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Tonight marks the 10th anniversary of Y2K, so I’m using it as an excuse to look back at lessons learned and not learned from that experience. The greatest lessons had to do with psychology, not technology.

Y2K was no surprise to me. I wrote a chapter on it in my book Accidental Empires back in 1991 — fully nine years before the actual deadline. To my knowledge that was the first in-depth explanation of Y2K in the mass media. I explained how the problem came to be, how it could be solved, and predicted that doing so would cost a lot of money and force a transition on the way corporations and governments used technology.

In early 1999 someone at PBS came up with the bright idea that I do a TV special about Y2K to run that October, setting audience expectations about what was to come. Going into that project I remember the producers expected it to be about all the stuff that was likely to go wrong. After all, I had written eight years before that we were in peril. But when I jumped into the research in 1999 I found that Y2K remediation, as it was called, seemed to be going well. I also found that systems weren’t as inter-connected or dependent as many of us had thought — that the world simply wasn’t as much at risk as we feared. I had to fight for this position, but ultimately that was the more conservative story we told two months before the actual event. And we were right.

PBS, to its credit, was the only U. S. television network with the guts to do such a show in primetime or anytime. We took a position — a controversial one it turned out — and justified it with research. Other networks preferred to play the doom card over and over again.

Y2K remediation cost $50-100 billion for the U. S. alone. Probably half of that money would have been spent on IT improvements anyway, but an extra 25-50 billion 1999 dollars is still a lot of dough. Much of it was spent on Y2K-related issues but a lot of it was spent on this-and-that. Y2K was such an arcane problem and so far above the heads of typical CEOs that it was viewed by IT departments as a chance to buy all the cool stuff they never could before. A lot of cool stuff was bought on top of all the other cool stuff being bought because this was also the time of the dot-com Internet Bubble.

I have wondered how much of the economic downturn in 2000 and 2001 – the collapse of the Internet Bubble — was actually due to the passage of Y2K with its excessive IT purchasing and labor costs.

While making that TV special I spent weeks interviewing experts and self-proclaimed experts including survivalists. What I learned then was a story that I don’t think ever really came out. It consists of three parts:

1)  Desire: the people warning the loudest about Y2K, those hoarding lentils and suggesting the end of the world was coming, really wanted to be right. They not only thought Y2K was going to be a disaster, they wanted it to be a disaster.

2)  Paranoia: the people who were so upset about Y2K — the survivalists and others who headed to the mountains and other sparsely-populated areas — didn’t go to the country because they thought the cities would collapse. They thought the rule of law would collapse and there would be Mad Maxian mass civil unrest. And all that unrest would be aimed squarely at them — the arrogant and narcissistic survivalist leaders. They just assumed that all the other folks who stupidly hadn’t been hoarding lentils would want their lentils and would be coming for them, possibly armed. They expected that Y2K would not only delay Social Security checks, it would lead to armed insurrection aimed at they and their lentils. I am not making this up.

3)  Disappointment: When the worst didn’t happen and these same folks found themselves in the middle nowhere with half a ton of lentils, they were disappointed the world hadn’t fallen apart after all.  Some of those people still haven’t recovered.

When Y2K: The Winter of Our Disconnect? aired that October (pre-Y2K), it produced the greatest e-mail response of any show I ever made — almost 3,000 messages in the first week. Most of those messages were negative, some extremely so. Many viewers saw me as irresponsible. They claimed that my irresponsible actions would lead to the deaths of hundreds — perhaps thousands — of PBS viewers, lulled into inaction by my false reassurances. Some viewers said I deserved to die for making the show. A few suggested they would kill me themselves.

It reminded me to a certain extent of the minor firestorm a couple weeks ago over my Christmas card, though at least that one produced no death threats.

So I was Public Enemy Number One in October, 1999 for suggesting that Y2K would turn out to be no big deal. And what happened in January, when it became clear that my show was 100 percent correct? Nothing. Not a single e-mail came to me from any of those people.

Audiences: you can’t live with them, you can’t live without them.

Happy New Year.

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There were already two computers in our kitchen but that wasn’t enough for Fallon, age three, who needs his daily fix of YouTube Scooby-Doo clips.  So for Christmas Fallon (who refers to himself as “the small boy”) got a Dell Vostro A90 netbook running Ubuntu Linux.  That’s the business version of a Dell Mini9 with a black case and Bluetooth installed.  Fallon would probably have preferred the more colorful Mini9 but he got the Vostro, instead, because I was able to buy a new one from Dell for $199 with free shipping.
Heck of a deal.

Alas the little Dell, with its perfect tiny keyboard for Fallon’s perfect tiny fingers, wouldn’t charge correctly.  The AC adapter would charge the battery to 100 percent then the Dell would forget the AC adapter was attached and discharge completely unless rebooted, starting the charging and discharging cycle all over again.

An hour on the phone with Dell Tech Support determined that the little Vostro had to go back for a motherboard replacement.  Dell sent a box by FedEx and we returned the netbook for repair.

According to the arrival and departure log, which Dell kindly sent me by e-mail, Fallon’s Vostro was received, the motherboard replaced and the system reshipped in approximately 10 minutes.  Wow!

Too bad they didn’t actually repair it.

When we got the netbook back it was worse.  Now it wouldn’t charge at all.

Dell Tech Support said this time it must be a problem with the battery or the AC adapter, both of which had been in their shop a day earlier and gone untested.  Rather than have me send back the Dell, they decided to send me a new battery and AC adapter, which didn’t help.

FedEx had come and gone again, I had Fallon’s little Dell now running on a fading battery, but I also had a second battery (only charged to 34 percent, sadly) and a useless AC adapter.

More time with Dell Tech Support determined we needed to send the Vostro back for another motherboard replacement, so they sent a second empty box to ship it back.  That box arrived this afternoon along with a an unexpected second box from Dell containing yet another  AC adapter and battery (giving me three of each) and a motherboard.

Was I now supposed to replace my own motherboard?

The Vostro and its two extra batteries and two extra AC adapters and the spare motherboard are again with FedEx on their way back to Houston, to be returned to Fallon sometime next week, hopefully repaired.

We’re up to three hours on the phone with Dell Tech Support four chat sessions, and nine FedEx shipments so far.  If everything goes perfectly from here on out the total will be 10 FedEx shipments, but there could be more.

The Dell people have been uniformly helpful, friendly, courteous, and kind.

I just wonder what the profit picture is for Dell on these $199 systems?

No wonder Fallon looks tired.

If you care about real estate, politics, or economics, you might find interesting this pair of posts I made this week on AOL’s Housingwatch blog:

http://www.housingwatch.com/2009/12/28/fannie-and-freddie-more-than-politics-as-usual/

http://www.housingwatch.com/2009/12/30/fannie-freddie-ii-the-wrath-of-obama/

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A week from now I’ll announce in this space an important project involving technology startup companies, which I feel are key to continued economic prosperity for the United States. This will be my major project for 2010 with the Moon shot following in 2011. But first I want to conduct a little experiment involving venture capitalists. How interested are they, really, in your ideas or mine? We’ll see.

This is a tough time to be a VC. Investment returns have been poor for several years. Some of this can be blamed on bad investment decisions, some on a horrific economy, and some of it comes down to what are essentially deferred returns because of the drought of Initial Public Offerings. With not many tech companies going public there are fewer VCs buying private jets.

So the VC community is chastened though not poor and this leads to a trend I’ve noticed of venture firms and their web sites suddenly seeming a lot nicer than they used to be. Nearly every firm on Sand Hill Road says it fosters entrepreneurism, says it gives more than just money (sage counsel, help in hiring, really good coffee, etc.), and offers a channel for you and me to submit our business plans right into the belly of their beast, though with nothing held confidential, of course.

I find this idea fascinating, that anyone (heck, everyone) could submit a business plan for review by some of the smartest (and not so smart) VC’s in the world. Can it really be that easy? If my idea, my technology, my business model, and my target market are all good, can I really get funded through a VC web site alone? History and conventional wisdom suggest not, but those web sites are just so darned cheery that I decided to give it a try anyway.

So last week I wrote a business plan for a real startup. People with good ideas and nowhere better to take them come through my door all the time, so I grabbed one of the better ideas and just wrote it up. The geek in my kitchen this time was supremely experienced and grounded in the real world, his idea was novel and addressed a $7 billion market growing at 30 percent per year. There were, as far as I could tell, only seven competitors, the technology seems protectable, and if any of them rip it off it should be easy to tell. Best of all there wasn’t much money required by VC standards, the development and sales cycles run in parallel, and could be measured in months, not years.

Heck of a deal: one funding stage and profitable in less than a year. This would be many a VC’s dream investment. But only if they know it exists.

I submitted the business plan last week through the very friendly web sites of two Sand Hill Road venture capital firms. One firm is venerable the other fairly new but both are among the best. If they actually read the plan I’m sure they’ll be interested, not just because it is good but because it came from me and these firms both know me. I’m not an idiot — I only play one on TV — and they know that. So the real question is whether the plan will be read at all.

I don’t really know how this vetting process works, but I imagine it must be like the stories I’ve heard about how book publishers handle unsolicited manuscripts, which pile up in corners, are occasionally thumbed through by junior editors, and periodically shoveled in a dumpster, many unread, even unopened.

That’s no way to find the next Moby Dick.

Yet good books are still published because literary agents get their stuff past that pile-from-Hell and into the hands of senior editors who actually buy books. Same with venture capital, where it usually comes down to who you know.

This should be interesting. Will the VC’s read my plan at all? Will they read and reject it? Good plans are rejected all the time. If they reject it will they bother to tell me? If they like it will they bother to tell me? And how long will all this reading and telling actually take? Days? Weeks? Months?

Of course by writing this column I’m unleveling the field a bit. Most firms will do nothing special as a result but a few may actually send someone to paw through that electronic pile of business plans looking for something from me.

I’ll keep you posted.

Now that Microsoft has lost its appeal (ain’t that the truth) and has to pay $290 million to Canadian company i4i and take the docx file format out of Word 2007, is it just me or doesn’t that sound like an improvement to the product?

The whole point of docx didn’t seem to be to help users, but rather to make life difficult for both Microsoft competitors and for users who decided not to upgrade from the previous Word versions that used only the .doc format.

Microsoft deserves to lose this one.

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The DVD may have died this week.

Walmart is now selling Blu-Ray high-definition optical disk players for $68 in the U. S. Sure, plain old DVD players are cheaper still, but why would you buy one? Blu-Ray players can be used with your old DVD collection just fine and will line-double and up-shift your old disks a bit so they’ll look nice (but not as nice as 1080p Blu-Ray) on your new LCD or plasma TV. So unless the Blu-Ray can’t connect to your old TV for some reason, I can’t imagine why anyone would buy the old standard.

These things happen: Moore’s Law, remember? But in this case it feels to me like the transition is happening a little earlier than I expected it would. For that I blame the economy.

DVD sales have dropped 30 percent in the current recession, which was a big surprise to the major movie studios. They expected sales to go up because movies played at home (where the popcorn is cheaper and the butter is real) are supposed to be a bargain during a recession. In a sense it seemed a perfect time to introduce Blu-Ray and get people to upgrade their movie collections just as they had upgraded their VHS tape collections for DVDs a decade ago.

That VHS-to-DVD transition was the Golden Age of home video, when old flicks earned their weight in rhinestones all over again simply because people liked the prettier pictures and random access to slo-mo nude scenes offered by DVD. So everybody happily bought all their favorite movies all over again, home video revenue became bigger for the movie industry than box office revenue. And like all participants in an unsustainable economic bubble, the movie producers and backers told themselves it would go on forever.

It couldn’t last forever because eventually all the people who wanted to buy DVD’s of old movies had bought them and the industry could only bring out new movies at a certain rate — a rate that was nothing compared to that total library conversion. What was needed, they realized, was another VHS-to-DVD experience, though in this case to a high definition standard like Blu-Ray, or its competitor, HD-DVD.

Except it didn’t work out quite that way. Both Blue-Ray and HD-DVD were late. Like Betamax and VHS, they fought it out in the market, creating buyer confusion (and movie studio confusion too). By the time Sony and Blu-Ray had defeated Toshiba and HD-DVD the DVD business was in decline (movie-related game sales were, too) and there were signs of an impending recession, which brings us to today.

The movie studio fantasy was that we’d pay $20-$40 per Blu-Ray disk, but then Daddy was laid-off and that Blu-Ray copy of 8 Mile suddenly wasn’t THAT much better than the DVD version for half the price. Some people decided to wait while others gave up completely, leading to that $68 Blu-Ray player down at WalMart. Remember WalMart is the largest seller of DVD’s (and presumably Blu-Ray disks) in America and possibly the world. WalMart is such a Big Kahuna in the home video business that they can dictate prices pretty much to the rest of the market. I predict, therefore, that after Christmas Blu-Ray prices will crash to only marginally more than DVDs and maybe even the same.

This is — like short-selling your dream house – just an acceptance of reality by the major players. They missed their chance to make big money but are fairly confident we’ll all finally switch to Blu-Ray if the price difference isn’t very much.

Think about that. It means we’re going to buy all new disks yet again, Hollywood will return to normal, and again we’ll probably be happy about it.

Lucky us.

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Last weekend a story in the New York Times blamed the bad reputation of AT&T’s wireless network on iPhone technical problems, not the AT&T network at all. Going further, Global Wireless Solutions, a network testing company, said the AT&T network is actually faster than Verizon’s, backing to a certain extent AT&T’s now-aborted legal effort to silence Verizon Wireless commercials that said otherwise. I doubt this is actually the case. Last summer as my family and I wandered across the United States in our old Winnebago motor home equipped with two iPhones from AT&T but also cellular data from Verizon, I can say with some certainty that Verizon coverage was consistently better, no matter what the Times has to say.

But the real issue here, it seems to me, is the obvious gag order successfully imposed on giant AT&T by Apple. Now that part I believe.

Apple and Steve Jobs (they are one and the same) feel a tremendous need to control stories about them. No other computer company I know of has sued its own customers to silence them, yet Apple did just that a couple years ago. Steve Jobs now reportedly controls most of the copyrighted photos ever taken of him, which is why editors and TV producers keep using the same few shots over and over again. The company, too, imposes on its commercial partners a virtual gag order. That’s the case here with AT&T, which apparently isn’t allowed to refute Verizon’s network performance claims even if AT&T has contrary data.

I’ve seen this before. PortalPlayer (now part of nVIDIA) was under a similar gag order when I went there in 2006 to shoot a NerdTV interview. PortalPlayer designed the innards of all early iPods, yet the people I spoke with at the company weren’t even allowed to acknowledge that Apple was a customer, much less that it represented 85 percent of their business. “We aren’t allowed to say their name in any context,” my interview subject told me. “They want the world to believe that all iPod technology was invented in Cupertino.”

And so it is with AT&T where the wireless carrier reportedly could respond to Verizon’s claims but generally doesn’t because doing so might piss-off Steve Jobs.

That must be very frustrating for AT&T (unless of course, as I suspect, Verizon is correct in its claim to have the better network). But the kind of inferiority complex it implies — one that would have the company accepting such a galling deal from Apple — shows up near the end of a long history of bonehead moves by AT&T or by its earlier incarnation SBC — Southwestern Bell Communications — one of the original Regional Bell Operating Companies.

Consider, for example, SBC’s onetime ignorance of Moore’s Law, as described to me recently by a friend who used to work there:

“Do you remember Americast? It was a cable TV joint venture between SBC and Ameritech. I was involved in evaluating set top boxes for that mess. They finally settled on a box and in the telco tradition signed a contract requiring the manufacturer to make ‘the same box at the same price’ for 10 years. The execs who cut the deal thought they had really won big because (they were convinced) the cost of the box had to increase over the next ten years. But, they really signed a contract requiring the company to build a box that looked the same, had the same connectors and the same functionality for the next 10 years. Then I asked if they had figured-in Moore’s Law?

“They, being Telco Executives, had never heard of Moore’s Law. When I pointed out that the cost of the electronics in the box should drop by a factor of between 8 and 16 over that ten years, they denied that there could be such a thing as Moore’s Law or it would have shown up in all their other purchasing. About a week later my boss asked me to write a memo on Moore’s Law and hand deliver it — paper only — to the President of TRI, later known as SBC Labs, now a tiny part of what is left of AT&T Bell labs. I was later told that paper copies of that memo circulated widely among executives at SBC.

“SBC had a corporate purchasing culture based on the idea that everything gets more expensive over time. I guess that is an example of people who should know better investing in things they didn’t understand. In this case they had an entire building full of people who did understand the technology but were either not consulted or were ignored.

“The SBC executives didn’t believe they needed help because they were experts. I mean they had to be experts to become executives, right? ”

Right.

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Update — Good news!  Reader Scott Hall, who owns a card printing web site called Babyshere.com, offered to print our Christmas cards for less than FedEx-Kinkos would have charged.  Only a few hours later my cards are now literally in the mail.  Thanks, Scott!

Tonight I walked into the Fedex Kinkos store on Calhoun Street here in Charleston, SC to print our Christmas cards, only to have the clerk, Tammy Johnson, reject my order as obscene.

We Cringelys are known for our Christmas cards, I admit, because we make them ourselves and we’re naked. The tradition began by accident and now our cards are so popular friends remind us to send them.  Making naked Christmas cards that are tasteful isn’t easy, either, but we do it.  With three little boys you can only go  so long until they begin to realize they are, well, naked.  That leads in our family not so much to protestations of modesty as to demands for bribes. The price of this year’s photo session was $2 worth of sour gummy worms per kid. Yum.

This is the second year in a row we’ve been rejected by Kinkos. “I remember you,” said Ms. Johnson, handing back my USB drive with a look of disdain. It was hard for me to tell whether this was a different look of disdain from the one I got when Ms. Johnson had to put down her cellphone to serve me in the first place.

I appealed last year’s rejection to the store manager, a man. After all Kinkos — the very same Kinkos — had happily printed our cards the previous four years. We were posing last year in a fishing boat, wearing life vests, strategic shadows, and nothing else. “I see something there, ” said the manager, pointing at what would have been the groin of my six year-old if it hadn’t been well-hidden behind a light on the boat.

“What do you see?” I asked.

“You know,” he said.

“It’s a navigation light,” I said.

“I don’t think so.”

“It’s green,” I said. “It’s a green navigation light.”

Our cards show nothing. They are just for fun. Summer vacation photos that families print at the same store show more — lots more — than our cards ever do.

When we were rejected last year I was working two days per week in San Francisco, so I had the cards printed there at another Kinkos, South of Market. I told the whole rejection/obscenity story to the pierced and tattooed San Francisco Kinkos counterman, who found it hilarious. He threw-in a few extra cards for free.

The U. S. Supreme Court allowed years ago that obscenity standards could vary based on “local values,” but such values have to be uniformly applied. If a Fedex Kinkos in Charleston will print a picture of a girl in a bikini or a boy with his shirt off, then they should print my Christmas cards.

I’ll be calling Fred Smith, the founder of FedEx, in the morning. If enough of you tell your friends about this column before then, maybe Fred will be expecting my call.

Here’s the picture. What do you think?

Today I started moonlighting for AOL Real Estate where I’ll be posting twice a week.

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There is a funky dance going on right now between chip giants Intel and nVIDIA and I just want to cut through the crap and tell you that no matter what the companies are saying it is likely to end with nVIDIA being purchased by Intel. Both parties know it and the only thing that hasn’t been determined yet is the price, which is what all this posturing is about.

Intel this week cancelled Larrabee, its proposed graphics processing unit (GPU) that was intended to compete with both nVIDIA and ATi (now a part of AMD). The moment AMD bought ATi Intel had to decide whether to build or buy its own GPU to stay in contention. They decided to build, or at least said they had. It’s hard to say how viable Larrabee ever was but at some point it turned from a weapon against nVIDIA to a barrier to Intel buying nVIDIA. So Larrabee had to go, because without that chip Intel presents a much less imposing target for the Department of Justice and Federal Trade Commission which might oppose a merger on anti-trust grounds.

With Larrabee, Intel could be seen as crushing a major rival. Without Larrabee, Intel is just trying to enter a new market.

Intel wants nVIDIA not just for its GPU’s but also for its mobile chips. Mobile is a big part of the future of computing yet Intel in 2006 cancelled its business aimed at handset makers, writing-off $5 billion in the process. Remember that? Despite attempting to back-in to the market again with its upcoming Moorestown post-Atom low-power processors, what Intel would really like are nVidia’s superior Tegra AXP chips aimed at mobile phones and media players. Ironically nVIDIA didn’t even design the Tegra processors, which it bought a couple years ago with Portal Player.

Intel had to do something the minute AMD bought ATi. Now with Larrabee gone Intel has no real choice but to buy another company to remain in contention. The only such company available is nVIDIA.

Notice how Intel has been making a serious effort lately to settle the anti-trust cases pending against it, especially with AMD, to which Intel is paying $1.25 billion. Yet against nVIDIA, the legal action actually appears to be heating-up. Why would Intel hold an olive branch for all the others yet still oppose nVIDIA? Again it is to drive down the price of an eventual acquisition and Intel has nothing to fear from an nVIDIA legal case if its actual intention is to buy the company, retiring the lawsuit.

But the action is not all coming from Intel. Last month nVIDIA announced they were suspending development of chipsets for new Intel processors. Later we read that nVIDIA was going to release a chipset for Intel’s Lynnfield processors only to have Intel question the validity of nVIDIA’s license to the Intel’s Direct Media Iinterconnect (MDI) technology, which connects Lynnfield processors to the chipset. Both companies are talking tough and so far nVIDIA has not released a product that supports Intel’s Core i7 or Core i5 processors, yet without Larrabee Intel really needs that support no matter how much they fume.

Meanwhile nVIDIA has its own Ion low-power System-on-Chip for portable Internet devices and, inspired by AMD/ATi’s Fusion forthcoming CPU/GPU hybrid, nVIDIA has been working on a similar chip of its own. Intel reportedly was, too, with Larrabee, but now that’s over.

Intel could effectively block the nVIDIA hybrid processor through the MDI licensing ploy, above, and doing just that would have worked to the advantage of both Intel and AMD while Larrabee was still viable. I suspect this may have been a big part of Intel’s reason for settling the AMD anti-trust suit. It may have been part of their argument to AMD, too, about why the smaller company ought to settle at this time, because doing so would remove an nVIDIA threat. The big question is whether Intel knew at the time that Larrabee was doomed? If they did, then the real plan was for Intel to absorb the nVIDIA hybrid processor and make it its own, which they can effectively do now that AMD has promised not to testify against Intel under any circumstances as part of their legal settlement.

That would be Intel turning the tables on AMD, which may have been suckered.

If this reads like a huge conspiracy theory that’s because it is.

But sometimes conspiracy theories are true.