Safe as houses

Any chance the Bank of England can loan me £1 million (at five points above EURIBOR) to bet on Chelsea winning the treble (in my book a high risk gamble now Jose has gone ... whoops, sorry ... a high quality investment portfolio).

I'll even give the betting slip as security, so if I don't repay the loan then the bank can keep the slip (whoops, sorry ... investment portfolio).

Of course, I'll be the one taking the real risks as I would stand to lose a £100 million+ in bonus if Chelsea don't win (calculated from the cumulative odds of winning each competition).

The BoE would only lose £1 million - a trifle in comparison - but at least they would keep the portfolio.

Its a shame that good old market economics are dandy as long as things are going up, but when it's on the way down the banks want to be bailed out by good old state intervention.

As for the demands for Mervyn's head ... well it is almost laughable ... he's not the one who has been gambling with other peoples' money.

Still, the buck for this seems to be heading firmly and unfairly in his direction.

I think that's trebles all round in the world of finance ... talking of which, how is my loan going?

How banking works ...

I thought I'd explain the current banking crisis in plain English. It works like this ...

• People (who happen to be tax payers) save money in say bank A.
• Bank A lends this money as loans to other people to buy stuff, say properties.
• Bank A then borrows money from Bank B on guarantee of the loans business.
• Bank A lends this money again as loans to other people.

and so on, and so on.

Obviously this means the original money is lent many times. Many banks have more loans than savings. It works as long as most of those people honour their debt.

But what happens when people start defaulting on their debt?

Well Bank B starts getting nervous about lending money to Bank A on guarantee of defaulting and possibly worthless loans. A credit crunch occurs. Over stretched banks start to have problems etc.

How do you solve this?

Well, one way is for the central bank (funded by tax payers) to lend huge amounts of cash to the banks in return for the dubious (low quality) loans business.

That way the banks keep going, bonuses remain high, Ferraris still get bought and who pays if all goes wrong? Well we all do, as tax payers.

A sort of, I win then I keep the cash, I lose and we all share the cost.

I can certainly understand the "moral hazard" that such action creates and how it can encourage excessive risk taking. It's like borrowing someone else's money, putting it down on laughing boy, 3rd race, Catford dogs and if it doesn't come in - get your money back from the central bank in exchange for the betting slips.

Sounds like a good business to be in. Unless of course in the long run, you're an average joe public tax payer who saves.

Glad to hear that Mervyn didn't change his mind .... damn, he did.

Dealing with the stack

I had intended to create a number of posts about the XaaS stack. However, my recent diversion with the writings of Andrew Keen and my realisation that there were deeper fundamental processes at work here has forced me to postpone ... for a short time.

After spending sometime reading up on a number of articles, I've yet to come across a satisfactory exploration of what is happening in the IT industry today.

Now I don't pretend to know, I have some rough ideas.

So I thought I'd write down an initial view (something I scribbled together in Como). I'll use this as a starting point whilst I explore the concepts. I'm likely to change my mind on these fundamentals several times during the process, and I might not even get to a satisfactory conclusion.

Any pointers would be extremely welcome.

Bloody hell it's cold ...

Just got back from lake Como - wonderfully spectacular views and warm weather.

There has been lots of interesting news recently regarding the HaaS market. Of note is the the announcement by the DMTF of the Open Virtual Machine Format aimed at becoming an industry standard for portable virtual machines between one environment and another. Excellent.

According to Dr. Stephen Herrod, Vice President of Technology Development at VMware "End users and software vendors have been clear that they need to be able to leverage standards such as OVF and avoid proprietary formats and licensing that lock them to a single vendor or platform"

The future utility computing markets take another step forward.

However, before I start with my general posts, I thought I'd share this video which made me howl with laughter.

Now to go find some matches and put the fire on, it's damn cold in Blighty at the moment.

Commodification Vs Commoditisation

I was asked recently why I talk about commoditisation (~ization, American English) when the "real" word is commodification.

Well, I happen to find the distinction useful and both words are still relatively new (created in my lifetime unless I'm mistaken) and both have some traction. That said commodification definitely seems to be winning the race and becoming the catch-all word.

Commodification (mid to late 1970s?) is used to describe the process by which something which does not have an economic value is assigned a value and hence how market values can replace other social values. It describes a modification of relationships, formerly untainted by commerce, into commercial relationships.

Commoditisation (early to mid 1990s?) is the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition, from monopolistic to perfect competition.

The processes are very different, I happen to agree with Douglas Rushkoff on this one.

Deja Vu dot Zero

I couldn't decide whether Andrew Keen is the modern equivalent of King Canute or akin to the wandering minstrel of old who lamented the invention of sheet music or the great digital hypocrite promoting himself by the same means which he lambasts or some great visionary?

So I attended his lecture at the RSA, to try and get a clearer picture. He received a luke warm but polite reception and by all appearances has somewhat mellowed his viewpoints.

He puts forward a case that what we need is acceptance and understanding of expertise through education, that trained gatekeepers are needed for the internet, that real artists need to be paid and that content given away freely will never make any money and may undermine the whole system.

If you take his arguments at face value - then on one side you have a litany of self selecting experts, creating "high" quality output, demanding payment and authority Vs a mob of amateurs, creating "poor" quality output and providing their work for free.

This sounds somewhat familiar?

Oh my word, it's not just the meme of "open" that has traversed from one boundary (software) to another (content) but also the entire same debate - lock, stock and barrel - has followed it as well.

Jenny Ambrozek asked me some incredibly insightful questions about open source communities which I completely missed the point of. This really is just closed source vs open source all over again, which would suggest common underlying processes. Jenny, you're star!

It's all interconnected with the ideas of commoditisation. It's worth re-reading David Stutz work and re-applying these concepts to content.

"Open source is about consumer demand, political process, and community involvement, rather than about software or hardware innovation. To stay relevant during a shift to commodity software, open source communities will need to claim part of the power that has historically accompanied the definition and regulation of commodity networks. Open source constituents will need to actively participate in the creation of standards and legal frameworks in order to avoid marginalization. Without participation, the dynamic interaction of commodification, global capital markets, and political interests will likely result in the subjugation of open source and standards to corporate and national interests. In fact, judging by the history of other commodities, this outcome is actually most likely."

At least I can finally make up my mind. King Canute - but only if we make it so.

Whooosh ....

Over the last few months there seems to be lots of good news coming through on the VC / Entrepreneurial front in the Hi-Tech market in and around London.

Saul's OpenCoffee is a regular and growing event.

Dopplr receives funding - congratulations.

Seedcamp has kicked off.

dConstruct just seems to get bigger.

Mashup demo is launching in October

Future of Web Apps is coming to town.

Things seem to be taking off.

To boldly go ....

Just heard the great news that Dopplr has received early stage financing.

This is fabulous news - congratulations.

Pictures as words

I was reading with interest an article about 'Writing With Pictures: Toward A Unifying Theory Of Consumer Response To Images'
So I thought I'd mix the two together to summarise my latest rant

How much is that standard in the window, the one with the lovely tale?

Everytime I settle down to write about the stack - some other bit of news comes and disturbs my peace. Maybe Keen is right and we should just leave it to the experts, however judging by what is happening with OOXML, maybe we shouldn't.

So for those of you who don't know, OOXML is open office XML an alternative to ODF (the open document format). Recently OOXML has been trying to become an ISO standard.

ISO is the International Organisation for Standardisation. It describes itself as -

"a bridging organization in which a consensus can be reached on solutions that meet both the requirements of business and the broader needs of society, such as the needs of stakeholder groups like consumers and users."

So how is the OOXML going?

Well, apparently there are a number of issues with OOXML. According to Stephen Walli -

"Microsoft Office DOESN'T ACCEPT WELL FORMED OOXML documents not produced by Microsoft Office"

and

"A standard that can't be implemented is WORSE THAN USELESS. It really demonstrates that this standard they rammed through ECMA is nothing more than a vendor's product specification."

Fairly hard hitting words there, but I can understand the sentiment.

A standard is something which must be open and free to use. As the NZ Standards Council commented -

"Significant concern was expressed about proprietary content that is embedded in the document. Microsoft made commitments not to sue for breach of patent. However, there was still general concern about the protection these commitments offered."

Well if it doesn't work and contains proprietary content, it doesn't sound like a good standard by my book.

So how is consensus being reached that meets the broader needs of society and consumers?

According to Computer World -

"Microsoft Corp. admitted Wednesday that an employee at its Swedish subsidiary offered monetary compensation to partners for voting in favor of the Office Open XML document format's approval as an ISO standard."

... whoops, but there is more ...

Groklaw says there has been more pressure by Microsoft in Denmark and there are rumours about irregularities in Norway and Hungary. This doesn't seem to be the sort of consensus I'd imagine.

ZDNET further informs us that Georg Greve, Free Software Foundation Europe (FSFE) president, said -

unprecedented numbers of Microsoft partner companies from several countries have joined standards organisations and have voted to approve the Office Open XML (OOXML) document format as an International Organization for Standardization (ISO) standard.

Apparently this has happened in Switzerland, Sweden, Germany, Portugal, the Netherlands, and the US.

Alarm bells are ringing .... "Membership of the Swiss body saw a surprising growth before the vote, while in Sweden a very similar thing happened — suddenly the room was overcrowded with Microsoft partners" Greve told ZDNet.co.uk.

As ZDNET points out there was "20 new companies, overwhelmingly Microsoft partners, joining the committee voting on ISO certification within days of the final vote"

Hmmm, this must some form of meeting the broader needs of society and consumers that I'm not familiar with.

So why the pressure to get OOXML accepted? Why not just adopt ODF? Well as Tom Robertson, General Manager of Interoperability and Standards for Microsoft says it's all a "proxy for product competition in the marketplace".

Er? Sorry, I'm a bit of a luddite here .... what does he actually mean?

A quick look at Ben Langhinrichs' data shows that OOXML is losing badly in this marketplace with about 1% market share, and at least ODF is already an ISO standard, ISO/IEC 26300.

So what is the point of OOXML? ODF may not be perfect, but surely supporting the creation of a decent single standard as Bob Sutor suggests is better than muddying the waters?

Governments tend to adopt ISO standards and this is starting to happen with ODF. If it spreads into business, which it surely would, then this could start to undermine the dominant position of MS Office. It could level the playing field - ah, now I think I understand Robert. Surely that's the point of OOXML, to reduce the threat of ODF to the marketplace?

There is a lot of blogging out there about this issue (something which Mr Keen would no doubt disapprove of), however it is good this whole issue is being brought to light.

So who are the winners and loser? Well, as a member of society, all I can see is confusion being created by OOXML. However, the real loser in this could be ISO's reputation itself.

Quis custodiet ipsos custodes? Well I hope that ISO conducts a full and public review into this sorry tale, particularly these stories of gerrymandering. As an authoritative body it needs to set and to be seen to set the highest standards of conduct.

"How much is that standard in the window, the one with the lovely ..... it's not for sale sign."

Quis custodiet ipsos custodes?

Looking at my calendar, I notice that I've got nothing to do on Tuesday night. So I thought I'd go and see a tragic comedy, Andrew Keen's talk "The Great Digital Seduction" at the RSA.

I blogged about Andrew some time ago, and since then I've decided to ignore the man whom I believe is the greatest digital hyprocrite of our time. However, seeing that he is going to the trouble of speaking, and even more that I'm going to the trouble of attending - I thought I'd say a few words.

Andrew's thesis is basically that the internet is robbing us of our culture, that art is something you pay for (making Damien Hurst surely the greatest artist of all time?) and that talking is best left to those self selected elite whilst the rest of us pig farmers should keep quiet - a sort of "Stop all that chattering! I'm talking" approach. Watch the video.

A cynic would probably describe his approach as inflammatory and pointlessly controversial designed to promote sales of his book. A real cynic would be expecting a further book about "How to make a mint out of controversy".

You can add me to the real cynic camp.

Comedic? Well, in my view it's laughable as the discussion is pointless. He is the King Canute of the Internet world asking the mass of bloggers and other producers to stop producing. I don't disagree that there is a lot of noise on the Internet, and a need for reputation-based networks to help filter this for the individual. But the choice should be with the consumer, not some censor or self-elected quango. The crowd will choose their own gatekeepers, their own filters - they are doing so already.

Does anyone really think that people are going to stop expressing themselves? You'd need to abolish the principles of democracy and establish a fascist state to achieve that. Ah, I note he invokes Godwin's Law in reverse and asks whether he is a Nazi. Shame on you Andrew, shame on you.

Never the less, despite his views Andrew has the right to express this - as we all do, it is the basis of a democratic system. He has the right to use the same mechanisms that we all do - which he does. Hypocritical? Well of course, he uses the same mechanisms to lambast them - blogging is wrong, stop blogging and read my blog instead ... yada yada yada.

The questions we should be asking as we move from elitist producers to a more open Stentorocracy, is how do we create relevance in all the noise? How do we push further and create that elusive Meritocracy?

Tragic? Well I'm sure he has made a handsome return on his book, when there are so many more deserving causes. Still, freedom is about people being able to express their opinions and choices even when such choices support individuals who would happily take away your freedoms.

Economies progress, new means of distribution appear and societies adapt.

"Oyez, Oyez! who are these upstarts taking away my job?" as many a Town Crier must have cried as so called journalists started to publish "news" papers. Bloody amateurs.

How many wandering minstrels lost valuable income when any Tom, Dick or Harry could buy sheet music and thump out a tune on an old piano? Bloody amateurs.

How about the Telegraph? According to the Pennsylvania Historical and Museum Commission, the first message received by a commercial telegraph line in the United States was "Why don't you write, you rascals?". Bloody amateurs.

I'm sure history is littered with those "keen" to keep it the same. However things change - businesses and society move on - no matter how many Keens you have. Yes, I'm sure that some artists will suffer from the opening up of the means of expression, they will not adapt but then I'm sure many will benefit. The crowd will be the arbiter, not Keen and his fellow "old guard". Unless, of course, the crowd choose them to be so.

One advantage of any future reputation based networks for searching information, will be the madame guilotine of the Internet. As any World of Warcraft player well knows, it is the /Ignore function.

However, in this case the /Ignore function is dangerous, as the feebleminded concepts of TINA (there is no alternative) promote a view that it is simply a choice between authority or anarchy. TINA promotes FUD (fear, uncertainty and doubt) about the Internet. Well there is an alternative - it's called participatory democracy.

Vive la revolution - liberty, equality, fraternity - and keep on blogging.

Quis custodiet ipsos custodes? (who shall guard the guardians?)

We shall. It's our society after all.