A small, but mighty, recap of the June conference

The number and intensity of sessions at last month’s Digital World conference in Beverly Hills makes it impossible to summarize them in any detail. But many speakers had thoughtful comments to make about the state of digital media-based computing and products, and what follows are a smattering of those comments.

In the opening panel, Jim Clark, chairman of Silicon Graphics, revealed that his company is cooperating with Japanese partners on development of vastly powerful processors based on the MIPS Computer Systems RISC architecture. With a performance of 300-500 million floating-point operations per second (which Clark believes will be available in the next 3-5 years), these chips would eliminate the need for custom silicon to handle tasks such as digital video compression and decompression. They would become the fundamental hardware needed to handle the integration of many media, including synthetic 3D realistic image creation and manipulation and the sampling of digital video and sound.

“All media manipulation could be handled on one single, general-purpose, highly programmable processor,” Clark said.

Compatibility between consumer and computer. Clark believes that the same processors, using the same instructions and able to run the same programs, will be used in both consumer electronics products (such as digital cable TV decoders) and computer workstations. A consumer player might use a single chip, while a workstation would likely use many processors operating in parallel. The result would be compatibility between computer and consumer platforms.

In addition, the cost of developing and producing this chip could be leveraged by the mass production required for successful consumer devices.

In the Japanese Connection panel, Jack Plimpton of Japan Entry explicated the differences in business styles between Japanese and U.S. companies. He said that the metaphor for business in the U.S. is that of a “game,” while the metaphor in Japan is “war.” Some U.S. companies–Microsoft and Intel (and, we would add, Disney)–share the megalomania that Plimpton says characterizes successful Japanese companies, though these companies are routinely criticized for taking such a perspective.

Shunsuke Matsuda of Mitsubishi suggested that, for their vaunted homogeneity, the Japanese are culturally tolerant of ambiguity and diversity in “standards.” They are, he said, quite comfortable using Taoist, Christian, and Buddhist ceremonies for personal occasions.

Tolerance for multiples. This may explain their tolerance for multiple standards in their personal computers as well (in the Japanese market, nearly all manufacturers require specialized system software for their PCs). It helps to explain why they are less troubled than Americans by multiple media standards (Beta, VHS, CD, CD-I, DAT, MD, DCC, etc.). Japanese consumers, who love gadgets, are far more willing than Americans to take a chance on new technologies. Americans, on the other hand, are reluctant to get stuck with 8-track tapes and tape players or Beta equipment.

It was further noted in the “Where are the Markets?” session, by Michael Schrage of the Los Angeles Times, that “American companies hate low-margin businesses. . . . [They] love niches, they love monopolies.” They also shun “commodity” businesses which demand finely tuned operating practices.” The Japanese, on the other hand, are happy to compete in these fields. For example, a Japanese company is typically satisfied with a 3 to 4 percent margin on its products, while American companies will call it quits if the margin falls below 10 percent. This assures us that mass-market products will continue to be developed by the Japanese unless U.S. businesses begin to embrace truly open architectures.

Trip Hawkins of Electronic Arts (a $100-million-per-year game producer) gave some notable commentary about the American home and the markets that exist around it. First, he proposed that the market for home technology could be as much as $20-40 billion annually, considering that $14 billion was spent on video rentals in the U.S. alone last year. Movies by themselves are a significant market ready to be plundered by a new, convenient technology.

Computers are still too expensive. Hawkins then pointed out that $7 billion was spent in game arcades–$7 billion in quarters spent on video games, pinball and mechanical bowling. Why then, he asked, is the home game market only a $2-billion-per-year industry?

The obstacles are clear: computer technology is too expensive and current game technology is not sophisticated enough to support interactivity with complex graphics. Compression could assist, but Hawkins expressed doubts about the vitality of MPEG. “Is MPEG good enough? If Hollywood doesn’t think it’s good enough and they’re not going to get behind it, then let’s not waste our time on it,” he said. Hawkins believes that when suitable, inexpensive technology comes to the home, the market for home entertainment will steal from and surpass both the rental and arcade markets.

Howard Mirowitz of Mitsubishi pointed out that the first 30 percent of market development is where all of the interesting stuff happens. Early technology development is determined by “a bunch of crazy people inventing the basic technology while eating pizza and drowning in Jolt Cola.”

The hockey stick curve. A number of these projects are funded, bringing numerous incompatible architectures to market. There follows a period of “evangelical confusion” where many platform vendors are fighting to control the market by being first.

Eventually, Mirowitz said, one or two develop enough of a base that the market begins to take off in a “hockey stick” shaped curve. Standards are thereby set, clones are developed–and investors lose interest because the game is over. This, he said, is how standards are set, not by committee.

Following the Intellectual Property Mock Trial, which pitted a movie studio against an alleged thief of a movie clip for use in an interactive product, U.S. District Court Judge Stephen Wilson addressed the means by which intellectual property rights will be established over the coming years.

It’s important to remember, he said, that disputes over high-technology issues will be settled by juries of lay people. The system as it exists today was established so that juries decide cases based on credibility.

A trial such as the one presented at the conference is asking the jury to decide on fine nuances of the law, which Wilson felt is not what the system was designed to handle. One school of thought in the courts even says that certain cases are so complex that they ought not go to a jury at all. Even this view presumes that judges themselves are capable of handling such cases.

Unsophisticated juries. Wilson urges business people and their lawyers to keep in mind their “audience” in arguing such cases. The issues must be simplified as much as possible. Such cases will be resolved by people with far less sophistication than the participants.

The other point made by participants in the Mock Trial was that until Congress creates new laws governing electronic rights, such cases will be decided on established standards of law even if they are not entirely appropriate to the medium. Nobody expects Congress to act on such issues in the foreseeable future.

(This sentiment flies in the face of the opinion of Laurence Tribe, the Harvard Law School professor who has proposed a 27th Amendment to the U.S. Constitution stating that the fundamentals of the Constitution should be applied “without regard to the technological method or medium through which information content is generated, stored, altered, transmitted or controlled.” Tribe believes the Constitution is sufficiently elastic to protect our rights. What’s really required, instead of a new body of arcane laws about digital media, is more education about the issues themselves.)

Take it case by case. The other option in establishing standards of law is to develop a body of court cases that deals directly with such issues. This implies, however, that there will be a number of expensive and time-consuming trials, decided case by case, before there are universally understood legal practices.

Ken Liebman, one of the “trial” attorneys, said that such lawsuits would be a good sign for the industry because “you only have lawsuits when there is a lot of money at stake, which means there is a market. If you do see a lot of lawsuits, we know that you are successful.” Spoken like a true lawyer.

- Jonathan Seybold, David Baron