Internet would allow obscure films like The Peanut Butter Solution to find their audience, no matter where the fans lived or what language they spoke.

It's been the inspiration for countless Internet companies.

But what if we've been looking at it the wrong way?

Erick Schonfeld over at TechCrunch writes an interesting review of a Harvard Business School article whose basic premise is that just because the Internet makes it possible to offer more goods does not mean that consumers will start buying in significant numbers.

Erick dissects the HBR article and argues that while demand is being pushed down the tail, simply aggregating non-blockbuster items is no guarantee of success. (If you haven't already, I urge you to read it as well as Long Tail author Chris Anderson's comments before continuing.) Erick acknowledges that the  market has changed, but concludes,

"...but to say there is no money in the Long Tail is nonsense. It is just more finely distributed and harder to find. True, there are not many businesses that have figured out how to collect it. Google is one with AdSense and search ads. Each search ad is insignificant in and of itself, but all of those obscure terms add up to billions of dollars."

What is amazing is that people take the Long Tail as gospel without really considering what it means. As an example, one of the conclusions of the Wikipedia entry for the Long Tail is that it has changed the proverbial "80-20" rule into the "72-28" rule. It doesn't mean that the Long Tail has somehow marginalized blockbusters: instead it describes how much product discovery efficiency has increased.

Likewise, this definition does mean

• "...Important profits from the long tail will be largely be made (by) those able to aggregate niche products" - Consumers want variety, and a hyperefficient market as Zappos.com proves, retailers are able to make greater margins from less popular products

However, it does not mean:

• "...Everything is going to be a hit at some time...the next Brit Spears or Kanye is out there in the (Long Tail)...if they can only get 1) monies and 2) traction." - I got two words: Heaven's Gate. They spent $5 million marketing it and it only made $3.4 million in the US. Sometimes, you really can't polish a turd and make people believe it's an apple.

Given some of the recent court rulings won by luxury goods companies like Louis Vuitton against both eBay and Google, it appears the Long Tail is working harder for fraudulent knockoffs than the original couture brands. The New York Times reports that Tiffany & Company argues that 83% of the products sold on eBay are fraudulent. (And I mainstain that the luxury goods companies should get into social networking, if only to publish an API that lets third parties know who is and who isn't an authorized dealer. But I digress.)

So let's consider a couple of other real world experiments.

In the early 90s a major cable company that I worked for ran a pair of trials at the same time: a dozen hit movies scheduled at convenient times, and a much larger library of films that included both hits and films that were popular with smaller groups. The trial using the much larger library had a lot of initial interest, but usage dropped off after a short period of time. On the other hand, the hit movie channel had moderate interest at first but traffic grew over time. Our conclusion was simple: the hits drive the revenue.

That example is 15 years old, and Chris Anderson rightly points out that heavy DVD renters are more likely to venture into the Long Tail. But there is another example that is much more current and possibly much more persuasive.

Early insiders at both AOL and Prodigy tell the same story, at different times: early adopters did a lot of exploration at first, but after time, they would spend more time online at fewer sites. If the Long Tail applied, wouldn't smaller websites be seeing strong growth in both new site launches and recurring traffic? When Techcrunch suggests that people are benefitting from the "billions of dollars" generated by AdSense, and then I read that VC Fred Wilson's popular blog is only making $500 a year, it makes me wonder.

At the same time, the average search query is growing in both number of terms and complexity. Does it mean that people are getting better at finding niche sites? Or does it mean that people are simply getting better at sampling new experiences? I somehow doubt that most people that visit a new site go on to become a frequent visitor at that site, even with the assistance of RSS, social bookmarking and widgets.

The Long Tail is a way to describe how web services and other innovations make it easier to find and buy things. I'm not sure that it helps stores like The Gap find a better way than outlet stores to get rid of unsold inventory, nor does it help a music label improve its ability to find the next hot act. But for people interested in other models that describe how technology influences our relationships with brands, I'd encourage you to explore Dunbar's number. Marketers know there is a limit to how many brands can possibly have top-of-mind awareness; Dunbar's number gives you insights into why McDonalds makes more money by featuring only 8 items or why the average Facebook user only has 164 friends.

Inside Burger King's $190 Burger: It's All About Igniting the Senses

When the cost of gas causes people to rethink their travel priorities, it is up to local businesses to find new ways to tell great stories that compel people to visit.

You don't have to be an upscale New York hotel with a new spin on the TV dinner to play the game. You can be a local Burger King franchise with a $190 burger, as reported by AdAge (registration required).

Determined to show the world that it takes meat quality seriously, this Burger King sandwich is only available Thursdays at a single location. All proceeds go to a local children's charity. So what goes into a $190 burger?

"...(The sandwich is) made from Wagyu beef, topped with white truffles and Pata Negra ham (which owes its nutty flavor to the fact that the pigs are fed on acorns), the burger nestles in a bun spread with organic-white-wine-and-shallot-infused mayonnaise, plus pink Himalayan rock salt, and dusted on top with Iranian saffron. It is served with Cristal champagne onion straws and a garnish of lamb's lettuce."

By all accounts, the meat is good but all the other stuff is great -- the mayonnaise, truffles and Pata Negra are all something special. Customers were especially surprised to find that the saffron's aroma really did put their nose in synch with their taste buds.

Of course, the sandwich is only part of the experience. You have to call in to reserve your spot. Once you arrive, you are ushered through a red velvet rope and up some steps to a private upscale dining room. There is crisp table linen and free-flowing 2003 Tapanappa Cabernet Shiraz from the Whalebone Vineyard in South Australia. And at your table, you're presented with a free limited-edition bottle of Coca-Cola.  And, as Riedel connoisseurs know, the shape of the bottle does affect the taste of the beverage.

People want to go places where they can experience new things. Even though the venue is Burger King, every step of the experience is laden with information that the consumer can take home with them, whether it's trying Pata Negra ham or trying to recreate Cristal champagne onion straws at home (hint: try adding herbs de provance). Companies need to do less so-so stuff and really try to ignite the senses.

Just about any restaurant can re-create this same type of experience. By asking people to reserve a spot in advance, your risk goes down because you only order what you need, and only cook when they arrive. You can bring in locally grown produce (because as Whole Foods knows, everyone wants to know the story behind what they're eating), and instead of a Coke, give them a customized coffee table book that contains fascinating stories about the region and delicious recipes from the locals.

And as for Burger King? So far 30 of the burgers have been sold and there are plans to introduce the $190 burger in Spain and Germany, also for a limited period.