November 27, 2024

Behind the iPhone Frenzy

Let me say right up front that I have not accepted the Jesus Phone as my personal Lord and Savior. The iPhone might turn out to be insanely great. It might become the best-selling mobile phone ever. Or it might not.

Either way, the iPhone’s arrival and the attendant frenzy mark the beginning of a new phase in the mobile phone world – a phase based on the radical notion that it’s possible to make a pocket-sized device that is a pretty good phone and a pretty good networked computer at the same time.

From a purely technical standpoint, this isn’t surprising at all. Phones are basically computers, and we know how to cram a decent computer into a small, low-power package. The engineering isn’t trivial but we know it can be done. Apple might have modestly better engineering, and significantly better human-factors design, but what they’re doing has been technically possible all along.

Yet somehow it hasn’t happened, because the mobile carriers don’t want it to happen. They have clung to their walled garden models, offering limited, captive services rather than allowing easy development of Internet applications for mobile devices. An open system would provide more benefit overall, but most of that benefit would accrue to consumers. The carriers would rather get a big share of a small pie, than a small share of a big pie.

In most markets, competition keeps this kind of thing from happening, by forcing producers to account for consumer preferences. You would expect competition to have forced the mobile networks open by now, whether the carriers liked it or not. But this hasn’t happened yet. The carriers have managed to keep control by locking customers in to long contracts and erecting barriers to the entry of new devices and applications. The system seemed to be stuck in an unstable equilibrium. All we needed was some kind of shock, to get the ball rolling downhill.

Only a company with marketing muscle, design mojo, and a world-historic Reality Distortion Field could provide the needed bump. Apple decided to try, in the hope of selling zillions of the new, more capable devices. The real significance of the iPhone, whether it succeeds or fails in the market, is that it will trigger the transition to more open networks. Once people see that a pretty good phone can be a pretty good mobile computer, they won’t settle for less anymore; and mobile networks will be pried open.

Whether or not the Jesus Phone achieves worldly success, it will succeed in its own way by convincing people that the world can be different.

Why CEOs and Companies Break the Law

Ben Horowitz, CEO of Opsware, offers an interesting essay on why so many bigshot CEOs seem to be in legal trouble. Why, he asks, would a rich and powerful executive risk going to prison? The easy answer, greed, is too simple because many of these guys were already tremendously rich and stood to gain little or nothing personally from the illegal acts. There must have been something else driving them.

One answer is pride. Exhibit A is WorldCom CEO Bernie Ebbers (now doing 25 years for fraud and conspiracy).

As WorldCom grew at a rapid pace, Bernie set expectations high. This led investors to give him advance credit, thus boosting his stock, which was the currency he used to build his company. When Bernie saw that WorldCom wasn’t going to meet those high expectations, and that thousands of shareholders to whom he had promised great performance would lose their money, and thousands of employees who he had hired would lose their jobs, he was willing to do anything to make things right. Even if it meant doing things that were wrong.

Like a killer committing his second murder, the decisions to commit fraud must have come easier as Bernie gained experience. In addition, the stakes continued to get higher. He continued to commit fraud, because if he hadn’t, there was a 100% chance that he would let everyone down who mattered to him and he would no longer be the person that he had worked so hard to become. He wouldn’t be Bernie Ebbers #11 in Time Magazine’s Cyber Elite; he’d be Bernie Ebbers, former milkman, bouncer, and disgraced CEO.

If this is right, Ebbers defined himself by the success of WorldCom. If the company failed, then his work – his contribution to society – would evaporate.

Even beyond pride, some executives see themselves as great benefactors, bringing happiness to employees, wealth to investors, and great products at low low prices to customers. If WorldCom’s growth was good for humanity, then it was worth taking risks to defend. And when the time came to take risks, the Great Man stepped forward.

While working on the Microsoft antitrust trial, I read Titan, Ron Chernow’s biography of John D. Rockefeller. Rockefeller saw most things clearly, but he had one blind spot: he honestly saw little distinction between the growth of Standard Oil and the advancement of humanity. Cheap, high quality oil would transform American life, and Standard Oil would be the agent of that transformation. America needed Standard Oil. Rockefeller had an uncommonly strong drive to do good in the world, a drive that was channeled into an intense need to win every business skirmish. His opponents, who were only trying to make money or run a business, were no match for a guy trying to save the world.

One gets the sense that WorldCom grew as big as it did, and the house of cards stood up for as long as it did, because Bernie Ebbers had a Rockefeller-like drive to make it so. He would do almost anything to keep WorldCom afloat, which is what made him dangerous to his employees and investors.

He was a danger, too, to his competitors.

Once WorldCom started committing accounting fraud to prop up their numbers, all of the other telecoms had to either (a) commit accounting fraud to keep pace with WorldCom’s blistering growth rate, or (b) be viewed as losers with severe consequences.

How severe were the consequences for not breaking the law? Well, like a baseball player who refuses to take steroids, CEO Mike Armstrong of AT&T did not keep pace with the cheaters. As a reward for his honesty and integrity, he was widely ridiculed in the press prior to being fired and AT&T, perhaps America’s most valuable brand, was acquired for cheap. Now you see why Barry Bonds needed something to help him keep pace with Mark McGwire.

The steroids analogy helps explain why corporate criminals must face serious punishment. It’s not enough for the average performer to know that the leaders probably aren’t cheating. Given the choice between believing that the other guy is cheating, and believing that he is honestly outperforming you, most people will go for the cheating theory. People need to know that nobody in their right mind would cheat – a lesson that Bernie Ebbers will be teaching us for the next twenty years or so.

Woman Registers Dog to Vote, Demonstrates Ease of Fraud

A woman in Seattle registered her dog to vote, and submitted absentee ballots in three elections on the dog’s behalf, according to an AP story.

The woman, Jane Balogh, said she did this to demonstrate how easy it would be for a noncitizen to vote. She put her phone bill in her dog’s name (“Duncan M. MacDonald”) and then used the phone bill as evidence of residency. She submitted absentee ballots in Duncan’s name three times, each ballot “signed” with a paw print. She says the ballots did not designate any candidates and only had “void” written on them, so the elections were not affected.

Nevertheless, she broke the law and now faces charges.

This relates to an issue every applied security researcher has faced: how to demonstrate a security problem is real. People take a problem more seriously when they have seen a real, working demonstration of the problem – otherwise the problem will be dismissed as theoretical. Often there is a lawful way to demonstrate a problem, for example by “breaking in” to your own computer. But sometimes there is no way to demonstrate a problem without breaking the law. Careful researchers will stop and assess the legality of what they’re planning to do, and will hold back if the demo they’re considering breaks the law.

Ms. Balogh went ahead and broke the law. Beyond that (serious) misstep, she did everything right: admitting what she did, avoiding any side-effect on the elections by filing blank ballots, and leaving obvious clues like the paw prints.

Fortunately for her, the prosecutor decided not to charge her with a felony but instead offered to let her plead guilty to a misdemeanor, pay a $250 fine, and do ten hours of community service. She was lucky to get this and will apparently accept the deal.

Any readers considering such a stunt should think again. The next prosecutor may not be so forgiving.

Chinese Gold Farmers: Work or Fun?

Julian Dibbell had an interesting article in yesterday’s NYT, profiling several Chinese gold farmers, who make their living playing the massive multiplayer game World of Warcraft (WoW) and accumulating virtual loot that is ultimately sold for real money. If you’re not familiar with gold farming, or virtual-world economies in general, it’s a nice introduction.

Even if you’ve heard it all before, the article is still worthwhile as a meditation on the porous boundary between work and fun online. These guys make their living playing a game, in seven twelve-hour shifts a week. It’s highly repetitive work – they follow the loot-maximizing strategy which involves hanging around the same little area and whacking the same monsters over and over. WoW players even call this kind of play “the grind”.

Yet somehow the guys enjoy it, not all the time but often enough to find a work rewarding in an odd way. One guy, Wang Huachen, has a law degree but chooses to play/work WoW instead, at least for a while.

“I will miss this job,” [Wang] said. “It can be boring, but I still have sometimes a playful attitude. So I think I will miss this feeling.”

I turned to Wang Huachen, who remained intent on manipulating an arsenal of combat spells, and asked again how it was possible that in these circumstances anybody could, as he put it, “have sometimes a playful attitude”?

He didn’t even look up from his screen. “I cannot explain,” he said. “It just feels that way.”

Amazingly, after finishing a twelve-hour shift, some of these guys spend their long-awaited free time … playing WoW.

But all that changed when the boss of one gold farm got a new business idea: rather than grinding out more loot, his employees would instead build up a 40-man team of uber-characters who would serve as mercenaries, for hire by players who wanted reliable, non-greedy companions in attacking the toughest areas of WoW. Suddenly these gold farmers could really use their skills, and have more fun – for a while.

The end arrived without warning. One day word came down from the bosses that the 40-man raids were suspended indefinitely for lack of customers. In the meantime, team members would go back to gold farming, gathering loot in five-man dungeons that once might have thrilled Min but now presented no challenge whatsoever. “We no longer went to fight the big boss monsters,” Min said. “We were ordered to stay in one place doing the same thing again and again. Everyday I was looking at the same thing. I could not stand it.”

What’s most interesting about this, to me at least, is the relationship between the gold farmers and the players they serve. It’s not a personal relationship, only an economic one, in which the gold farmers play the boring part of the game in exchange for a cash payment from a richer customers.

This relationship is an amazing tangle of play and work. The gold farmer works playing a game, so he can earn money which he spends playing the same game. The customer finds part of the game too much like work, so he works at another job to earn money to pay a gold farmer to play for him, so the customer can have more fun when he plays. Got it?

All the Interested Parties? Not Quite.

Here’s a quick quiz to detect whether you’re stuck in Washington groupthink.

There’s a patent reform bill under consideration in Congress. According to a blog entry by Andrew Noyes at the National Journal, a group of Republican senators sent a letter to Rep. Howard Berman, the chair of the relevant House subcommittee, asking that the patent bill be given more consideration before the committee votes on it. Senator Berman responded:

“There have been a number of hearings, briefings, and meetings about these issues over the past four years,” said Berman, who introduced a companion bill, H.R.1908. “We’ve heard from representatives of all the interested parties – from independent inventors, universities, bio-technology, pharmaceutical, software and financial services industries.”

Here’s the quiz: who did Rep. Berman leave off his list of “all the interested parties”?

Rep. Berman’s omission is a common one in Washington. Start listening for this omission, and you’ll be surprised how often you hear it.

I don’t mean to pick on Rep. Berman personally. Okay, maybe I do, just a tiny bit, given some of his past actions such as co-sponsoring the ill-advised Berman-Coble bill that would have legalized denial-of-service attacks against people suspected of sharing infringing content. If this was just one congressman, once, it wouldn’t be worth noting. But given the frequency of this mistake, I think it does reveal something about the standard Washington mindset.

In the case of patent reform, there are complex issues at stake. Changes to patent law can affect innovation and competition in subtle ways. That affects all of the parties Rep. Berman mentioned, as well as the one notable group he left out. Which is …

Ordinary citizens.