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After years of listening to game podcasts, I have to say this is E3 2011 edition of the Bombcast one of the best conversations I have ever heard about the Xbox.

I give full credit to Indie game star Jonathan Blow for asking the questions. Why is your platform so closed? Why does your interface force me to watch advertisements? Ironically, I've only heard about Blow because of his game Braid on the Xbox but he is clearly no mindless fanboy and his insightful comments kept it real.

What makes the conversation so special is that the other guests are two Microsoft regulars, Stepto and e. This conversation is almost painful to listen to at times which illustrates how rarely anyone asks meaningful questions in the media. Blow and I seem to agree about a lot of the same things so the talk was great for me to listen to but I think it is also useful for Microsoft.

Blow's questions brought up a number of small issues that actually touch on serious/significant aspects of the company culture.

Microsoft's culture is completely corporate. You get ahead in a large company by being liked, managing risk, and avoiding uncomfortable questions. The company generally ignores or disdains anything that we dont make ourselves. Despite the fact that the Xbox division has lost money almost every year it has existed and it is not even close to reaching the market size of the PS2 or Wii, the Xbox division sees itself as a mind-blowing success. I think these factors create a dangerous mindset for a business in our world of intense competition.

On a personal level, I am a gamer who loves gaming. I currently own 6 game platforms and I want to hear people who love games tell me about games wherever they are. I want to hear the good and the bad to help me be informed and make decisions. The idea that any platform is always good is childish.

For a while I listened to Stepto and e on the Major Nelson podcast. Eventually I stopped listening because it felt like too much of an infomercial for Xbox. While the cast seemed like nice people, all they did was talk about how great Xbox is. Even multi-platform games were discussed as if they only existed on the Xbox. That wasnt the game criticism I wanted to hear so I went back to listening to game journalists.

When Blow complained about being required to have achievements, the Softies said they had to do it because "people complained". To which Blow said: "That's when you sack up and tell them no." Amen brother. When people act like children, adults say no. Do people ever complain about Apple? Does Steve Jobs ever say no, you cant have multitasking or cut and paste? Just because someone asks it doesnt mean its the best idea.

The thing is, corporations avoid saying no (except to lawsuits) because it means someone has to think about the issue and make a decision and by doing so, that person takes the risk of screwing up and getting fired. Taking a risk by making a bold decision really is the worst thing you can do at a large corporation because you might screw up; job number one for corporate survivors is avoiding that situation by hiding in a group or by trying to please everyone. Whether the feedback is from partners or customers, Microsoft's corporate culture is very strong and starts with our CEO: be everything to everyone. Picking and choosing based on our design taste or creative vision are a huge no-no.

As part of the Microsoft talk, two other companies were mentioned: Apple and Valve.

Valve is a company of gamers for gamers. While they started as a PC game company that have evolved. They understand that they provide a service not a product; they bring games to gamers wherever they are. Windows, OSX, PS3, wherever. Blow complimented Valve for making it easy for him to sell games and reach gamers. I cant say enough good things about Valve.

Apple is an even more interesting comparison. For years I have heard that CEO Steve Jobs hates buttons (hence the no-button Mighty Mouse) and games. Apple does not make any game devices. They do make the hottest new gaming platform (the iPhone and iPad) which have created an entire new genre of touch gaming yet both products ship without a single game. Not even some crap like Minesweeper or some faux-intellectual stuff like Chess.

What Apple does make is a great platform for developers (Cocoa), great hardware, and they provide a platform that makes it easy to find, purchase and use software apps. Apple doesnt do games but they made it easy for other people to make games and touch gaming exploded immediately after the iPhone launch.

Blow is correct in his assessment. Touch gaming took off because of the sheer number of developers trying to make games on an easy to use, easy to distribute, open platform. iOS is nothing like the Xbox or PS3 or anything from Nintendo.

Despite Job's reputation for disdaining games, Apple has a bone fide top class gaming platform. iOS gaming is a big threat to all gaming hardware platforms because it is so popular and games are so cheap and there is only so much time customers can spend on gaming.

It may be inside baseball but the conversation illustrates that the culture at Microsoft is one of its biggest threats. Telling yourself how great you are, trying to be everything to everyone, and trying to control the platform will make it hard for Microsoft to grow and evolve. The Xbox is a major gaming platform with dedicated customers but it could be so much more.

By all accounts, MSFT ought to be THE gaming company because it essentially created PC gaming with Direct X. Remember Games for Windows? *cough* PC gaming is a lost opportunity for the company because the culture sees gaming as a product not a service. MSFT doesnt think of providing games to gamers wherever they are; MSFT sees gaming as a single product, Xbox, and as a result it has basically killed off PC gaming and ceded that market to others like Valve. One might even argue that until this year, Microsoft saw Xbox as a single game or game type (Halo and Gears).

The Microsoft press conference showed some interesting stuff but it remains to be seen whether the company has the vision and cajone's to tie that "stuff" into a coherent environment that people want to be.

Yeah, the first hour of this conversation was great. Despite our corporate slogan about unlocking potential, there is a lot of gaming potential Microsoft has yet to capitalize on and it wont do that without more frank dialogs like this. Way to go Jonathan.

It's Comcastic!

When basketball season ended, we cancelled cable TV, saving about $60 a month. And life continued.

Turns out there is plenty of entertainment for our "television" screen out there for free. Instead of cable TV, we are watching OTA television, Hulu, Netflix on-demand, and ESPN3.

Comcast was nice enough to leave the free over-the-air (OTA) channels on the cable itself so we dont have to mess with an antenna. Using Sage TV software on a Windows 7 PC, we are able to record and watch PBS and the major networks just like we would with cable. Even better actually since these channels are in HD and unscrambled so we can record them with our home theater PC DVR.

ESPN was nice for sports but most of the ESPN content is also available on their online site ESPN3. Some shows are only available during the broadcast but most are available on demand for a week after the actual event.

Netflix on-demand is fantastic. I find that Claire and I spend most of our time with this service.

Hulu is also great but mostly for broadcast shows during the season and for anime that does not have the same restrictive licenses as the major network shows.

Life with high speed Internet but without Comcast is worth living after all.

HTPC update

This change also made me realize that I may have build my last Windows PC.

Our HTPC was pretty long in the tooth. A single processor that was 4+ years old. It has been a solid performer for years but it just could not keep up with the demands of Adobe's CPU hog known as FLASH. Apple is right to criticize the performance of FLASH, which is a dog. Trying to watch the jerky, low-rez version of the World Cup on ESPN3 was the final straw.

For about $300, I bought a new entry-level AMD CPU, motherboard, memory and a nicer case to rebuild our HTPC. Then I spent a half-day putting it together.

• For $100, the Lian Li case is half the size of our old PC. It does not look like a "stereo" but it is small and distinct enough to look decent and still give us flexibility.
• We kept our Hauppage PCI TV capture card for recording HD TV shows with cable or an antenna, and the SageTV software for running a PVR. (Although about the only TV we watch this way now is the news.)
• The CPU is a dual-core and the motherboard has on-board video from ATI. I was worried it would not keep up but it does just fine with HDTV so we got rid of the separate $60 video card I had.
• The most exciting addition was a remote touchpad/keyboard that fits in my hand for about $40. This was my main point of frustration with the HTPC system that I was never able to solve. Who wants a huge keyboard on the coach or wants to get up to use the keyboard across the room?

The new system is half the size, quiet, and performs like a champ.

FLASH video from Hulu and ESPN3 looks great at the highest quality level. No complaints now. (Netflix always looked great because it uses Silverlight not FLASH.)

I considered moving to an Apple system for the HTPC but ruled it out for cost. We would need to spend money on a TV capture method that I already owned and the Apple TV does not provide full browser support for Hulu and ESPN3. So I stuck with Windows.

Is this the last Windows PC I build?

the end of Windows PCs?

The HTPC and my gaming PC both run Windows 7, but the rest of our computers and devices are all from Apple. Two iMacs, two iPhones, and iPad and a few iPods.

My gaming PC is almost 2 years old and still going strong. For about 10 years, I have been building my own Windows PC's to game with. Every year or so, I replace something in the system. Our basement is a testament to those investments: a pile of worthless PC parts in their original boxes. While we have been re-selling our old Mac's on Craiglist for about 50% of what we paid for them, most PC's are worth next to nothing after 2+ years.

But is building PC's fun? Lately I think not. My hobby is playing games not building PC's (or worse, troubleshooting malfunctioning ones). Now that I spend more time playing console games, I really question the value of time spent building PC's to play games.

My next Mac upgrade will likely be more powerful than my game PC, with a better video card and CPU, which also calls into question why I have a separate game PC. Valve now has Steam for the Mac so I can get a number of games on my Mac natively...

So the end may well be in sight. With a 27", 4-core iMac, I will move to Bootcamp - one Mac that runs MacOS or Windows 7, as needed. That will remove a PC box and a monitor from my office and give us back some space while providing an even better experience. Sometimes it is nice to use my Mac to look stuff up while playing a game, but I can probably live without that.

The world keeps changing but the good news (for computers at least) is that the experience for users continues to get better.

Want to improve the quality of your product or service?

The number one, most significant thing you can do to improve your product quality is to reduce variation and create a culture that values variation reduction.

variation reduction

Reducing variation is one of the basic principles behind the Toyota Production System and the root of why Japanese cars had better quality than American ones. Reducing variation (and using statistical methods to look for variation) was a principle Edwards Deming brought to Japan after WW2. Deming worked with Japanese companies to create a culture of quality through reductions in variation and the rest, shall we say, is history.

Reducing variation is a basic idea that has been around for decades and I am kind of amazed at how few people have heard about it much less internalized it in the USA. While it is part of the culture in Japanese manufacturers, it is still a pretty foreign idea everywhere else.

Toyota was already legendary for their quality cars. When they had all those recall problems this past year, what was their response? Reduce variation by cutting the number of designs and the number of design groups even more than they already had. They doubled down on variation reduction.

The benefits of reducing variation are not just for manufacturing.

Do you frequently lose your keys or glasses or the TV remote? That is probably because you set them down randomly, ie a lot of variation. If you get in the habit of always putting them in the same place, you eliminate the variation and you always know where they are.

Lets say you are at a software company that makes several products. Several of them need to do the same task. The most common (but wrong) choice is to have each product write the task themselves. The right answer is to abstract the tasks and write it once in a reusable library that all the products can share. If the products want to customize it, they do that themselves or they change their design and stick to the common solution. This method will make it easier to test for problems, fix problems that exist, and it will create a common experience for users that is easier to use and understand.

Keep it simple, reduce the variation, and your quality with go up. Your productivity will also increase as there are fewer fires to fight and people are not repeating the same work.

Microsoft and Apple

A good example of the impact of variation is in personal computers. As it happens, the two largest personal computer systems in the world took opposite approaches to variation.

Microsoft Windows is unarguably the most popular desktop operating system in the world. 9 of 10 personal computers run Windows. While Windows has been successful, the business model is based on increasing variation. Microsoft only writes the software OS; it relies on thousands of hardware partners to make the actual PC's that we all buy.

A PC is actually a complex system. The CPU, motherboard, memory, video card, hard drive, power supply... all these components are designed and manufactured by different companies. Yet other companies take these parts, assemble them, add Windows and sell it to consumers.

Even though the "PC" is something of an open standard and companies are using the same basic designs, there is a ton of variation in building them. Using a different capacitor or a different factory can be the difference between "it works" and "I keep getting a blue screen". On top of that, many of the companies have different designs altogether.

All of these products ultimately run the Windows operating system and consumers associate their experience with Microsoft. Microsoft is responsible for their quality and the quality of their experience. Microsoft has to test them.

Testing software involves a test matrix. Take all the combinations possible, put them in a matrix, test each case to make sure it works. Even if you only stick to the highest level and list the number of products from each consumer PC company, that matrix is gigantic. Frankly it is a miracle that the PC works at all given its high level of variation. Your average consumer has no idea how much effort goes into making Windows work on so many hardware products.

At the other extreme is Apple.

Apple makes everything itself. It writes the software OS and designs the hardware which it then contracts out to manufacturing. Apple products are all controlled by a single company from start to finish. There are no clones, no partners, just Apple. Right from the start, Apple has reduced the variation people experience with an Apple product.

Apple has further reduced variation to the handful of models that it makes and supports. To reduce variation over time, they make their OS very inexpensive and expect users to upgrade. This allows them to focus only on the current products and spend very little time fixing past mistakes.

Even Apple's design philosophy is based on cutting features, reducing options until you only have the most needed things for a good experience. Critics argue that Apple products are too limited but Apple argues that good design stems from making decisions and limiting variation. (Although they dont use the variation word.)

While Microsoft 's test matrix is incomprehensibly large, Apple's test matrix is manageable.

the consequences

And the results?

The overall Apple experience is consistently better. By focusing on reducing variation in the hardware and the software, Apple has built a reputation for quality at the consumer level. Apple products just work. Fans know that Apple products wont do everything but they are confident that what the products do do, they do well. Measures of brand loyalty, brand recognition, revenue growth and stock price indicate that Apple is doing something people like,.

Despite Herculean efforts, Microsoft has the opposite reputation for many people. Window's PC's are complicated and break easily. You have to update video drivers, or call friends, or hire the Geek Squad. So many people spend time on tech support phone calls, it is a common cultural experience and running joke.

I would argue these two experiences ultimately stem from two different approaches to the principle of variation. Apple cuts variation and delivers higher perceived quality. Microsoft tries to give everyone everything and falls short. In effect, Microsoft chose the biggest hill to climb and then grows that mountain over time with even more choices. Microsoft's model requires them to expend increasing effort just to deliver the base level of quality.

In recent years, even Microsoft has been making an effort to reduce variation because someone recognized how much it costs. Specifically they have been reducing the test matrix by cutting support for previous products (which also have to be in the test matrix). Windows Live Messenger used to support many different versions; now they just support the current version and the previous version. Microsoft has also stopped supporting Windows XP. Even though there are a lot of customers using XP on new hardware, Microsoft needs to reduce its variations and stick to the current version and the previous version, Windows 7 and Vista respectively. It is just a start but still a good sign for consumers.

a variation culture

So think about variation. Once you understand the significance of variation, you will start to see examples of it everywhere in your personal and professional life. Once you see it, you will see it everywhere.

Unfortunately that is just the start. The real impact comes from a culture of variation reduction, whether that is in your household or your company. Deming recognized 50 years ago that quality does not come from individuals, it comes from the culture individuals work in.

If you are the only one in your group that is trying to reduce variation, you will go insane. Your efforts will just feel like extra work to other people and the result will probably be even more tension and frustration.

Culture's that dont appreciate the principle of variation reduction are still trying to get better quality and the result is probably a culture of fire fighting. New problems never stop coming up, people work harder and harder to deal with the symptoms but they never make time for fixing the root cause, variation. The result is overwork, lower productivity, high stress, and frustration. Most cultures get addicted to fighting fires and fail to realize that the best approach to fighting fires is to prevent fires in the first place by reducing variation.

So once you see it in your own life, you need to try to get others to see it too and help create and spread a common understanding and culture about variation. "I am not asking you to do extra. If we do it this way, it is actually easier. There will be less problems and we will have more time to do other things." The principle of variation is a subtle but powerful mindset change that will have significant impact over time.

There have been a number of articles recently about Microsoft and Apple. While both companies are well known brands, most comparisons miss the fact that they are completely different businesses.

This history of IBM, Microsoft, and Apple also tells the tale of the "personal" computer.

Once upon a time computers were room-size mainframes, all computers were used for business and THE business computer company was IBM. IBM was serious business.

In the 1980s tiny startups appeared trying to create “personal” computers, maybe even put a computer on every desk. This was heresy to Big Blue but IBM was powerless to stop it and eventually even they got in the act with the IBM PC. The world of computing profoundly changed.

Fast forward 30 years and everything has changed again.

IBM still makes mainframes computers but their visibility has been greatly diminished as business focus has moved from the back-office to the desktop. IBM eventually gave up on desktop computers altogether and re-invented itself as a "services" or consulting business.

Microsoft has changed too. It has replaced IBM as THE business computer company. Business computing has shifted from mainframes to desktops and Microsoft makes the OS and the productivity software that runs business globally. Once the champion of "personal computers", Microsoft’s focus has changed from the personal computer to “enterprise software”.

And then there is Apple. Apple was the David to IBM's Goliath in the 1980's, pushing hard for personal computers. For decades it quietly made desktop computers that felt more personal, the PC for the rest of us so to speak. In the 1990's, Apple tried to get into serious business and floundered badly. The company almost went out of business but its loyal following kept it alive churning out desktop computers. Then CEO Steve Jobs returned to the company and things started to change. A lot.

It wasn't obvious at the time but it is now. Apple has reinvented the idea of a "personal" computer by taking the idea to the next level. It is not about a computer in every desktop anymore; We have that.

The next stage of personal computing is a computer in every pocket or backpack. Apple has emerged as the company pushing this vision harder and more successfully than anyone else.

It is pretty amazing how much Apple has changed in the last 5-10 years. As proof, look at their income statements and you will see a desktop computer company that has reinvented itself as a portable computer company. Apple built a solid, extendable foundation with MacOS X on the desktop and then they expanded: first laptops, then iPods, then the iPhone and now the iPad.

Apple still makes a tidy profit with desktop computers and they sell more Macs then ever before but after less than 3 years, 40% of their revenue (40%!!) comes from the iPhone alone. Add in iPods and iPads and one can see the future. Apple is now a mobile computing company. With iPhones selling in Wal-Mart? You can expect that trend to continue.

This transformation is also why Apple’s stock price has taken off and Microsoft’s has cratered. Enterprise software is for business and every business has a copy (legal or otherwise) of some version of Office and Windows. Enterprise software is a mature business which is driven by upgrades not new customers.

Almost everyone that can afford a desktop computer already has one but how many people have a pocket computer? If every person buys a smartphone and every other person buys a tablet, Apple stands to make a lot of sales to brand new customers. These are growth businesses not mature businesses and Apple products have emerged as "affordable luxury" items in these markets. Apple's devices are aspirational in segments that represent enormous future sales opportunity. The stock prices reflect that.

While Apple, Microsoft and IBM are often compared and have a shared history, they are different creatures today. IBM was mainframes and became services. Microsoft was personal desktop PC's and became enterprise software on the desktop. Apple continues its journey as the "personal computer for the rest of us" as an emerging mobile computing company.

And the story continues. How will things look in another twenty years?

Microsoft Bing is in the news again the past week.

Microsoft looks to expand Bing

By NICK WINGFIELD And JESSICA E. VASCELLARO

JUNE 10, 2010

"When you're the number two, you have to think outside of the box," Mr. Mehdi said.

I am a Microsoft shareholder. Microsoft definitely needs new businesses. Our stock price is being punished because of our lack of growth but...

Is paying customers to use our product really "thinking outside the box"? It would be more precise to say that is thinking "outside the business."

Building a search product that is different and has a different focus from Google is smart. It differentiates us but the cost of the massive investment and the goofy advertising is questionable.

We need profitable businesses that can grow. We dont need vanity business that continue to suck resources year after year. Our CEO calls those "strategic bets" but I call them expenses. If there is no return on the investment, there is no business and that is why our stock has steadily lost value over the past 10 years. We tend to invest without returns.

If Bing+Yahoo is 30% of the search market and you cannot turn a profit with a third of the market, something is wrong with your business. Either the business itself is a bad one or you are lousy at execution. Losing money on every sale and trying to make it up in volume is not a recipe for profit growth. I am hoping for the best but Microsoft's consumer-focused products dont have the best track record so far.

If I asked you what "BPOS" stood for, what would you answer?