Just about 14 years after the Bill Gates “Internet Tidal Wave” memo changed Microsoft’s direction on interactive media, the cable industry is back in the game with a new initiative to shape the next generation of developers and content providers. Although Microsoft never fully abandoned TV as a operating platform and continued to work with set-top-box manufacturers, “The Memo” killed Project Tiger (iTV) back in mid-1995 and most of the talent in Redmond was reassigned to take on Netscape and a bevy of other newly emerging threats to the Microsoft way of life.

I started working with Project Tiger right after I joined Compaq back in mid-1994. Even though this joint venture between cable operators, telcos, hardware and software vendors, etc. tanked, there were some good lessons to be learned from this premature effort.

Hardware - in the mid-90′s, the progression of new servers was based on two things, the newest chip from Intel (how many of them you could cram into one rack mounted server) and density of storage. At that time, Compaq was obsessed with Hewlett Packard and the battle over running enterprise server applications. Compaq had density envy and was trying to keep up with HP’s mini business for running high-end, processor hungry applications. The fight for floor space in the raised floor environment of the Fortune 500 dominated product and marketing strategy. The Internet was barely mentioned as an opportunity / threat and any mention of vendors in that space was quickly dismissed.

It wasn’t until some of Compaq’s top customers (Microsoft and others) expressed a need for a modular solution that Compaq OK’d the development of a smaller,  modular, rack mount Proliant server (a.k.a. Little Nellie). This not only satisfied the need for enterprise customers it was an immediate hit with ISPs and telcos, not to mention the folks at Microsoft that had been itching to take on SUN in the dedicated hosted services market. Unfortunately, I can still remember the prelaunch conference call with Compaq’s NA sales director where he dismissed the need for these servers and forecasted a whopping total of six as their commitment for the first month’s sales. Nice going jackass! The modular server was a hit and gave way to the even denser blade server in subsequent years. Who would have thought that a computer manufacturer could learn something from the stodgy century old telco market.

Software - with few exceptions, Compaq’s server division was focused on winning the TPC-x benchmark war. As in the section above it was all about density of processors,  so that they could prove they were the lowest cost – highest performing server platform for running Oracle, Informix, SAP, etc. Servers were optimized for database reads and redundancy in storage, but at 10Mbps on a local network,  or worse T1 and lower from a remote location, performance was no longer about databases and Compaq did not have a dog in the fight.

Servers were destined to be hidden behind firewalls, load balencers, switches and routers made by vendors that understood flow of traffic on a wire. Compaq did its best to partner with these folks, but a little end-to-end thinking before hand would have identified where the battle for Internet applications would be fought and what technologies were about to explode.

Usage - Lets hope that the cable MSOs that are pushing the OCED standards effort have learned from past mistakes during the first couple of tries at interactive TV. I wish I had all of the flowery pitches and predictions from those days and I wish I had a nickle for every time someone pitched me on the idea that viewers would click on the screen to buy whatever jacket Jerry Seinfeld was wearing. One of the things that has become obvious over the past 10+ years is that people do not need to interact with their TVs for anything more than what the remote allows. Time shifting, Pay-per-View VOD, vote for your favorite American Idol, maybe even a survey, but not much more. At least for now, TV content is entertainment and people are not users, they are watchers.

Advertisers and programmers are betting that there are enough people that watch TV and simultaneously surf the net so that any opportunity to measure or monetize the viewing experience is captured in close to real time or at least bookmarked for later. If I look at my family and freinds’ online habits, very little time is spent actually interacting. Yes there is chat, but SMS has successfully diverted much of that from the keyboard to the cell phone. I guess email is a sort of interaction, but not really. Much of what we do online is watch and react. YouTube and even social media platforms from Facebook to Twitter are based on our voyeuristic curiosity and a delayed one to many reaction.

So can cable companies facilitate and capture this reaction? Yes, if they keep it simple and don’t try to over-complicate the viewing experience. The set-top-box is now a fairly capable networked computing platform, but so is my GE washer and dryer. Can this power be used for good or is it destined to be turned to the dark side? Unfortunately, cable companies sometimes think like the telcos and are never fully satisfied unless the business model has them transporting and controlling all the bits. Back in the Tiger days we used to talk about VOD to a captive audience (with a controlled viewing environment) and how that was the ideal environment for iTV. I now know that there is no such thing as a captive audience. We all have too many opportunities and gadgets at out disposal 24/7 to ever be that submissive to only one platform (and network) at a time.

I mention this historical anecdote because this issue comes up time and time again in the StartupMonkey Workshop and just as often in my strategy consulting work. From early start-ups to more mature product vendors, exec teams (& investors) rarely take the time to understand their customers and the flow of their market. It is far too easy to drink the koolaide, get wrapped up in the uniqueness of your cool new tech, and let the gap between you and your customer’s needs grow wider and wider until you start to believe that your view of the market is complete.

Stay Tuned!