This Christmas I added a Windows server to our home network because my kids were finding some favorite programs were unplayable over their RDP (Remote Desktop Protocol) thin clients. So I bought a very inexpensive Windows 7 desktop and for $89 at Walmart added Microsoft’s Anytime Upgrade to Windows 7 Professional, which is needed to support remote RDP desktops.  No luck with the RDP deployment so far, though, because MICROSOFT’S ANYTIME UPGRADE WEB SITE HAS BEEN DOWN FOR THE LAST TWO DAYS.

This is no way to run a business, Microsoft.  My kids want their FusionFall.

I would have understood had the site really been down for maintenance as it says, but two days isn’t maintenance.

It would have made better sense, too, had the fail screen not required me to every time submit all my information before telling me the site was unavailable.

People who are headed to www.windows7.com/getkey are there for only one reason and if Microsoft knows that reason is unavailable, why not just put up a big OUT OF ORDER sign at the door and save us all some work?

So far I have wasted an hour of my time on this.  Multiply that by the thousands (maybe tens of thousands) of would-be Christmas upgraders just like me and you have a prime example of how companies fail to respect their customers.

Fourteen years ago I gave a speech to the National Association of State and Provincial Lotteries at their annual meeting, held that year in Minneapolis. They gave me a hand-carved wooden duck decoy that’s on my bookshelf today. My topic was this thing called the Internet and what it would mean to state lotteries and organized gambling in general. I told them it would rock their world. And it has. But thanks to a ruling last week from the U.S. Department of Justice, the lotteries may finally be in a position to fight back.

What amazed me back in 1998 was that the lottery folks weren’t Las Vegas-type gambling executives but more like the people down at the DMV — pleasant and chubby civil servants there to collect the money, thanks. They were secure in their local gambling monopolies and had no idea that some outfit in the Channel Islands could steal their customers with a game of online poker. The state troopers would handle that problem, they thought, dimly.

I suggested fighting fire with fire — that the states promote their lotteries internationally, expanding their territories and making even more money. They looked at me like I had two heads.

Since then Internet gambling and Indian casinos have taken twin bites out of the lottery business. But last week the DoJ ruled that state lotteries don’t violate the Wire Act if they are conducted in accordance with their charters, that is entirely within state boundaries and not involving wagers on sporting events.

So now California is thinking of selling its lottery tickets online, which is exactly what I suggested 14 years ago.

Once one state does it most of the rest will follow. The customer base of the lottery business will expand and the margins for the states ought to grow higher, too, because by dealing direct the lottery can grab some of that margin currently going to lottery retailers. Of course those retailers will hate that so even more lawyers will shortly be involved.

But the writing is on the wall and this has real technological significance for both the gambling and Internet industries. Location services will become even more important as lotteries are required to verify that their customers are indeed within state boundaries. I see, too, a whole new class of geographical proxies used to defeat these new services. Where once it was the hope of anonymous web surfing or watching the BBC iPlayer from outside the UK that drove these location spoofing services, soon it will be  proving you are in Portland, Oregon, not Vancouver, Washington.

There are wonderful nuances to this, too. If I am a resident of a state but happen to be traveling outside the state, can I still legally order lottery tickets even though I am not home?  I don’t think that one has been answered.  Certainly if I am a visitor to a lottery state I ought to be able to order tickets even though my credit card issuer is in Canada or Tanzania, right?  So an effective local proxy could allow international gambling, which is in the interest of the states to allow, however thinly veiled.

And what about the PowerBall and other multi-state lotteries?  Where do they fit in this new system?

Will there even be physical tickets involved?  Why should there be?  And what’s the possible role of high frequency gambling — you know, the equivalent of high frequency stock trading?

If millions of tickets have been sold for a huge lottery jackpot with no winner yet identified, would it be possible for a syndicate or maybe a huge corporation to simply say “I’ll take all the remaining tickets, please,” reducing the odds to a certainty through one huge electronic buy?

Internet gambling is about to enter its own Wild West.

Kind of makes one long for the old days and those pleasant chubby people from the DMV.

There’s a very good TED Talk by Simon Sinek about how great leaders inspire companies by asking why?  I think it also goes a long way toward explaining why big companies don’t handle change well.  It’s not that they can’t ask why?, it’s that the answer doesn’t make sense at their scale, though it should.

The Dow 30 Industrials that make up that all-important stock average began in 1896 as the Dow 12 and of those original 12 only General Electric survives on the list today. None of the other 11 are on today’s list even under different names, though some of the companies do survive. Many of those former industry titans, though — companies like American Tobacco and U.S. Leather — no longer exist at all. In some ways that’s surprising since big industrial companies take decades to build and we continue to need most of the stuff they make, so what was the problem?

Times change and big companies don’t like to change with the times.

At the polar opposite position from big industrial companies sit startups, nearly every one of which begins with an effortless expression of why?  Big companies ask What? then How? but almost never Why? according to Sinek, who I think has it absolutely right. But good startups are motivated from birth by Why?

Nearly every good startup begins with why? and that why? is traditionally quite simple — because the founders want one for themselves. A hardware device or software application doesn’t exist and they’d really like one, so they invent it. For startups why is easy. If it isn’t easy then you probably don’t have a good startup.

If as a founder your answer to why? is “to get rich” you are in the wrong job.

Applied to a more mature company, looking at Apple we can see the why of the iPod and iTunes was “to take your entire music collection with you wherever you go.”

That sort of thinking isn’t common in big companies. Some of this is due to scale, some due to arrogance, and some to simply losing their way.  But no matter how big a company grows, asking why? is still vital for continued success. They just don’t know it.

Back in 1986 I helped write the business plan for Illustrator, Adobe Systems’ first consumer product. The Why? for Illustrator was “because (Adobe founder) John Warnock wants a drawing program,” which is traditional startup. As I recall the business plan had the new consumer division with a net-net positive cash position of $87,000 after five years. Millions invested creating an entire new business for a new set of customers through a completely new distribution channel for a lousy $87,000?

Most companies would never have done it.

Yet if you look at Adobe’s market cap of $13 billion today probably $12 billion of that is based on consumer and professional software that began with Illustrator.

That $87,000 grew to $13 billion over 25 years.

Adobe had an OEM cash cow business selling printer controller designs and software in 1986 but that could only grow so big.  And thanks primarily to Microsoft cloning Adobe’s PostScript, that OEM business would eventually decline and almost go away. PostScript is a small part of Adobe today.

This sounds to me like the position faced by many large, successful companies with mature product lines facing obvious challenges down the road. Such companies (I’m sure you can name a bunch if you think about it) see the problem approaching but are paralyzed by the need to envision $10 billion replacement markets. They can’t do what Adobe did in 1986 because there is no obvious Why? and $87,000 after five years wouldn’t even get before the board, no matter how important it really is to the company’s survival.

Adobe was lucky to have a curious founder still at the helm. It was lucky to be making enough money to risk a few million on an alternate future, too.

But 2011 is nothing like 1986. Looking five years ahead for business justification isn’t done any more. Heck, five quarters is a long time in business today.  But then the average CEO tenure is also, what, four years?

And that’s why big successful companies roll over and die.

I was speaking recently at a software company very interested in mobile apps. One of their concerns had to do with which operating systems to support.  Should they do them all?  Just a couple? My advice was that three’s a crowd.

Technical markets tend to divide like bettors at the racetrack where five percent win, 10 percent break even while 85 percent lose. Turning these numbers on their head and applying them to mobile OS revenue, IOS (iPhone, iPad, iGizmo to be named later) will generate 85 percent, Android 10 percent (because it is Open Source and free) leaving only five percent max for mobile OS number three, which could be Blackberry or Windows Phone 7 but can’t be both.

Notice this is all about revenue.  I’m not saying Android won’t have more phones in use than Apple, just that Apple will make a lot more money from its phones.

Since Microsoft feels it can’t afford to miss the mobile transition, they’ll do anything to hold at least the third spot, which is why I expect Redmond to eventually acquire RIM. That would actually be a better than usual deal for Microsoft. RIM has (residual and fading) market share as well as incredible talent at its Waterloo, Ontario HQ, not to mention a bootload of cash. What they don’t have is a clue, which is why they need Microsoft, which is clueless, too, but will at least provide desperate new leadership, mass, and marketing clout.

Hey, I think that was my first prediction for 2012!

Another option for Microsoft would be to embrace Android and reposition Windows Phone as a shell, making Android apps look and function like Windows apps. This is not as stupid as it sounds. Thanks to its aggressive legal department, Microsoft already makes more money from Android than does Google, so Android’s success can be seen as Microsoft’s success if you squint a little. Microsoft could specialize in Android services where Google might be letting users down a bit and the Microsoft/Android Application Store could sell apps for both OS variants, undercutting Google.

That’s prediction #2: If Microsoft doesn’t buy RIM they’ll license Android.

If they are really on their game Microsoft will do both (buy RIM and license Android) which would be a true game changer.

This potentially leaves a little room for other candidates for mobile OS position #3, but I’m at a loss for a good business case for even trying. Consider, for example, Intel’s new mobile OS project called Tizen, which replaces the failed Meego.

Tizen looks to me like a bad bet. Intel even championing a mobile OS against IOS and Android is spitting in the wind. The best that Intel can hope is to grab third place, which would still take a miracle.

Is a potential five percent market share worth Intel’s time?  I don’t think so.

Prediction #3: Tizen will fail in 2012.

WebOS, first from Palm and then from Hewlett Packard, came and went so fast most mobile software developers never even got a chance to play with it. Now HP has declared WebOS to be Open Source, placing the project (it’s really not a product anymore) under CEO Meg Whitman to show they haven’t totally given up on the mobile OS. But what is WebOS, really, in this new incarnation? Its potential is enormous — far greater than most people realize — but I simply don’t see HP and Whitman as being able to execute on the plan, if there really is one.

WebOS and its Enyo application framework are clever and elegant and have one important advantage over any competitive mobile environment, which is that they leverage a huge base of web programming talent. WebOS, while based on Linux, uses strictly HTML, CSS, and Javascript for application development — tools familiar to almost any web developer. So the learning curve for WebOS is very steep (steeper is better because you are learning faster) as opposed to, say, Android, which is also Linux-based but requires developers to learn an almost entirely new model (reusing only the language and core libs from Java).

So WebOS was simpler to start with and now it is free. Heck of a deal!  But what can people actually do with it.  In the HP world, plenty. Remember the plan was to put WebOS on everything HP made from printers to mainframes, sometimes co-resident with other operating systems like Windows.  HP could use WebOS as a sort of glue to more elegantly link system parts together creating a strategic advantage in the process.

Neither IOS nor Android are good at all things. Android plays well with its own services but doesn’t work nearly as well with Google’s other server-side offerings like AppEngine. IOS doesn’t like anything non-Apple.

WebOS could be for HP the glue that holds its systems together making it suddenly more advantageous to go all-HP bottom-to-top, especially for enterprise customers, where the money is. Imagine WebOS alternatives for, say, cloud data synchronization like iCloud and SkyDrive, two terrifically complex and closed products.  And by allowing third-party glue through Open Source, HP would be tacitly admitting that it can’t imagine or create every necessary component, so make one of your own, please.

HP would sell hardware, they’d sell high-margin associated services, but the heavy development lifting would be shared with a large cadre of Open Source developers. At least that’s what I imagine the plan to be: HP hasn’t been clear.

Open Source WebOS, then, is really an anti-IBM and Oracle (Sun) strategy more than anything else. So that’s what Leo Apotheker had in mind! But it can only work if HP makes WebOS truly open to the point of publishing APIs they might otherwise have kept hidden.

Whitman may talk a good game, but I don’t think her troops are ready to be that bold.  I think they’ll flinch, perhaps without even telling her, and make WebOS a little less open than it should be. And by doing so they’ll let WebOS fail.

Again.

Microsoft last week lost a potential European customer for its cloud-based Microsoft Office 365 product over concerns about the Patriot Act allowing U.S. government access to to private data. UK defense contractor BAE Systems said they’d changed plans on advice of their lawyers. Smart lawyers.

If we have to rely on lawyers for data security advice, we’re in real trouble.

Frankly I think the US Government and the Patriot Act would be the least of their problems.  If a defense contractor put their data on a public cloud service it would be an open invitation to Iran, North Korea, China, and others to try to steal it.

It boggles my mind that BAE even thought about putting their data in the cloud, yet stories quoting company officials show they were about to pull the trigger.

In many industries — but especially defense — there must be absolute data security.  They traditionally have had a rigorous process to control where data is kept, how it is kept, how it is accessed, who can access it, etc.  I am troubled by the notion of a major defense contractor letting an external service store their data and have them access it across the public Internet.

How much were they really saving?  How much were they really risking?

Along the same lines there’s the supposed cyber attack on the Springfield, IL water system.  Officially they have stated that nothing happened.  Okay, fine.  But this, too, begs the question: why are utility control systems even accessible from the Internet?

I appreciate the value of being able to call an engineer, have him/her access the system from home, and help fix a problem.  There might be a few legitimate reasons to make critical internal systems accessible from the Internet.  However if you choose allow the connection, then: (1) you need use the best security tools to manage the connection, and; (2) you need to monitor the connection and be able to sever it at the first sign of trouble. That didn’t appear to happen in Springfield

These are both examples of a generational gap in experience.  By laying off all the older engineers and IT experts, industry has created an experience gap in its technology work force and bonehead moves are taking place as a result.  Someone at BAE had no clue it might be a bad idea to put their data on the cloud.

How stupid was that?

Just a short thought. Apple has lost control of the iPad trademark in China but retains it in the rest of the world. Readers warn that China will be soon awash in iPad clones.

ProView Technologies, the Taiwanese company that presently controls the iPad trademark, was near bankruptcy until yesterday. Apple has $80 billion in cash.

Do we really think Cupertino will let go of an important trademark in what will eventually be the largest IT market in the world?

I don’t think so.

Verizon Wireless announced Friday that it was paying $3.6 billion to three cable TV companies — Comcast, Time Warner Cable, and Bright House Networks — in exchange for wireless licenses the companies bought in an FCC auction in 2005. Pundits are describing the deal, and especially its cross-marketing provisions, as revolutionary with the potential to change the way we communicate and are entertained. I doubt this. Rather, I think it reflects a failure of the cable companies to compete in other markets.

I remember this license auction and wrote about it at the time. New spectrum was being released and the MSOs were afraid Verizon and AT&T would snap it up to compete with them for video. So the cable companies bought the spectrum specifically to keep it out of commerce, which has been the case now for six years.  Mission accomplished. Yet the price they are getting from Verizon when you wrestle through the apples and oranges of varying licenses bought and sold at different times isn’t significantly higher than they paid back in 2005, especially since the licenses have produced zero cash flow for going on seven years.

But the point isn’t the price, we’re told, but the co-marketing — that Comcast can sell Verizon Wireless service eventually without even calling it Verizon or that Verizon will presumably resell Time Warner Cable or Bright House to the very folks it would rather buy Verizon’s own FiOS video package.

Yeah, right.

I think the co-marketing story is just spin and that not much will come of it.

We’re heading into a bandwidth war between DOCSIS 3 cable modems and fiber-to-the-curb services like FiOS. And while I can’t predict which side will win or lose this battle I can say that wireless service won’t be a factor in the decision.

Yes, we get e-mail and play Angry Birds on our smart phones and yes, 18 months from now all mobile phones will be smart phones, but the mobile transition hasn’t had any impact on our bandwidth use in homes or offices. It has just given us a way to consume even more electrons at lunch or in the car.  And for all the very real potential of Long Term Evolution (LTE) 4G networks, they can’t in practical terms serve enough bits to enough people at the same time in any city to be viable competition to almost any form of wired Internet, whether from the phone company or the cable company.  The physics just doesn’t support it.

Eighteen months from now many American homes will be where Japanese and Korean homes have been for sometime, sucking 100 megabits or more from the Internet. LTE can’t do that now or then and it can’t do half of that for a tenth or even a hundredth of the customer base of wired Internet.

Verizon needs the bandwidth because voice landlines are going away and it has to compete with AT&T, not Comcast. The new voice is all wireless. But at the same time, even 4G wireless will come to share analog voice’s sense of not being enough.

FiOS was deliberately designed from the very beginning with the good glass — fiber that can go to a gigabit and beyond. DOCSIS 3’s channel bonding and network segmentation will eventually allow full access to 70+ video channels for data service where currently most cable modems use one channel and some use two or three. No matter what way the wire gets to your house that wire will soon carry 100 megabits and then a gigabit that LTE never will.

Those wireless bandwidth caps are there for a reason.

Cable companies today make most of their profit from providing Internet service. FiOS and similar services are Internet services enhanced to keep subscribers subscribing, not especially to give them Wheel of Fortune.

This deal is the cable companies getting out of wireless because they can’t figure how to make money in that business.

Note — Reader consensus below seems to be that I’m the one drinking the Flav-r-ade in this post, so proceed at your own risk. That’s not how I see it, of course.  CNN asked me about this issue yesterday and I think it is pretty clear, but that may be in part a reflection of my background, who knows? Just as readers expect me to take responsibility for my words, I expect Apple to take responsibility for the performance of its products. The issue isn’t so much abortion clinics as what other big gaps exist in this service? When you call your doctor the recording says “If this is an emergency hang up and call 9-1-1…”

I don’t think Apple really wants to keep its customers from finding abortion services using Siri, the voice-based automated assistant built into iPhone 4S’s. But the company has been remarkably obtuse on the issue, making statements that deny intent, deny culpability, yet at the same time seem evasive. It’s time for Cupertino to learn a lesson in damage control.

Apple has been a charmed company since the 1997 return of co-founder Steve Jobs. Jobs enforced a culture of secrecy on Apple that worked well with its event marketing to make product launches really special and help Apple to become the success it is today. Elements of this strategy are refusing comment, making vague denials, deliberately delaying news or releasing out of cadence with normal news flow, in at least two incidents threatening or actually filing lawsuits against the media, or alternately not appearing to give a damn.

To paraphrase Steve Jobs, I don’t mean this in a small way, I mean it in a big way when I say this attitude appears to me to be by design and pervades the entire company, not just PR.

Visit any Apple store and you’ll see it. Those Apple kids in their t-shirts are friendly and helpful and good at their jobs but don’t you get the sense that they’re drunk on Flav-r-ade? They know what they can and can’t, will and won’t do for you and for all the tattoos and Converse sneakers they aren’t going to go a millimeter over that line. And then there’s their sense of time — AppleTime — which is different from yours and mine, have you noticed?

They live in the zone, while we’re just visiting.

This is fine when things are going beautifully and customers are lined-up down the block, but how well does it work when things aren’t going right, like in this Siri situation?  Badly.  Apple comes off looking insensitive and smug.

They blamed the problem on Yelp, its supplier of local business data, which could well be correct, but Apple never said “and we’ll fix it right away.”

They blamed the problem on Siri being in beta. I didn’t know that, did you?  Siri is part of IOS 5, is that in beta?  I didn’t know that and I suspect most of the folks at Apple didn’t know that.  In fact I might even go so far as to wonder if it is even true?

Blaming beta software for bad performance is Google’s bag, not Apple’s.  That was a stupid PR move and stupid PR moves happen when companies panic.

Which suggests a leadership vacuum of sorts at Apple.

With Steve Jobs gone, the company has told itself and told the world that it won’t try to second-guess Steve’s ghost — no asking “what would Steve do?” But what happens if they don’t have a ready answer to the question “What should Apple do?”

I think that’s what we are seeing here.

There’s a huge lesson for Apple PR in my movie Steve Jobs — The Lost Interview.  In one section Steve talks about how companies with monopolies (the examples he used were Xerox and IBM) get caught-up in process because — as monopolies — their content is almost immaterial to success.  If everyone is already buying your product then there’s little incentive to make better products so companies come to concentrate on themselves rather than pleasing customers.

Ironically Apple appears to have fallen into this very abyss. They are so caught up in their own process of information and damage control that the actual problem with Siri doesn’t appear to matter to them. Their statements suggest things will improve in a few weeks. This is an example of AppleTime.

Why should it take that long to fix?  It shouldn’t and it won’t, but Apple appears to not want to empower us by communicating honestly.  They want to surprise us by fixing it by next Tuesday, yet don’t respect us enough to explain the plan.

Their first thought is to dissemble, not to accept responsibility. They seem to think solely about how this abortion incident could hurt them, not how it could be a chance to show Apple’s character — a chance to have character.

Everyone appears to be too busy covering asses and trying to control the process to actually fix the problem.

Maybe after 16 years Steve forgot his own lesson, but I’m guessing that if he read this column he’d get it right away. And Steve would learn from it, because he was one guy who wasn’t afraid to admit when he was wrong.

At least that’s what he says in our movie.

Sitting here in Santa Rosa drinking too much coffee while the turkey cooks I’ve been reading the Black Friday sale fliers and you know what’s missing? Desktop computers.  Radio Shack doesn’t even have a desktop on sale tomorrow and even Walmart has only one. This season marks the triumph of notebook and tablet computers I’d say, though not at chez Cringely. At our house we’ve just gone thin client, instead.

With five people in the house we’ve been making do with one desktop and three notebooks for family use (don’t mess with Daddy’s PCs). You’d think with the number of iPod Touches and Roku boxes we have as well that there would hardly ever be a squabble over computers but that’s not the case.

My decision to go thin client was not based on cost savings.  It was the most versatile way for me to create a standardized desktop computing experience. By repurposing as servers three computers I already had I was able to add five workstations (one for each person — even me) that can run any mix of Linux, Mac, and Windows applications.

Each workstation has a 23-inch Hannspree 1920-by-1080 LCD display ($139 at Tiger Direct) with a Chip PC LXP2310 thin client ($166 from NewEgg) literally Velcro’d to the back of the display. Add an extra-short DVI cable and generic PC keyboard and mouse and each seat runs around $350. But given that I can beat that by $52 tomorrow at WalMart for an HP desktop with an 18.5-inch LCD display, why go thin client at all?

There are several good reasons but the most obvious ones are ages 9, 7, and 5.

Little boys break things, spill things, and leave things out in the rain. The advantage of a desktop computer is you know where it is and have a much better shot at controlling access. They can’t put coins or toys inside a thin client. If they spill on the keyboard it’s a $19 replacement.  And with total parity in screen size and power (nobody ever wanted to use the netbook, for example) there’s no more squabbling.

Every application I own is available at every desk so my kids can learn to make fake ID’s with PhotoShop without putting at risk any family pictures. Every user is backed-up hourly and all storage is mirrored both on- and off-site.

Having set up three workstations for the kids I quickly added two more because I wanted to share their screen size versatility and speed.  Yes, speed.

I went a little overboard when it came to the Mac server, upgrading my 2011 Mac Mini Server to eight gigs of 1033MHz DDR3 RAM and a pair of RAID0 128-gig Solid State Drives with an external 1TB LaCie Thunderbolt drive. My original thought was that I’d use the Mini as my workstation while also running the kids in background using the Aqua Connect OS X terminal server, but Aqua Connect messed with the DisplayPort so I had to use the box as a pure server. And now I’m glad I did because it is, if anything, faster while still supporting all the external interfaces like audio, webcams, etc. that I need.

Best of all, computing at our house is now silent.  And for that I am truly thankful.