I recently upgraded to a Blackberry and one interesting thing I have noticed is that many vendors who are actively promoting mobile services in the market haven't made their own websites accessible to mobile devices. Is that their way of saying mobile is more hype than reality if even they haven't made their website viewable on a mobile device? I don't need to call out any companies by name but all you have to do is type in the URL of some of the largest vendors offering different kinds of mobile services and most times you will get a page that asks you to download the Flash player or their standard website not optimized for a mobile browser.

It's possible that some of these vendors do in fact have mobile sites but that their home page is not setup to sniff what browser of OS you are coming from, which defeats the purpose of having a mobile site to begin with. I really think that any vendor who is offering mobile services in the market has to have their own website accessible by mobile devices in order to be taken seriously.

While there are a lot of video based hardware devices in the market all competing for the living room, today, none of them have the three essential components needed to be declared the winner. To truly have a shot at owning the living room, you need the content consumers want, the software platform to control the content and an install base of devices capable of reaching a large enough audience. Today, so much of what we hear about regarding these broadband enabled devices is the hardware, but that's the least important part. With Internet connected functionality being built into nearly every device associated with the TV, stand-alone boxes are not the path for long-term success. The path to the living room is not a hardware play.

When Apple announced the new Apple TV, some predicted that Apple would ship a lot of the units since they retail for just $99 a pop. But all the Apple TV does is cripple the web experience. You can only access the web through apps and many devices made by Apple restrict the way in which we interact with our content. Because Apple wants to control not only the iTunes software but also the hardware, Apple is preventing themselves from ever controlling the living room. We know the hardware is becoming less important. Roku's box is cheaper than Apple TV and offers support for USB and 1080p. So this is not about Apple having better hardware with Apple TV because they don't. It's about who has the best content and the best platform to manage it.

Apple is setting themselves up for failure in the living room all due to the fact that they feel they have to control everything in the video ecosystem. But just imagine if Apple cared less about the hardware and was more open with their iTunes platform. If Apple licensed iTunes to every TV and Blu-ray manufacturer and these devices all shipped with iTunes built in, Apple would immediately have the largest install base of anyone overnight. iTunes would become the dominant platform in the living room and could go uncontested if Apple added browser functionality to iTunes.

We know this model works as we can look at Netflix's success in approaching the market in that way. Netflix does not make any kind of hardware and is not trying to control the video playback device. They want to and will work with nearly every CE manufacturer to get the Netflix platform on as many devices as possible and at the end of this year, expect to have an install base of 100M devices. How many devices is iTunes on in the living room? The answer is very few as they only have the Apple TV.

Of course folks who love Apple are going to point to how many iPhones or iPods have been sold and the install base that iTunes has on them, but that has nothing to do with the living room and the task of getting Internet delivered video to the TV screen. One could argue, and I would agree with them, that today Microsoft and their Xbox 360 console is the winner so far. Outside of a set top box, it has the largest install base of any device connected to the TV, has a platform to go with it and has quite a lot of content available via Zune Video. And with ESPN and other forms of content coming to the device shortly, Microsoft is clearly focusing more of their efforts on the platform and the content as opposed to the hardware.

The market for the living room is completely fragmented right now with nearly every vendor falling under the hardware category, platform category or content category. Very few are working on all three. Hulu is a content play, yet they have no install base in the living room and are only now starting to work on that. Hulu has been hard at work on two of the three requirements to dominate the living room, but is missing the eyeballs. Netflix on the other hand has the platform, the device penetration and is hard at work on improving the content.

Then you have all the hardware players in the market including Roku, TiVo, WD TV Live, Popbox, Sony Netbox and all of the broadband enabled TVs and Blu-ray players. Aside from Roku who is spending a lot of time focusing on the Roku platform and brining new content channels to the device, most of the others are all a hardware play. Of course TiVo has been working on all three for some time, but unfortunately has not shown much success. If there is one thing TiVo has proven in the market it's that the value is not the hardware, but rather the software and application layer. TiVo still has the best software hands down, yet does not have much in regards to the content side of the business nor that big of an install base.

On the platform side of the business, companies like Sonic Solutions are trying to become the dominant platform for devices, but still has a small device install base. Like others, they also have no control over the content side of the business and have to hope that content owners not only adopt their platform but also work with CE manufactures to get on more devices. Then you have platform providers like Yahoo!, VUDU (now Walmart), Blockbuster, Rovi and others who are all struggling to find their identity in the living room.

I like Apple devices, I've only used a Mac my whole life. But Apple makes some really dumb mistakes in the market at times simply due to their ego and this is one of those occasions. If Apple opened up iTunes to non-Apple devices, they would be dominating the market. And if they did that, and had the kind of device footprint Netflix will have by the end of this year, it would be a lot easier for Apple to get the studios to agree to allow them to add new business models like monthly subscriptions for video. 

The competition to get consumers attention in the living room is wide open and with Google TV, Boxee and others all gearing up to launch their offerings, Apple's iTunes platform and Apple TV device are only going to fall further behind in the race to control the connected living room.

While there are lots of online video platforms (OVP) in the industry, just like in the CDN space, only a couple of vendors control the vast majority of the market share. The primary reason for this is that it takes companies burning through a ton of cash before any OVP can achieve the scale they need in their business to generate enough revenue to be cash flow positive. With Ooyala’s latest round of funding in the amount of $22M, the company has now raised $42M in just over three years. Ooyala’s biggest competitor and market share leader Brightcove has also had to raise a lot of money over the years and their total funding has been $99M to date.

While not every OVP provider needs to be in the top two or two in the industry based on revenue, I think many folks downplay exactly how difficult it is to get into the OVP or CDN business. I constantly hear people say that they can just put out a bunch of boxes on the Internet and become a CDN. The reality is, it’s not the hardware that makes the CDN, it’s the software that runs it and the services that run over it. In the same light I’ve heard some say that they could build their own OVP to the same feature or scale as a Brightcove or Ooyala and it would only take them 12-18 months. Of course if that was true, then many content owners would be making the investment to build their own OVP, but they aren’t. Just like you don’t see any content owners aside from a few major players like Apple and Microsoft building out their own CDNs.

There is a lot of talk in the industry about how OVPs and CDNs are commoditized. I use that word all the time except that I’m not talking about the service, I’m talking technology. Video components like encoding, storage and delivery are completely commoditized but it’s the services and applications built on top of these technologies that isn’t. Today cars are a commodity yet there is a difference in how they perform. OVPs and CDNs are no different. It’s that scalability, performance, reach and functionality that truly sets them apart.

While I keep hearing people talking about the OVPs and CDNs as if one vendor has to beat out
another, the important thing to remember is that the market can sustain
more than one major player. If you look at the CDN space, a handful of
vendors controls most of the market. In the OVP space, the same is true.
In fact, in just about every vertical in this industry, only a handful
of vendors tend to own 75% of the market they focus on. Some need more
capital than others to get to scale depending on their offering, but no
OVP can expect to ever do tens of millions of revenue a year without first having to invest at least that much into the business.

The drawing is now closed. Last week, Adobe announced new versions of their Flash Media Server and thanks to them, I have one copy of Flash Media Streaming Server 4, which retails for $995, to give away to one lucky reader of my blog. (For in-depth details on the new features of FMS4, visit the Adobe blog and StreamingMedia.com) To enter the drawing, all you have to do is leave one comment on this post and make sure you submit the comment with a valid email address. Because the software will be delivered to the winner in electronic form directly from Adobe, this drawing is open to everyone with no geographic restrictions. The winner will be selected at random at the end of the month. A big thanks to Adobe for the giveaway! Congrats to Pete Gebhart of Secaucus, NJ who won the server.

Content delivery network ChinaCache filed yesterday with the SEC to raise $100M in an IPO. The company, which is based in Bejing, plans to list on the NASDAQ under the symbol CCIH.  Deutsche Bank Securities and BofA Merrill Lynch are the lead underwriters on the deal but as of yet, no share pricing has been announced. Last year, ChinaCache had revenues of $40M and from estimates I heard, was on track to do between $60-$65M in revenue this year. Read the filing here.

Yesterday, Adobe announced Flash Media Server 4 (FMS4), including a new enterprise version that has support for peer-to-peer multicasting. If you want to learn more about what's new in Flash Media Server 4, direct from the source, then join me today at 2pm ET where I will be moderating a Q&A session with Adobe's Kevin Towes in the next installment of Streaming Media's Ask Adobe Web Event Series.

Bring your questions for Kevin as after his presentation on FMS4, we'll be spending 30 minutes taking your questions. The webinar is free and you can sign up here.

Dow Jones is reporting that Google’s CEO just commented at an event in Paris that YouTube is, “nearing profitability and its revenue is doing quite well“. This should put to rest the debate on whether or not YouTube is profitable today, it isn’t. Of course, this would not be the first time Google has said that YouTube will be profitable soon, but since they have been saying that for almost two years now, it’s hard to know when it will truly turn a profit. I don’t think anyone would debate that YouTube will be profitable at some point, the really question is when and if Google will share details regarding the profitability of the YouTube business once they reach it.