Peter Yared's Musings

Why Google is Ditching Search

2012-01-13T18:52:00.000-08:00

This post was also published on CNET and VentureBeat.

There has been a huge maelstrom about Google integrating Google+ into its search links. And it all misses the point.

Twitter and others are complaining that Google is throwing its massive 65% plus market share weight around and quashing smaller competitors. The reason Twitter and others are so threatened is that the pattern of shared links within Google+ provides a decent enough indicator as to what links are interesting. What's important is what's trending, and algorithms can get a sense of that with just a subset of everything that's getting shared on the Web.

The most interesting aspect of Google's move, however, is its tacit acknowledgement that its stalwart search links are largely irrelevant and might as well be replaced with social results. Google search results are essentially gamed results produced by search optimizers.

In other words, the search results that we supposedly value so highly are themselves paid placements, just like Google's keyword ads. It's just that in the case of search results, link owners have paid for SEO (search-engine optimization) to get Google's attention instead of paying for SEM (search engine marketing) to make Google give their links prominence. Either way, though, searches are mostly just producing ads by any other name.

In addition, Google's famed PageRank algorithm carries less and less weight these days, since fresh news and results inherently don't have as many inbound links as older content.
(If it helps, you can think of PageRank as a kind of paleo-social search--just one that moves way too slowly for the modern Web.)

As I've written in the past, Google well knows that its search results suck, and over the past few years, it has started to short-circuit those results by putting more and more direct "answers" at the top search pages. That, of course, makes the search results themselves less and less important.

As the screenshot to the right (click for a larger version) shows, ads and answers have started to push Google's quintessential search results below the fold into the netherworld of the Web. As it turns out, in many cases the actual "answers" to searches for airline flights or products are actually much more monetizable than ads.

At last year's D conference, Google chairman Eric Schmidt presaged the shift from links to answers, stating that "we're trying to move from answers that are link-based to answers that are algorithmically based, where we can actually compute the right answer." More and more, Google is simply going to answer your questions. Last month, it acquired predictive search company Clever Sense to accelerate this transition. New mobile search engines such as Apple's Siri also dispense with search links entirely and simply return a single answer.

So why not replace increasingly gamed and lame search links with socially curated links? The search results were increasingly irrelevant anyway.

Google Set to Surpass Microsoft in Value; Facebook is Next

2011-12-15T13:13:00.000-08:00

This post was also published on CNET.

Brace yourself for the next passing of the torch in the tech industry.

Google, the leader of the Internet era of computing through the aughts, now has a $200 billion market capitalization and is on the verge of passing Microsoft's market cap of $215 billion. Microsoft was the leader of the PC era of computing and continues to dominate the desktop, notebook and server software market for Intel-based x86 computers.

I've been closely watching the relative valuation of these two companies for almost four years--ever since I predicted that Google would exceed Microsoft's valuation. The recent stock moves must come as a high note for Google chairman Eric Schmidt, who competed with--and lost to--Microsoft at both Sun Microsystems, as its CTO, and Novell, as its CEO.

Google's market capitalization (orange line) is creeping up on that of Microsoft (blue line).
Source: YChart

IBM, which led the mainframe and minicomputer era of business computing and now provides software and services around such hardware, recently passed Microsoft's market capitalization as well and is now worth $221 billion.

Oracle, which led the client/server era of business computing is worth $146 billion, but early this year was near parity with IBM, Microsoft and Google. Apple, the leader of the post-PC era of smart phones and
tablets, is an exception with a market capitalization of $353 billion. However, Apple is currently at a peak level of accelerated growth and some Wall Street analysts are predicting that it will settle.

Facebook is reportedly planning a public offering next year at a valuation of $100 billion. Although many question this valuation as high, it is likely that the leader of the social era of computing will be worth as much as the companies that drove the mainframe, desktop, client/server and Internet eras.

Is Apple Vulnerable in 2012? You Bet

2011-12-12T21:20:00.000-08:00

This post was also published on CNET and VentureBeat.

After Steve Jobs was fired in 1985, it took Microsoft 10 years to catch up--and exceed--the technical and user interface innovations of the
Mac OS that Jobs helped create. Now, Jobs is gone and Apple is once again in a position of clear market leadership with competitors gunning to match its products.

Apple's rivals aren't taking a decade, however. Far from it. Google, Amazon, and Microsoft, along with partners such as Intel, Samsung, HP, and Lenovo are all heading into 2012 with impressive products aimed squarely at Apple's hits--the
iPhone, the MacBook Air, and the
iPad.

The iPhone alternatives

When you hold the Samsung Galaxy S II, the Galaxy Nexus, or other versions for the new generation of Android devices, it's clear why Samsung phones are now outselling the iPhone and why Apple is suing various Android handset manufacturers. These devices are a huge threat to the iPhone. The screens are bigger than the iPhone's. They weigh less and they're speedier.

The new version of Android, Ice Cream Sandwich, is almost at parity with the beauty and ease of use of iOS. Plus, the emergence of apps from Pandora and Spotify, both amazing music streaming services, make the iTunes library lock-in hardly a lock-in at all. In fact, more than 370,000 apps are now available for Android, including most of the ones that people want. Apple is adding great new features such as Siri, but let's not forget that Apple acquired Siri and the underlying voice recognition technology is provided by Nuance. Android already has similar apps and Microsoft's TellMe will not be far behind.

Conclusion: even before all these advances, Android was already outselling iOS. Apple's position in this war is weakening.

Up in the air

Here come the MacBook Air clones. Air-like notebooks based on Intel's next-generation Ultrabook components are going to be announced en masse at CES in January. I recently played with an Asus Zenbook, the Asus version of an Ultrabook. The Asus looked great and even had stylish metal keys that are far nicer than I had expected from the photos. It's not as if Apple has an exclusive on making computers lighter and batteries last longer. Apple was just the first to perfect it because it controls the entire system--the operating system and hardware right through to retail--and has the will and pricing power to push for what it wants among the component makers.

I use both Windows 7 and Mac OS on a daily basis and really can't tell the difference between the two anymore, mainly because I spend most of my time on Google's Chrome and Microsoft Office. Windows 7 actually has better desktop management--when I open or select a document it only brings that document to front, not every other document already opened by that particular app. Yes, the Mac OS is easy to use and stable, but stand next to the Genius Bar at a Mac store and you will see that many people have many problems, just like Windows 7.

Conclusion: most notebook computers will adopt the MacBook Air form factor, and Windows will not only maintain its tremendous market share, but possibly even retake Mac's recent gains.

King iPad is at risk

Tablets are a category that Apple completely dominates, with 80 percent market share. Android competitors have flailed, but Amazon's Android-based Kindle Fire is likely to outsell the iPad in 2012 due to its low price ($199). Amazon is focusing the Kindle as a cheap, content-consumption device rather than full-fledged tablet, and it's subsidizing the price in exchange for people subsequently purchasing movies, apps, and physical goods from Amazon.

While the Kindle Fire will nibble at the iPad from the low end, at the higher-end, $500-plus price range, full-fledged computers based on the ultrabook and Netbook form factors and Windows 8 Metro will begin to compete with the iPad, including hybrids with pivoting screens and detachable keyboards that effectively merge an ultra-lightweight notebook and tablet.

Conclusion: the iPad will dominate through 2012, but after that the iPad will be squeezed on the low end by the Kindle and on the high end by full-fledged touch-screen PCs.

Of course, Apple is not sitting idly by. It is rumored that Jobs left years of product plans behind and Apple is widely expected soon to enter the TV set business in order to further ensconce consumers in its vision of gadgetry. Apple's vast manufacturing volume enables it to get the next generation of components, such as screens and processors, before its competitors.

However, technology is accelerating faster than ever before and it doesn't take long for the competition to catch up. Apple's ultimate attribute, that of design and "taste," is almost like fashion. And as with fashion, being first doesn't mean you will rule the market; it just means that you are going to get copied. Remember, H&M sells a lot more Prada-like designs than Prada.

How the Touch Screen is Revolutionizing TV

2011-12-05T23:21:00.000-08:00

This post was also published on CNET.

The recurring rumors about Apple entering the TV set business are at fever pitch, with no less than former Apple President Jean-Louis Gassée recently jumping into the fray and joining the it-will-likely-happen bandwagon.

Gassée and I have been arguing about the idea of an Apple TV since 2008, when I was among the first to blog about the idea. Gassée had taken the position that since TVs are upgraded every five years on average, and computers every two years on average, melding the two would not make sense. The computer would make the TV obsolete too early.

Now, Gassée is usually right about Apple predictions, so what's changed?

In short, the TV set is on its way to becoming little more than a monitor that simply displays what's on handheld devices. Think about it: to be interactive, a TV no longer needs a computer built into it.

People are finally recognizing that the long-held idea of how Interactive TV should work--you look up something on the TV screen and interact with related content through some control--has been crushed by the emergence of mobile and
tablet touch screens. Sure, people want to interact--just not with the TV itself.

Nielsen reports that 40 percent of viewers are pulling out their laptops, tablets, and phones while watching TV to peruse the Web, find related content, and make comments on social media. New technology keeps making this more inviting. One example is Yahoo's IntoNow, an
iPad app that recognizes what program you're watching and adds the interactive elements, such as relevant Tweets.

The reason for the transition from interactive TV to simple TV is very simple: a touch interface is intuitive and common, while a TV interface is klutzy. It's almost painful to watch someone navigate a TV screen app using remote control. Even the perennial favorite television "app" known as the onscreen guide has moved to the user's hands, with products such as Comcast's Xfinity iPad app (shown above). New voice-activated technologies like Siri and the TellMe technology, which is integrated into Windows Phone handsets, will let you to talk to your handheld device to control your TV.

And increasingly, people are streaming the content from their mobile devices to their TVs, using technologies like Apple's AirPlay and the industry standard DLNA. This could be paid on-demand programming from iTunes, paid apps with content, such as my company CBS' "60 Minutes" iPad App, or YouTube videos. Essentially, anything you can see on your phone or tablet will soon be instantly viewable on your TV, just as if it were a computer monitor.

At the last CES conference, Vizio demonstrated a technology that will transfer a video being viewed from an Android device to the TV, rather than rebroadcasting the video the way Apple's AirPlay works. So once you decide to watch something, the TV will take control and download the content itself, and you can go back to using your handheld device to do other things without having to bear the battery and bandwidth of getting the content from the Internet and re-streaming it to a TV.

Now that TVs are becoming increasingly bound to mobile platforms, a successful product offering must be part of a tightly linked stack that includes mobile devices, apps, developers, and cloud services. These requirements leave us with just the three usual suspects: Apple, Google, and Microsoft.

Apple's Apple TV offering has been criticized as anemic, however it is the first to integrate handheld devices with the TV screen with the AirPlay feature that shows what you are watching on an iPad or iPhone. With its domination of the mobile and tablet market, and deep content relationships with iTunes, Apple is a strong position to deliver high-margin, stylish TVs that are fully controlled by handheld iOS devices that can transfer media to stream directly to the TV. These TVs would also include multi-user gaming, just like Apple's TV AirPlay currently supports multiple people with iOS devices concurrently playing the same game on one screen. As Steve Jobs biographer Walter Isaacson writes, TVs that will "be seamlessly synced with all of your devices and with iCloud."
Google has reset its Google TV platform after a disastrous foray into TV with Logitech. The new Google TV has a far better interface and also supports Android apps. Google is also starting to integrate Google TV directly into TV sets with partners such as Samsung, which is particularly interesting as Samsung is a leading Android handset manufacturer and could potentially provide integration between Google TV and Android handsets. In addition, the cable set top box Google acquired along with Motorola Mobility gives Google a nice inroad into consumer living rooms. Google is attempting to make YouTube a rich content experience by funding premium content and striking video on demand content deals. The next step for Google is to further integrate its mobile Android devices with Google TV so that they can easily transmit
content from one to the other just as Apple's AirPlay does.
Microsoft actually has a strong lead in this market, with its pervasive Xbox 360 console in numerous living rooms and and recent deals that will stream television content. It is likely that the new Windows 8 Metro-style tablets will be able to control the Xbox 360 media player, just like Windows 7 can currently control the now-defunct Windows Media Center. Microsoft is applying is new Metro user interface to the Xbox, in addition to Windows 8 and Windows Phone 7, so that all of its screens look identical. While many write Microsoft off, it has a cohesive, integrated strategy and the money and will to pull it all off.

While Google, Amazon, and Microsoft have leading cross-device platforms, Sony and Amazon are the dark horses here. Sony CEO Howard Stringer has said that Sony is developing Apple-like television. Sony recently struck content streaming deals and it's trying to reclaim its mobile business from Ericsson Sony should consider bundling its PlayStation 3 into its televisions to get a leg up here rather than embedding yet another Linux-based content OS or Google TV.

Amazon has a large streaming business, a "rekindled" mobile strategy with its new Android-based Kindle, and relationships with TV video devices like Roku. Amazon could acquire Roku and tie it to the Kindle in order to have a competitive offering.

The upshot of all this? TV is becoming more relevant in the age of handheld computing -- and that's a plot twist no one had expected.

Has Content Become Advertising for Advertising?

2011-10-25T21:13:00.000-07:00

This post was also published on CNET.

Since the advent of the Web, online publishers have had to create unique content to attract premium ad rates. Over the past few years, however, a flood of subpar content has seemingly taken over the Web, driven by high-growth sites such as Demand Media and the AOL-owned Huffington Post. These types of sites have enjoyed surging traffic by creating relatively simplistic content, repurposing and "aggregating" premium content, and gaming Google's search algorithm. But this strategy faces a growing backlash and as a result may have hit its natural ceiling, and that could create opportunities for new online-media models.

What makes subpar content subpar? Like pornography, you know it when you see it. Take, for instance, "news" articles that simply paraphrase and quote articles written by journalists, or simple "how to" guides that don't explain much and have no accompanying diagrams, videos or other edifying media.

The primary financial driver supporting subpar content is what's known as "personalized retargeting," where ads follow a users around the web. When you visit Zappos.com, for instance, the site places a cookie on your computer that tells an ad network you were just there. Zappos then pays a premium rate to "retarget"--to show you an ad inviting you to come back to Zappos.com long after you've moved onto another site.

If a publisher can get enough eyeballs looking at content, by hook or by crook and regardless of the quality of its offerings, it can sell retargeted ads against that undifferentiated audience. In this model, content has essentially become advertising for advertising--i.e., for retargeted ads. The price for a retargeted ad isn't even connected to the content of the site a user is visiting--all that matters is that the advertiser is reaching its targeted visitor again.
Understandably, performance marketers--those who get paid affiliate relationships, for instance--have jumped on retargeting. Top brand marketers, however, are much more sensitive to the context around their ad, which is why they are more likely to shun so-called content farms and embrace original content.

What's more, re-targeted ads are increasingly freaking people out. While many of us in the industry understand what's going on, others find it creepy to be tracked across the Web. A woman running a nonprofit showed me her Huffington Post home page and asked how HuffPo knew that she had shopped at the two e-commerce sites with ad units on the page.

When women running nonprofits are alarmed by ad targeting, politicians can't be far behind. "Do not track" legislation that will prevent third party cookies from following users around is starting to draw support in Congress. Germany's draconian cookie laws already prevent basic analytics--let alone retargeting--and similar European Union cookie laws are now becoming adopted.

It's important that U.S. privacy legislation not overreach, so that we can find a compromise between user privacy and how websites need to function. For instance, tracking a user across a family of sites--say from Google's homepage to YouTube--is not retargeting. There's value to users when a company can optimize how its family of sites works together.

Even without regulatory intervention, subpar content is starting to hit its maximum headroom. Consumers can only go to so many pages of drivel before they orient back to the good stuff.
In fact, there is a resurgence in premium content. The Huffington Post is hiring writers from the New York Times and the BBC and increasingly producing unique content. Demand Media, one of the leading purveyors of simplified content, recently announced that it was scaling back its content creation army of contract writers. YouTube is shifting from user submitted videos to premium produced videos.

In addition, Google has recently made a series of moves that make it increasingly difficult for subpar content to get Google traffic. The Google Panda 2.0 and 2.5 search algorithm updates have been optimized to return premium, non-repetitive content that users will value after they search, pushing subpar content further down in search results. Google News has introduced incentives for content sites to highlight unique content. Google also announced that it is no longer going to include the search terms that are used when it sends a user from a Google search page to a site, bringing a halt to the practice of tailoring content to match active searches employed by sites like HuffPo.

Just when retargeting is about to hit the precipice, premium advertising is on the verge of a revolution. Offline spend continues to pour into online. Ad targeting systems are starting to look at add social media behavior and a user's present and historical interaction with a site. Engagement ad units powered by companies like Flite and Aol's Project Devil are even integrating premium content into ad units.

The resurgence of advertising on premium content sites, in addition to the new and interesting ways for premium advertising to engage an audience is some of the reasons I recently joined CBS Interactive as CTO, so read what you like into my obvious bias. All in all, interesting and fun times are ahead in the world of premium content.

Face it: Steve Ballmer is Doing a Great Job

2011-10-03T22:40:00.000-07:00

This post was also published in VentureBeat.

In the wake of the CEO ousters at HP, Yahoo and Nokia and the CEO implosions at Cisco, SAP, RIM and Dell, it’s surprising people are still picking on Steve Ballmer. Hedge funders are calling for his head. Employees are complaining.

I am by no means a big Microsoft fan — during my five-year tenure at Sun Microsystems, Microsoft was a vicious, scorched-earth competitor. But I have to give credit where credit is due: Ballmer has done a remarkable job, especially in contrast to the leaders of most technology companies. Ballmer’s problem is that everyone expects Microsoft to be as good as Apple at entering into new markets.

The reality is that Microsoft has never been a technology innovator. People are nostalgic about the days of Bill Gates, when Microsoft supposedly innovated. However, under Gates, Microsoft copied other products relentlessly, even from its very beginning. MS Basic copied Tiny Basic. MS DOS copied CPM-86. Windows copied the early Mac OS. Word copied WordPerfect. Excel copied Lotus 1-2-3. Access copied FoxPro. Windows Server copied Novell Netware. Exchange copied Lotus Notes. Internet Explorer copied Netscape Navigator. C# and .net copied Java. All Microsoft has ever done is enter markets late and invest and iterate until it wins. On top of that, Gates used monopoly position to force adoption of ensuing products, a luxury that Ballmer has not had.

During Ballmer’s 10-year tenure, Microsoft has tripled revenue and doubled net income. Legacy products such as Office, Exchange and SharePoint have been transitioned to the cloud. Windows 7 is a huge hit with over 400 million licenses sold, and early looks at the upcoming Windows 8 are resulting in rave reviews. Windows Phone 7 is a very late entrant into the modern smartphone category, but it is already being declared the number three player, with its innovative user interface and upcoming distribution via Nokia. Some analysts even predict that it will outpace Android within a few years.

Even more importantly, Ballmer has shepherded Microsoft as a big player in two new and growing markets: console gaming and search. The Xbox now has 20% market share in the console market, with 45% year-over-year growth, and has led the way to motion-based gaming with its hit Kinect product.

According to Comscore, Microsoft’s Bing search now has 31% of the US search market due to its distribution deals with Yahoo and others. While some lament the amount of money Microsoft is losing on Internet services, the ad dollars will soon start to follow the eyeballs, as I personally experienced during my tenure at Webtrends where we provided search.

The scale of the losses has to be put into context with the scale of Microsoft. Yes, losing $2 billion a year on online services sounds really bad. Losing $2 billion per year to gain 30% of a $30 billion and growing market actually makes a lot of sense, especially when you are delivering $70 billion in revenue and $24 billion in profits. Microsoft lost billions on Xbox and is now in a leadership position in that market, and it will follow that same strategy with Bing search and Windows Phone.

The reality is that Apple and Microsoft are the only large technology companies that have been able to create new products. Cisco continually bought companies to grow their revenues until the party ended. Oracle and IBM have had the same strategy as Cisco and will both soon run out of legacy application and middleware vendors to acquire. Nothing new has come out of HP, SAP or Dell in a decade.

Although they both create new products from scratch, Apple and Microsoft have very different DNA. Apple creates new markets, and Microsoft eventually dominates them. Steve Ballmer is not going to be Steve Jobs, who is widely lauded as perhaps the greatest CEO of our time. Even Apple can’t get another Steve Jobs and now has a COO running the company.

Who do detractors think Microsoft should replace Steve Ballmer with? HP has gone through three CEOs in a year and ended up with Meg Whitman, a non-techie whose core eBay website to this day looks like it was designed in the mid-90s. The only viable candidates are IBM’s Steve Mills and VMware’s Paul Maritz, who likely would not change a thing strategically at Microsoft.

Microsoft shareholders should be grateful they have a CEO who has steadily grown both earnings and revenue, transitioned legacy products into the cloud, moved aggressively into new markets such as console gaming and Internet services, revived the mobile product, and is now transitioning the Windows product line towards a new generation of tablets and processors. Yes, Microsoft’s stock has been flat through the 2000s and the decade’s massive technology market transitions to cloud and smartphones. That’s a much better outcome than tanking like HP, Sun, Nokia, RIM and others, and Microsoft’s products are now very well positioned for the coming decade. Booyah, Ballmer!

Facebook is About to Feature Creep Itself into a Usage U-turn

2011-09-21T10:21:00.000-07:00

This post was also published in VentureBeat.

People use Facebook a lot. They use it to share photos. They use it to invite people to events. They use it as an address book and messaging system. They use it as a games platform. The growth has been so staggering that Facebook is by far the most popular website and can’t even fill its existing ad display inventory.

When a company has achieved complete market domination, it usually hones in on its core features and makes every effort to keep things clean and simple. This is the reason Google’s homepage and search results barely changed for 10 years while Google’s revenue and profits skyrocketed.

Facebook, however, has different ideas. Despite the often rumored Facebook fatigue, Mark Zuckerberg thinks that sharing will double every year. Now that we can already Like everything on the web, what else can we possibly share?

Enter the rumored Read/Watch/Listen features that are expected to be launched on Thursday at the Facebook f8 conference. Now, your profile will automatically be updated with everything you are reading, watching, and listening to. On one hand, it’s a pretty cool way to share content and see what people are consuming. On the other, it’s a whole new barrage of sharing activity when people are already sick of sharing. Yes, it’s cool to know that you liked an episode of CSI. Maybe I’ll check it out. But if that indicator is lost amongst the sea of every other bit of media that you have ever consumed, it doesn’t really mean much.

People definitely like to decorate their profiles, and unfortunately Facebook profiles are quite spartan and rarely updated. In the early days of Facebook Platform, people could add apps to their profiles like “Where I’ve Been” and iLike to show off where they’ve travelled and what songs they were listening to. The iLike model worked really well and people were not creeped out by it.

Sites like Clicker.com that partnered with Facebook early on for instant personalization already incorporate a stream of what you’re watching, but they’re localized and do not syndicate everything back to profiles. Users have been very comfortable with this type of functionality and have embraced it since it helps them navigate the content on websites. However, Facebook has historically had huge headaches when automatically syndicating activity back to a profile from a website, such as the 2007 user revolt over Facebook Beacon. I fully appreciate an attempt to make profiles alive again, but perhaps there is a middle ground between adding apps and automatically populating your profile with everything you’re consuming from around the web.

The biggest issue Facebook faces in rolling out new features is that its 750 million users already have a very clear definition of Facebook: photos, events, address book and casual games. Essentially Flickr + Evite + Plaxo + Yahoo Games. Users are kind of open to brands being part of this mix because everything else they use has advertising. Trying to get them to do anything else is like pushing a rock up a hill.

The average Joe absolutely doesn’t understand the new “subscribe” feature. For some reason, Facebook thinks my 16-year-old would like to “subscribe” to Sheryl Sandberg and Tom Anderson. What for? On Twitter people are following celebrities and the asymmetrical relationship makes sense. On Facebook — which already has Facebook Pages for celebrities and brands — the subscribe feature makes no sense at all. Instead, Facebook should have considered letting individuals automatically populate a Facebook Page from their profiles and add a “Like” button for the Pages to their profiles.

The new double newsfeed is completely perplexing. The bigger layout in the middle makes sense and completely apes the polished Google+ look with larger photos and more spacing. But the layout to the upper right with a scrolling feed of news is confusing. One of them updates by clicking; the other updates automatically. One of them has large fonts and a lot of space; the other has small fonts and is tightly spaced. One of them requires you to click to see more; the other one has a hover feature to see more. One of them uses the browser scrollbar; the other has a mini scrollbar that appears on hover. It’s like two websites got mashed into one. I am getting text messages from anthropologists in San Diego asking me what happened to Facebook today. In previous iterations of Facebook I could always explain why the new version was better. This time, I frankly have no idea.

Historically, Facebook has always iterated very quickly and added features quite capriciously, even if it pissed users off. However, the features were well thought out and eventually people grew accustomed to them. This latest barrage of features is quite far from Facebook’s core usage patterns and just doesn’t make sense.

Steve Jobs has left a generation of techies who are constantly asking themselves, “What would Steve do?” Definitely not this. Facebook, you’ve already won, it’s time to chill out a bit! Bigger pictures = good. Two completely different newsfeeds on one page = bad.

The Verticalized Enterprise Stack: Why HP Needs to Merge with SAP

2011-08-21T23:09:00.000-07:00

This post was also published in VentureBeat.

HP has had to face tough realities this week. Fortunately, there is a way for it to survive: Embrace the inevitable trend favoring “vertical” companies.

In the first part of the 2000s, IBM and HP went in two vastly different directions: HP acquired Compaq to bolster a horizontally-integrated PC business, while IBM sold its PC division to Lenovo and focused on creating a vertical stack of enterprise products.

In the early 2010s, HP’s decision to attempt to dominate PCs has come back to haunt it. Even though HP is the number one PC seller, the low-margin business doesn’t pay, so the company is exiting both the desktop and mobile consumer computer business.

Now HP needs to act fast to remain competitive in the enterprise.

Rule of three

Earlier I described how the consumer computing business is consolidating based on the “rule of three” economic theory and that three big players would dominate the industry: Apple, Google and Microsoft. To play in this market requires a full vertical stack, offering customers everything they need from hardware to applications. Competitive companies will need the ability to extract efficiencies between and from each layer: mobile operating systems, mobile devices, desktop operating systems, personal computers, web browsers, productivity applications, content distribution and cloud services.

Given the vertical integration required to play in the consumer computing business, it is no surprise that HP decided to exit. In order to compete, HP would need to build out cloud services, a desktop operating system, and more. Microsoft, with its domination of the desktop PC and productivity applications businesses, has already spent years and billions of dollars filling its gaps, and will continue to spend billions until it wins the number three spot. HP, and in particular its raucous shareholders, have neither the financial gumption nor a base of technology for an attempt to be the number three in the consumer market.

So it is a wise move for HP to exit the consumer computing business and focus on its enterprise business. However, HP is jumping out of the frying pan and into the fire, as IBM, Oracle and Microsoft have been aggressively building integrated enterprise stacks over the past decade. The rule of three is applying itself to the enterprise space as well, and HP is getting left behind.

Owning the stack

The importance of owning every piece of the stack is increasingly critical. When Oracle decided to end support for the Itanium processor, HP had no database of its own to fall back on and resorted to suing Oracle to support its platform. Both IBM and Oracle are optimizing their databases and middleware to run super efficiently on their respective operating systems, processors and storage. IBM started the verticalized enterprise trend in the early 2000s by widening the memory bus to its PowerPC machines in order to extract more performance out of its DB2 database, forcing Oracle to acquire Sun in order to match database performance.

IBM and Oracle verticalizing enterprise software and hardware is much like the consumer verticalization. Apple’s ability to create efficiencies by building its own iPhones and iPads is a big part of what forced Google to acquire Motorola Mobility. HP board member Marc Andreesen may be right that software is king in his new cloud investments like Facebook and Zynga, but in the hardscrabble world of enterprise and consumer computing, IBM and Apple have verticalized software and hardware and clobbered HP in both the enterprise and consumer markets.

So how will HP build a complete enterprise stack? HP’s acquisition of Autonomy is a great start and fills the gap in enterprise search to compete with IBM’s OmniSearch, Oracle’s Secure Enterprise Search and Microsoft’s FAST. However, HP still has huge gaps compared to its competitors, including collaboration software, business applications, analytics, middleware, and database.

HP’s gaps are perfectly filled by SAP. And SAP’s gaps in services, enterprise search, operating system, processor, storage and management are all filled by HP. A merger of SAP (valued at $60 billion) and HP (valued at $49 billion) would create a $109 billion behemoth capable of competing with IBM ($188 billion), Oracle ($125 billion) and Microsoft ($201 billion). Large mergers like this can be a disaster, but HP’s CEO Léo Apatheker used to be the CEO of SAP and worked there for twenty years, so there is one person who actually knows both organizations.

HP needs to move fast. HP should dump its printer business along with its other low margin hardware businesses, merge with SAP to get a full stack, and then go on a shopping spree to shore up the weaker parts of the combined HP-SAP stack such as EAServer, StreamWork and HP-UX.

We are about to see a scrum amongst all of the larger enterprise players to acquire companies at every layer, such as TIBCO, Teradata, Jive, Salesforce, Red Hat, and likely even my own company, analytics vendor Webtrends. Microsoft may even take another try at Intuit now that it is no longer a monopolist.

Otherwise both HP and SAP risk losing the third place in the rule of three to Microsoft. It should be noted that despite its detractors, Microsoft has actually had amazing execution over the past decade and is the only contender to hold its own in both the consumer and enterprise computing stacks.

HP and SAP need to stave off Microsoft as the small- and medium-sized business enterprise player, or they will both wind up being carved up and bought by IBM and Oracle.

Good Morning, Would You Like an Apple, Google or Microsoft?

2011-08-16T13:59:00.000-07:00

This post was also published in VentureBeat.

While it comes as a big surprise that Google is buying Motorola Mobility, it is just as surprising that Apple launched a cloud service that will eventually fully compete with Google’s services and Microsoft essentially turned Nokia into its own private Foxconn and will compete with Apple’s devices.

All of these moves actually fit economic theory perfectly: Personal computing is now pervasive throughout our society, and the 30-year-old industry is maturing into a “rule of three” phase, where three large players will dominate the industry: Apple, Google and Microsoft are the GM, Ford and Chrysler of our era.

Each of these “big three” players needs to build a full vertical stack and extract efficiencies between and from each layer: mobile operating systems, mobile devices, desktop operating systems, personal computers, web browsers, productivity applications, content distribution and cloud services. Now we know why Apple needs Safari, iWork and AppleTV. Why Google needs the Chromebook, YouTube video rentals, and Motorola. And why Microsoft needs Bing and Nokia.

Each of these products on its own merits doesn’t really make sense, but from a full stack’s gaps perspective, they make a whole lot of sense. It doesn’t matter if each product isn’t best-of-breed, because of best-of-breed just doesn’t matter anymore. What matters is that each player has each product and, over time, can improve that product and better integrate the product into its overall, vertical solution. Apple’s iCloud offering is nowhere near as good as Google’s and Microsoft’s offerings. But it is good enough to keep the Apple fanboys around, and that’s all that matters.

Over the past few years we have seen the same type of “insane” moves in the enterprise space. Why did Oracle acquire Sun and replicate Red Hat’s version of Linux? Because Oracle wants to play in the consolidated big three of the enterprise and had to match IBM with its full suite of business apps, DB2 database, AIX operating system, and PowerPC hardware. There are still some crazy moves left in the enterprise space, such as HP and SAP merging so that they can match IBM and Oracle.

The “big three” computer players now all have massive patent portfolios, and they are not likely to sue each other as it will be mutually assured destruction. However, they will be more than happy to tax niche players into extinction, much like HTC is paying Microsoft for each Android handset it ships. Even IBM, with its patent trove and aggressive IP monetization arm, doesn’t want to play in this fight, and sold its mobility patents off to Google.

So what’s next?

We can expect Microsoft to pick up RIM and HTC much like it picked up Nokia, lock down computer hardware manufacturers with stringent guidelines and add stores to compete with Apple on service. Apple will aggressively build out its cloud infrastructure and beef up AppleTV to fend off the XBox. Google will continue to beef up its productivity apps and focus on consumer hardware. All three will compete on the next generation of answers-oriented, Siri-like search.

Even the carriers could be in play, with former Apple President (and my two time board member and longtime mentor) Jean-Louis Gassée predicting that Google will acquire TMobile. Sound crazy? C’mon Google needs stores to compete with Apple and Microsoft. And owning a carrier just raises the stakes for the other two even further. It’s no crazier than Google buying Motorola. Game on.

Why Time Warner Should Reacquire Aol

2011-08-09T23:33:00.000-07:00

This post was also published in VentureBeat.

Aol released its earnings today a week after Time Warner, its former dot-com merger partner, announced earnings. The two businesses, once considered completely disparate and deemed one of the worst corporate mergers of all time, are now increasingly complementary as the industry shifts beyond delivery mechanism to content as the value differentiator.

Time Warner reported stellar earnings last week, with income up 14% year over year and strong 11% growth in television networks such as TNT and CNN, 18% growth for premium content such as HBO, and 13% growth for Warner Bros movies.

The one thorn in Time Warner’s side is Time, Inc. — the division grew a moribund 3%. The anemic growth at Time is coming primarily from online revenue, but it is a tough transition since Time does not sit on a premium editorial perch like the New York Times or Wall Street Journal. And although Time is currently profitable, the Time Warner CFO has warned that income will likely fall next quarter.

In the end, magazine content is just dull and is no match for the online content scrum. Time, with its weekly recaps of the news, has attempted to roll out tablet apps and implement a paywall, but there is no compelling reason to pay. Even worse for Time Inc., Americans are tiring of celebrity magazines like Time Inc.’s People magazine, which suffered a 10% decline in newsstand sales. Meanwhile, online pure plays like Sugar and Glam are growing in the category. So what can Time Warner do to accelerate the online growth of its magazine division?

Aol has significantly grown its content business over the two years since its divestiture from Time Warner. CEO Tim Armstrong has been incredibly aggressive, acquiring the Huffington Post, the leading online pure play for news, restructuring Aol’s various blog properties, and growing Aol video into the #2 video site according to Comscore.

Aol missed estimates today, and the market savaged the company with a 25% drop. However, there was actually some good news in Aol’s earnings announcement: Advertising revenue is now $319 million and growing 5%. The online content strategy is actually working — it is just bogged down by legacy dialup and longer-term initiatives like Patch.

Although on first blush it seems absurd, Time Warner could pick up Aol’s content division at a discount, shut down Patch, and divest the dialup business to Earthlink, just like it divested Time Warner Cable. Aol’s content business would accelerate Time Warner’s online growth, and technology such as Aol’s Editions iPad magazine viewer could help grease existing Time properties. And Time Warner, with its $31.84 billion market cap, can easily afford Aol’s current $1.2 billion price.

If you were betting on the future of news, would you pick Time or HuffPo? Time Warner is going to have to make a move here, and Aol just got a whole lot cheaper than Say Media or Glam.

Just like Google and Facebook, Twitter now Charges Brands to Reach their own Customers

2011-08-01T21:08:00.000-07:00

This post was also published in VentureBeat.

You know a web service has reached massive scale when it can charge brands to reach their own customers. Google has been doing it for years, Facebook has been doing it for the past couple of years, and now Twitter has just entered this hallowed territory with its new promoted tweets feature, which lets brands keep their tweets alive in your stream only if you have already followed that brand. The irony here is that you are only seeing these promoted tweets if you already followed that brand – so the brand is paying to advertise to users that already like it.

Now if advertising is usually about getting new customers, why would brands pay to market to their existing customers?

Many years ago, Google had a stroke of genius: to put ads above the search results and then charge brands to own the top spot where the brand inevitably would have been the first result. So when people search for BMW, BMW does not want Mercedes getting the top spot, so it buys placement. Nowadays, it is part of most every brand’s AdWords buy to purchase their own name. MarkMonitor, the digital brand protection company, reported last week that in sectors like finance and travel, nearly half of the ad buys are on the competition’s keywords. Although Google technically does not allow the purchase of trademarked keywords, the practice has become so widespread that some brands such as American Airlines have sued Google.

Facebook then jumped into the fray with its brand pages. First, a brand has to get “Fans” by getting people to “Like” its page. This is accomplished by special ad units on Facebook called Page Ads. Other options include “Like-blocking” an app on a page so that a consumer has to Like the Facebook page in order to get access to exclusive content, sweepstakes or deals. Once a consumer has Liked a Facebook page, the brand can then purchase additional Facebook ads such as Sponsored Stories targeting users that have liked its page, as well as the friends of the user that have liked its page. In effect, the brand is paying to advertise to users that have already said they liked it.

Twitter is following the Facebook model. First it charges brands to be a Promoted Account, which puts a brand in the “Who to follow” box on the Twitter homepage. Then, a brand has to buy Promoted Tweets, so that its message doesn’t get lost in the endless stream of tweets. Again, paying to advertise to users that have already said they liked its brand.

Over the past four years I have run numerous social marketing campaigns for big brands as the general manager of the social marketing platform Webtrends Soicial. We see a 7x increase in clickthrough rates when brands target their own fans on Facebook. Comscore recently released a report showing a 10% friend drag along for brands such as Starbucks, Southwest and Bing. I imagine Twitter will soon add the ability for brands to advertise to people following its followers, just like Facebook lets you advertise to friends of fans.

As I wrote in VentureBeat a couple of months ago, sending advertising to your existing users is akin to email marketing. A Promoted Account is the same as an email opt-in, and a Promoted Tweet is the same as sending your customers an email. Just a lot more expensive.

Very few companies have achieved the scale to charge brands to reach their own customers, and Twitter is now one of them.

JavaScript: One Language to Rule Them All

2011-07-29T23:35:00.000-07:00

This post was also published in VentureBeat.

The Internet is about to hit its fourth major shift in server architecture.

The early days were powered by simple Perl applications. As the dotcom hit, Java application servers running on highend UNIX machines powered the majority of the web and created a multibillion dollar per year industry. In the 2000s, scripting languages such as PHP and Ruby running on cloud based Linux infrastructure have spawned massive growth at companies like Rackspace and Amazon with its Amazon Web Services service. Each of these shifts in server architecture brought greater efficiencies and the ability to more cheaply deliver more sophisticated Internet services. We are now on the verge of hitting another inflection point with JavaScript running on the server.

JavaScript came onto the scene in 1995 as the browser language in Netscape’s Navigator browser and was primarily used to implement simple user interface elements such as menus. With the wave of Web 2.0 companies building out JavaScript libraries such as jQuery and various HTML5 extensions of late, JavaScript is becoming increasingly sophisticated and capable of delivering highly interactive web and mobile-optimized sites comparable to Flash sites. As websites become more and more interactive, an increasing amount of business logic and data processing is starting to happen in the browser with JavaScript rather than on the server.

The growing up of JavaScript is leading to a collision of sorts between the client and the server. Why use one scripting language on the client, and then a different scripting language on the server? PHP and Ruby programmers are constantly dynamically building DOMs, the document object model for a browser page that JavaScript innately understands. Programmers also have to transform data in and out of JSON (the JavaScript Object Notation) so that it can be understood by browsers. All of this work translating between languages causes errors and bugs, and forces unnecessary communication between front-end and back-end developers. Each language has it stakeholders claiming better frameworks and whathaveyou, but at some point the pain of translation outweighs these benefits. Especially when you consider that JavaScript programmers are widely available, and Ruby programmers are virtually impossible to find.

Imagine if you were building a house and the architects spoke only Japanese and the builders spoke only French. There is a lot of time and energy spent handling communication and fixing miscommunication between the two parties. The same problems happen when you use two different languages to build a web application.

Even worse, when code is written, programmers have to decide whether it is going to run on the browser or on the server. Things as simple as validating a phone number need to be decided before a programmer can start, and be assigned to either the front-end JavaScript programmers or the back-end PHP, Java or Ruby programmers. Once the code is written, if for whatever reason it needs to be moved from client to server or vice versa, it needs to be rewritten from scratch.

The fissure between client and server is even starting to hit large corporate websites that have barely budged toward scripting languages from Java. When you go to your bank’s website or favorite e-commerce website, chances are that it looks and works very much like it did 10 years ago. This is because most corporations perform all of the processing of a website on their servers. When you click on something on a webpage, it goes to the server, which creates a whole new webpage and sends it to your browser. While this is not the most efficient way to serve a website, it is definitely the most efficient way to create a website inside a corporation, since the programmers do not have to learn all the intricacies of the various browsers and can simply program in Java, the favored language for corporate websites.

The sudden preponderance of mobile and tablet devices has created a sudden rupture in the way that corporations serve their websites. It is very slow and cumbersome to completely refresh a web page every time a user does something on a phone with its relatively slow web browser and connection. Now corporate web applications need to be upgraded to HTML5 and be able to update themselves dynamically, just like the modern web applications offered by Google and all of the Web 2.0 startups.

There have been various attempts to productize JavaScript on the server over the years. Netscape acquired LiveWire’s JavaScript server and shipped it in 1996 but then quickly replaced it with the Java and C++ based Kiva Application Server in 1998. Aptana attempted to provide hosted JavaScript servers and ended up selling its development tools to Appcelerator.

Over the past couple of years, a new breed of JavaScript servers have taken hold and are starting to get significant traction. An open source JavaScript server called node.js is becoming increasingly popular especially for communication servers and getting a lot of geek and startup love. Last year, Sequoia invested in Sencha, a company focused on JavaScript client libraries that has also done work on node.js.

It all makes sense when you think about it. It took many years for scripting languages to be considered serious web languages and for significant client logic to be implemented on the browser. But now this is the normal way to create an Internet application. Why code in two different scripting languages, one on the client and one on the server? It’s time for one language to rule them all.

How the Carriers Screwed Themselves out of Mobile Payments

2011-07-25T12:22:00.000-07:00

This post was also published in VentureBeat.

There has been a huge scrum amongst the smartphone players to capture the market for phone-based purchases. In a very surprising move, the major US-based carriers just folded their mobile payments hand, and folded it hard. Isis, the mobile payment system sponsored by Verizon, AT&T and TMobile, announced that it had signed deals with Visa, MasterCard, American Express and Discover to its touch and go payment systems.

In the European and Asian markets, mobile carriers are payment providers, and people use their phones to pay for goods and services and then pay their carrier, and the carriers get a cut. So why are US carriers not going after this incredibly lucrative market?

There’s actually a very simple reason. Payment providers require trust, and the US carriers decidedly do not have their customers’ trust. When your Verizon bill shows up and you see that it is $50 over what you expect, your first reaction is that they are screwing you yet again, not that you bought dinner with your phone a couple of week ago. For years, the carriers have regularly gouged customers for text messages, talk overages and data roaming, to the point where “cell phone bill shock” is a well known problem, and the carriers are amongst the most hated companies in United States.

The carriers are renowned for byzantine statements more complicated than IRS forms, obtuse voice jail systems, and horrible customer service. Can you imagine calling your carrier to dispute a payment? These are the people that try to convince their customers that overage fees are a good thing, rather than simplifying their billing so that people can understand the cost when they use services.

With the ISIS move, the carriers now have to play nice with the credit card companies just like everyone else and no longer have an edge in the NFC scrum. Instead, there is a good chance that the carriers will be completely cut out by Google, Apple, and PayPal.

Google is aggressively going after mobile payments, testing NFC systems, acquiring Zetawire to accelerate its NFC technology, teaming up with Citi and MasterCard on NFC payments. Microsoft has also made NFC moves. Apple is one of the biggest payment processors with its iTunes store and is in a strong position to go after NFC payments. PayPal has been all over mobile payments and is doubling its forecast for mobile-based payments, and is making real world mobile transactions a huge initiative..

Now that the carriers have capitulated on carrier payments, startups such as Zong and Fortumo working on the bill-to-carrier infrastructure will likely have to focus on the “unbanked,” as BillToMobile has successfully done on the web and is starting to do on mobile.

One thing carriers could do to try to stay in this game is break out their billing so that the regular billing shows up in one area, and mobile payments are in a separate, clearly segregated area. Carrier billing providers like Payfone attempting to roll out mobile payments based on archaic roaming protocols are going to have to shift their strategy, as roaming charges are amongst the most obtuse parts of a mobile bill.

Hey, remember when you had to pay $250 because you used Google Maps in Europe, or $75 because you talked too much during a deal that required a lot of concalls? Don’t feel bad. The guys that charged you just lost out on a multibillion dollar opportunity that should have been a bird in the hand.

Google+ Could Make Twitter the Next Myspace

2011-06-30T22:27:00.000-07:00

This post was also published in VentureBeat.

There are numerous comparisons between Google’s new Google+ social offering and Facebook, but most of them miss the mark. Google knows the social train has left the station and there is a very slim chance of catching up with Facebook’s 750 million active users. However, Twitter’s position as a broadcast platform for 21 million active publishers is a much more achievable goal for Google to reach.

There are two different types of social networks, private and public — each defined by its default privacy setting. Facebook is by default private and meant to connect actual friends. Twitter by default is public and anyone can follow anyone else. Google+ is decidedly in the Twitter camp — meaning you can follow anyone, including Google CEO Larry Page. Google+ lets you see Page’s posts and “like” his photos of kite surfing in Alaska. When posting on Google+, it forces users to select specific social circles they are posting to, which includes “everyone” as an option that mimics a Twitter-style broadcast. If not for the lawsuits and FTC settlement about Google Buzz automatically broadcasting posts, it is likely that Google+’s default setting would be pubic posts.

Although Twitter is growing (having just hit 200 million tweets a day), Twitter has left itself open to be displaced with a slow pace of adding features. Even newly returned founder Jack Dorsey has said that it was too difficult for “normal” people to use Twitter.

So, how can Google go after the 21 million people who are actively publishing on Twitter, and, more importantly, the few thousands that own the majority of Twitter followers? These types of posters are generally publishers, and Google’s core competence is serving publishers. Publishers pay a lot of attention to Google, from search engine optimization to increase the ranking on Google searches, search engine marketing keyword ads to drive traffic, and on-site advertising solutions ranging from AdSense to DoubleClick.

Publishers are interested in increasing their search rankings and improving their reach. Posting content to Google+1 increases search rankings. The black toolbar across the top of Google services, which integrates both Google+ and Google+ notifications, definitely provides reach and is now in front of as many user minutes as Facebook commands. Users commenting or liking on items from publishers will show up in their friends’ toolbars. Even if they only have a few friends, the overall traffic bump will be significant. The Google+ bar has not yet been activated on YouTube, a key publisher and celebrity channel, and likely will broadcast YouTube likes, comments and shares.

While Facebook is not sweating about Google+, the threat to Twitter is significant. Google has the opportunity to displace Twitter if it gets publishers and celebrities to encourage Google+ follows on their websites as well as pushing posts to the legions of Google users while they are in Search, Gmail and YouTube. Google was turned down when it tried to buy Twitter for $10 billion, and now it is going to try to replicate it. With Google+, the company actually has a shot.

Why Microsoft’s Office 365 will Clobber Google Apps

2011-06-30T21:49:00.000-07:00

This post was also published in VentureBeat.

Yes, Microsoft is a slow, lumbering giant. It has been working on cloud for years, with numerous iterations, that took so long cloud proponent Ray Ozzie got fed up and left. Microsoft had to work through cannibalizing reseller arrangements, reconciling how to reach consumers versus businesses and a host of other issues. With Office 365, Microsoft has finally delivered an end-to-end cloud platform for businesses that encompass not only its desktop Office software, but also its server software, such as Exchange and SharePoint.

Contrary to Google’s narrative, cloud based office software is still a wide open market. The three million businesses that have “Gone Google” — proclaimed on billboards in San Francisco airport’s new Terminal 2 — are for the most part Gmail users, who are still happily using Microsoft Office and even Microsoft Outlook. Gmail is a fast, cheap, spam-free and great solution for business email, especially relative to the expensive, lumbering email service providers. Google Apps has definitely found a niche for online collaboration, but generally for low-end project management types of spreadsheets and small documents. The presentation and drawing Google Apps are barely used.

Yes, there are definitely Google Apps wins, since it seems cheap. On implementation, businesses find that switching to Gmail is one thing, but switching their entire business infrastructure to Google Apps is a completely different animal that goes far beyond simply changing how employees are writing memos.

Imagine you are a 25-person law firm in Kansas City running Microsoft Office, Microsoft Exchange for email and calendaring, Windows Server for file sharing, SharePoint for wiki/collaboration, and have a custom billing application written in .Net and running on Microsoft SQL Server. Like the majority of small to medium-sized businesses, you are an all-Microsoft shop.

Google comes in and presents: Google Apps looks primitive and doesn’t have all the features of Word and especially Excel and PowerPoint. It also doesn’t work offline. Email and calendar is sort of the same, but you should really use a browser instead of Outlook to get full functionality. Plus, you have to manually move all of your SharePoint content over to Google Sites, the file server isn’t integrated with the Windows or Mac desktops, and you have to keep your .Net app the way it is or rewrite it into Google AppEngine.

Compare this experience to the Microsoft value prop: go home on Friday, and on Monday when you come back everything will look the same, except now we are hosting it all and you can lay off your IT staff. There’s no training required. Employees can run apps on the desktop or in the browser, whichever they like, and the browser version looks like the desktop version, only cheaper. For a regular business where technology really is just a pain and an expense item — not a mission in life — it’s really a no-brainer. In addition, Microsoft has historically been very smart about seeding nonprofits and educational institutions with copies of software that are virtually free, which it will likely also do with Office 365.

The thing about Microsoft Office 365 is that it looks really good, and looks and act just like the well-known native Office apps. The ribbon interface is intuitive and the apps are fast and responsive. Google Apps, conversely, looks like it was made by college students from a weekend project. I don’t understand how Marissa Mayer loves fashion like Oscar de la Renta at night, but goes to work during the day and insists on data-driven web sites that look like crap. Google hasn’t shipped a good user interface since Google Maps. The different between Office 365 and Google Apps is glaring.

Microsoft definitely has a few issues to work out. As Google pointed out, collaboration is not very simple, since you have to be a Microsoft Office 365 subscriber in order to collaborate. However, Microsoft already launched Docs.com, a free Office offering with free collaboration. Microsoft will likely integrate Skype into Office 365, which will offer chat, audio and video conferencing, screen sharing and (probably) free document collaboration based on Docs.com.

Google’s claim that Office 365 doesn’t support many platforms is moot. It works fine on my Mac OS X with Chrome, and officially supports Internet Explorer, Safari and Firefox. Office definitely has numerous pricing tiers. The lowest tier is on par with Google Apps and the higher tiers include subscriptions to the desktop software, which help to transition Microsoft from feature-driven bloatware to subscriptions — a model that has worked for Adobe.

Google Apps will definitely have a place for new businesses and small businesses with younger employees that aren’t tied to the Office user interface. Google App Engine is a hidden jewel within Google Apps and its hands down the fastest solution for programmers to create and deploy a comprehensive web app. However, with Office 365, Microsoft is clearly on a trajectory to continue its Office hegemony. Microsoft is much more concerned about Apple than Google at this point, and insuring that it monetizes Apple devices like it used to make more per Mac than Apple did in the early 1990s. Conversely, Google should be much more concerned about Microsoft, which now has almost 30% marketshare in search.

Is Apple’s iCloud an Excuse to Overcharge for Storage?

2011-06-08T23:37:00.000-07:00

This post was also published in VentureBeat.

After falling far behind in the shift to cloud computing, Apple’s much-anticipated iCloud offering fell far short of expectations. Rather than a cloud locker that could stream media to a variety of clients, iCloud turned out to be a glorified file synchronization service like Dropbox. iCloud will automatically sync all of your apps, settings, and files to all of your iOS devices.

Syncing all of your files is definitely a useful feature for consumers, but it is starkly different from the approach of other industry titans. Google and Amazon were so terrified of Apple streaming music that they both pushed shoddy beta-quality music lockers out the door in the past few weeks. Instead, Apple shipped the ability to recognize ripped or illegal music on a user’s hard drive and then automatically sync copies of songs at higher quality across devices. While recognizing that a user already has ripped a CD and skipping the upload does not seem like a killer feature, the music labels sued MP3.com for that very feature over a decade ago, and Apple had to pay the labels a reported $100-$150 million to automatically sync the music that is already on a hard drive.

Google is staunchly in the cloud camp with its Google Apps, Google Music, and Google Drive offerings. Microsoft has launched its Office 365 cloud based Office, which enables businesses to offload their IT infrastructure such as email to the cloud, and announced that Windows 8 will automatically configure itself to a user's settings on login, so a user will be able to walk up to any Windows 8 machine and recreate their entire desktop experience. Amazon has always been a leading cloud vendor with its Amazon Web Services business offerings, and streams video rentals immediately for consumers in addition to its new Cloud Player streaming music locker service.

So what’s going on over at Apple? It’s quite simple, actually. Apple makes an enormous amount of money selling overpriced Flash storage, and it is therefore incented to sync every file to every device rather than stream media files on demand. Apple charges $6.25 per gigabyte of Flash storage on iOS devices. In comparison, retail pricing for generic Flash storage is $1.44 per gigabyte. That’s quite a margin for Apple; and of course you can’t add your own Flash upgrades to iOS devices unlike Android and Windows devices.

While a case can be made that, in the age of bandwidth caps, it is cheaper to copy everything to every device once, music is relatively low bandwidth to stream when compared to full duplex voice over IP or video calls. The age of ever-expanding Wifi networks also tilts in the favor of streaming. And ironically Apple owns the patent on the creative solution of storing the first few seconds of media on a device so it will play immediately when a user clicks play, which gives the music stream a chance to buffer and then take over playing.

Getting $100 for $16 gigabytes of storage is an excellent reason for Apple to dislike streaming. However, it is definitely a contrarian position to the overall market, and it risks that consumers will get wise the next time they upgrade a device and switch to Android or Microsoft.

How Twitter 2.0 Will Make Money

2011-05-25T23:51:00.000-07:00

This post was also published in VentureBeat.

This is the second of two articles on likely changes to Twitter. The first article focused on consumer-facing changes to Twitter and this one focuses on monetization.

Twitter has experienced tremendous traffic growth, and more importantly has permeated into the collective consciousness with constant Twitter quotes by news organizations and entertainers. Twitter’s valuation has gone up as people expect it to monetize its traction with both consumers and brands. Here are a few of the features that would seriously inflect the Twitter revenue curve.

Bring on the banners

Twitter has struggled to scale advertising revenue, because like most social sites it tries to inflict strange ad units on both its users and advertisers. From the users’ perspective, things like promoted tweets or Facebook’s social ads are intrusive to their content experience. From the advertisers’ perspective, they can’t use their normal ad units and track results the normal way.

This is easily addressed by supporting normal ad units such as right rail skyscraper banners. As Myspace proved early in the social years, banner advertising works on social networks, especially social networks where a lot of people are following celebrities and media. In addition, to be frank, a lot of the former Myspace userbase is using Twitter to follow celebrities and sports figures, and these are the types of users that respond to banners. It will be a long time before Facebook chief operating officer Sheryl Sandberg can convince Mark Zuckerberg to go after banner ad buys less than a year-and-a-half after he pulled Microsoft’s static units from Facebook, so Twitter will have an advantage going after large-scale media spend.

Special care should be taken to ensure that when banners are introduced, they are placed similarly to other top sites. For example, the infamous “dickbar” mobile banner that caused user uproar was placed at the top of the Twitter app. Most mobile banners such as AdMob units are placed at the bottom of an app. Adding banners will always bring on complaints, but adding banners that look like everyone else’s banners will achieve begrudging acceptance and will make the complainers look like trolls.

To add a social flare, the units can include tweets relevant to the brand or whatever is being promoted. Put the social into the ad unit, not the ad unit into the social. Acquiring the self-service dynamic ad creator Flite, which lets advertisers create and deliver ad units similar to Aol’s Project Devil units, would make dynamic ad units that integrate tweets available to the Twitter.com as Flash units and mobile as HTML5 units.

Twitter should let Facebook experiment with social ad units, and focus on soaking up a bunch of brand banner ad spend.

Monetize (rather than cannibalize) third-party apps

Over the past few months Twitter has been going after third party Twitter apps by blocking some apps’ access to its API and arbitrarily changing authentication systems. Attempting to regain control of the on-ramp with which power users use Twitter is admirable, and the TweetDeck acquisition was a very smart move in this direction.

However, a rich developer ecosystem is a rare treasure and should be nurtured. Rather than go after rollups like UberMedia and smaller Twitter clients, it would be better to exchange volume API access in exchange for placement of the banner ads (you know, the ones I just described) with a revenue share. Pissing off developers is never smart, consider how quickly iOS developers jumped onto Android after all of Apple’s various shenanigans. This is especially important considering that Facebook is nurturing a rich ecosystem of third-party apps, ad, and analytics vendors. That said, it should be expected that Twitter will add obvious features like email notifications, and Twitter should notify developers of changes like this ahead of time to circumvent upset feelings.

Developers love Twitter, and Twitter should be helping them do fun stuff and make money, too. There are a bunch of small, self-serve ad networks that could be acquired to accomplish this, as well as open source implementations such as OpenX.

Check-ins are tiresome, but location deals are useful

Twitter is one of the most used mobile apps, and it could open a great revenue stream by enabling merchants to deliver real-time deals. Check-ins are increasingly lame, but people do want to know if there are deals around. A lot of mobile units have low conversion rates, but a built-in interstitial with a map view would lead to a lot of conversions. Options for this include doing a deal with Groupon Now like Loopt’s recent implementation and Foursquare’s rumored integration, or acquiring a small mobile deals company like BeThere Deals. Replace the #dickbar with the #dealbar!

Sentiment analytics and service tools for brands

I work at Webtrends, which sells social, mobile and web analytics solutions to enterprises, and am continually amazed at the voracious appetite marketers have for analytics, and for the new breed of analytics around social interactions. No CMO on the planet is going to question a marketing budget item labeled Twitter Analytics. A lot of sentiment analysis tools such as CoTweet, ScoutLabs and Radian 6 have already been acquired. However a new breed of more powerful tools such as Crimson Hexagon are ripe for Twitter to acquire to enable social media teams to see, route and respond to Twitter conversations about their brand. Much like Facebook Pages include support for broadcasting to Twitter, it is critical to also include support for Facebook and blog conversations so that brands can have a single, Twitter driven view of what is going on with their brand.

Twitter should continue to sell access to its firehose of data, but delay access for a few hours to external entities other than a few premium partners in order to increase the value of its own offerings.

Sell lucrative sharing, trending, and tipping data

Companies like ClearSpring and RadiumOne are mining what content is being shared by consumers and selling the data at a huge premium to advertisers who want to know what topics are trending and how to better target users. Twitter has one of the best views of this type of data and should sign lucrative deals with publishers and ad networks to help them better optimize their businesses. More importantly, as I wrote back in March, Twitter’s data provides a very unique viewpoint as to how content goes viral and what types of posts, influencer retweets, and incremental advertising could tip a campaign towards a viral spread. Social scoring companies like Klout have very limited algorithms, but this type of infrastructure could be an offshoot of acquisitions such as Topsy and BackType in addition to the more immediate benefits described above. Mining the Twitter data will only become increasingly valuable as marketing campaigns become increasingly automated.

Adding enterprise features to Twitter will be much easier than consumer facing features. Enterprise features have far fewer users, can have structured release programs such as limited early access releases, and generally have a pretty forgiving audience in terms of time to add features and the occasional downtime. There is huge opportunity in for Twitter to sell to businesses; Twitter’s voluminous consumer traction, brand mindshare, and treasure trove of data offer significant monetization opportunities in the advertising and analytics segments. Acquiring companies like those described above would accelerate Twitter into every brand’s media spend.

Here Comes Twitter 2.0

2011-05-24T14:44:00.000-07:00

This post was also published in VentureBeat.

This is the first of two articles on likely changes to Twitter. This article focuses on changes to Twitter’s consumer-facing side and the second article focuses on Twitter monetization.

Twitter reportedly acquired TweetDeck today, and that’s likely to be the first of many changes. There is a broad consensus that Twitter had stalled out in terms of product innovation, , which even creator Jack Dorsey noted upon his return to Twitter as head of product. With Dorsey’s return, we should expect more changes, and very quickly.

BusinessInsider recently suggested that Twitter only has 21 million active users, and a lot more people who read of those users’ tweets. While at first blush this number may look really bad, it is actually an indicator that Twitter has matured. Twitter is a microblogging platform, and has followed the same trajectory as blogs. At first, everyone blogged. Now only a few blogs really matter.

Consumers want Twitter to be their source of information. Lady Gaga on Facebook has 35 million fans, and on Twitter she has 10 million followers. The numbers don’t tell the whole story: The 10 million Twitter followers actually care what Lady Gaga has to say every day, while a large portion of the Lady Gaga Facebook fans simply added Lady Gaga to their profile as one of their musical preferences, which Facebook later automagically turned into becoming a fan of the Lady Gaga Facebook Page.

As Twitter becomes the go-to source of information for news, celebrities and more, it’s differentiated from Facebook, which is very focused on what your friends are posting. With this shift in mind, below are some features Twitter could quickly add via targeted acquisitions that could bring back the company’s mojo, scale users, and add multiple revenue streams.

Add a news view

Twitter’s home page should become a news style view of what is going on. As LinkedIn’s recent news site showed, there is ravenous appetite for socially filtered news presented in a news format that includes pictures and descriptions. I myself have experimented with PostPost, the real-time Facebook news site, to rapid uptake.

Twitter has become the central avenue for news organizations and celebrities to distribute news. In addition, it is the prime hub for curators and users to retweet the news, essentially adding a vote for the interest level in the news story. Facebook is still primarily a site to interconnect with friends rather than disseminate news. However, Twitter needs to act fast since Facebook is currently driving more traffic to news organizations that Twitter. It’s time for Twitter to double down and dominate its core category.

With a Twitter news view, newbies and infrequent users would start with a broad view of what is currently interesting in the news, and as they follow sources and curators they would be able to personalize their experience and drastically increase Twitter usage. Adding a news feature could be accelerated by acquiring Twitter newspaper makers such as Paper.li or TweetedTimes, with a blend of TweetMeme to rank the articles.

Offer news streams for events and locations

Last month I was at the Coachella music festival. On the first day, there was one person on Color, 66 Foursquare check-ins, and thousands of #Coachella tweets that included linked photos and videos. Twitter has a fantastic opportunity to offer a dynamic, visual view of what is going on around events and places, ranging from music festivals to political upheavals. Facebook is the go-to site to find out what’s going on with your friends, and Twitter should be the go-to site to find out what’s going on around you and in the world. Since news organizations are always quoting tweets, people are now predisposed to Twitter as a leading source of information. Acquiring companies like Memolane or Storify that have spent time on how to present posts in a structured manner could be helpful. In addition, acquiring What the Trend would add the ability to show trends of tightly focused geographic and demographic slices.

Show photos, videos and other media inline

The Twitter user interface has been stalled almost since its inception. Although users can now click to fetch linked media, it is not an ideal experience, especially since users are now accustomed to seeing photos and videos inline with the Facebook newsfeed. Photos, videos, documents and such should be presented inline directly below a tweet. Twitter should announce support for Facebook’s OpenGraph protocol and support open graph tags for web pages that return metadata such as titles, descriptions, and thumbnails. This feature could be accelerated by acquiring Embed.ly, a site that returns metadata such as thumbnails for arbitrary URLs.

Inline comment threads

Following a conversation stream in Twitter is maddening. Although there is a new feature to see a tweet in context, it only shows a few surrounding tweets that are not necessarily relevant. This is a critical feature that needs to be fixed, and can’t be fixed via an acquisition. Every tweet that is a response to another tweet needs to be linked to its parent tweet, and every tweet needs to be able to find its child tweets.

Facebook addresses this issue by simply grouping all comments under the original post. Twitter should also focus on solving this simple problem first, and then going after the more complicated nested commenting problem. So if I reply to a tweet, and then you reply to my tweet, both tweets are filed under the original source tweet as one long stream. A huge step forward from how it works right now, and the nesting of comments can be addressed later.

Improve search

Although Twitter acquired Summize in 2008 to power its search engine, the search results could use a lot of improvement. Twitter search doesn’t dereference URLs, so you can’t search for references to a particular article. In addition, it doesn’t offer expected features for people accustomed to Google search such as spelling corrections (“did you mean…”). Building fast and effective search is extremely challenging. Options should include partnering with Google like Facebook partners with Bing. Google would be overjoyed to get some social juice, and Twitter would benefit by being able to offload search. Another option is to acquire Topsy, the leading Twitter search engine which is fast, realtime, and effective.

More Twitter widgets for websites

Facebook is blanketing the web with its social plugins ranging from Likes to Comments, and Twitter needs to stake its claim on websites, especially news sites. An equivalent of Facebook’s recommendations plugin that shows what content on a site is actively being tweeted would be relatively easy to create. In addition, context about what people are saying about an article could be added by acquiring BackType, which offers a widget that shows all of the tweets and comments about a particular URL.

With the service’s notorious downtime, the Twitter engineering team has struggled just to keep the lights on and it will be awhile until they can transition to innovating rapidly. Although acquisition integrations are hard, they will be the best way for Twitter to innovate quickly. If the acquired companies are not compatible with existing infrastructure it is critical to incent them to do a quick rewrite as part of the acquisition. In addition, Twitter should be comfortable shipping stuff that people will complain about – Facebook does it all the time. One idea is to start throwing features over the transom under a “TwitterLabs” moniker.

Good thing that Twitter recently hired Mike Brown, Facebook’s former acquisitions guy, and didn’t buy into TechCrunch’s accusations that he committed insider trading. Brown is super tied into the startup community and is well-respected. Looking at the laundry list above, he is going to be a pretty busy guy. (Editor’s note: Brown is also an investor in VentureBeat.)

Tomorrow, I’ll dive into Twitter’s monetization opportunities.

LinkedIn IPO: It’s Only a Bubble when Grandma can Buy In

2011-05-19T21:12:00.000-07:00

This post was also published in VentureBeat.

LinkedIn’s massive 2x pop this morning when it went public reflects that everyone, including the underwriters, seriously underestimated the demand for the shares. There was a time, especially during the .com, when underwriters such as Morgan Stanley would attempt to artificially go out the door with a low price in order to create a pop, but companies going public nowadays are much more sophisticated and discerning about leaving so much money on the table.

So why is there so much pent up demand? It is not just, as Jim Kramer claims, the limited number of shares. Hot, second wave Internet companies are taking a long time to go public and the stock is only available to a select few. Only accredited investors could invest in hot Silicon Valley companies through secondary exchanges like SecondMarket. On top of that, early stage investors and management are much more patient due to the liquidity gained through secondary markets and the willingness of late stage investors like DST to buy out existing stockholders.

I have lived through two bubbles, the .com bubble and the housing bubble, and have concluded that bubbles are essentially giant pyramid schemes. And Grandma is at the bottom of the pyramid. It is a bad sign when unsophisticated Grandma starts investing her money in 1999 .com startups that she doesn’t understand and in 2008 investment property in Phoenix although she knows nothing about investment real estate. Yes, everyone else has made so much money and it is going up and up, and her financial advisors are telling her to take advantage of the opportunity. But after the unsophisticated investors like Grandma jump in, there is no one left for her to sell her stock to.

Grandma is the last stop of the gravy train.

We have felt the early signs of the bubble here in Silicon Valley, but the price of companies has been self-contained to the Bay Area. My company Webtrends decided to move to a different area of San Francisco from uberhip South Park because rents got too high. Engineers are demanding skyhigh salaries.

The key metric to watch is multiple on revenue. LinkedIn is valued at 36 times its 2010 revenues, which is a very high multiple. Contrast that to San Francisco-based RPX Corporation, which acquires patents on behalf of large companies to fend off patent trolls. RPX went public ten days ago and had a slight pop, and is now valued at $1.3 billion, ten times its 2010 revenues. Ten times revenue is generally considered a fantastic multiple, and well deserved for a company that is profitable and growing fast in a novel space such as patent protection.

Grandma is never going to hear about RPX. When the multiple on revenue spread between the LinkedIns of the world and the RPX’s of the world gets too crazy, you know the grandmas are all getting in and it is time to get out. In the mean time, numerous attractive young women are floating around South Park, a sight unseen since 1999, so enjoy it will it lasts!

Can Social Commerce Catch Up with Email?

2011-05-16T17:08:00.000-07:00

This post was also published in VentureBeat.

Although many are heralding the advent of “social commerce”, the biggest e-commerce wave of the last couple of years has in fact used the most basic Internet technology. Enormously successful deals companies such as Groupon, LivingSocial, and Gilt Groupe send simple e-mails. Users click through those emails to a single landing page whose only goal is to get users to hit “Buy”.

There is no innovative technology at play here, rather a simple email op-in that asks consumers what regions or products they are interested in when they join the mailing list. Although Groupon likes to tout its tipping point algorithm where a certain number of users have to purchase in order for a deal to happen, there is such volume that all deals go through, every time. Net net, nothing social going on here.

The social revolution has made brands think they can invert how people think. Sure brand ambassadors are great, but they are few and few between, and lots of people on Facebook “like” Lady Gaga. But people do not want to broadcast what they bought, they want deals brought to them.

Last summer, Facebook chief operating officer Sheryl Sandberg claimed that email was dead, but she must have seen the light when it came to the recently launched Facebook Deals service. Consumers are now so programmed to receive deals via email that Facebook had to also send its deals via email, not through Facebook’s countless viral channels such as the newsfeed, messaging inbox, and notifications.

There is now such a heavy volume of activity on Facebook newsfeeds that no one ever goes back in time to see what happened, so branded posts in your newsfeed quickly gets buried. Conversely, most people still scan through all of their email and can see that Groupon sent them a deal yesterday.

Facebook’s other commerce initiatives have all faltered. The MarketPlace classified ad feature is outsourced to Oodle and has not had much traction. Adding Facebook storefronts to brand pages is currently the rage, but in my experience people do not like deep engagement on a Facebook page, and prefer a quick in-and-out, much like they interact with friends. So Facebook storefronts are more useful for promoting a few items rather than incorporating an entire store. The one shining star is the fact that Facebook got its gaming masses to adopt Facebook Credits as a mechanism for paying for virtual goods in games, mainly by strong arming game developers to support Credits.

Traditional commerce success is very important to Facebook. Most of its ads are sold to small local businesses, game companies like Zynga, and deals companies like Groupon and LivingSocial looking to acquire new users. In order to fuel its growth, Facebook needs to be able to close large large ad buys with national brands and retailers.

However, Facebook keeps insisting on atypical “social” ad units, such as sponsored stories. Things like retargeting already creep people out, when they see a shoe or a car following them around the Internet. And people decidedly don’t like when they are the object of retargeting like with Facebook’s sponsored posts feature, for example “Your friend Joe likes Home Depot! You should to.” Most Joes really don’t like that. Let’s face it, most people don’t like ads, and making ads social by including people in them is just creepy.

Even the omnipresent Facebook Like button is not helping retailers very much. Most products have too short a shelf life to accumulate many likes. In addition, very few people are clicking Like on a product since it is broadcast to all of their friends, and instead are are using the “e-mail to a friend” feature so they can ask a select set of people if they like an item. Email is really making Facebook miserable when it comes to e-commerce. No wonder Forrester and Goldman Sachs are questioning whether Facebook can make it in retail.

So what is working? Justin Kistner, a young product manager at my company Webtrends, came up with the idea of using Facebook Ads as the equivalent of an email campaign. We all initially thought he was insane, but in fact we found that it works enormously well.

Here’s how it works: Get a consumer to Like a retailer on Facebook through a Facebook ad campaign where the consumer gets a coupon in exchange for Liking the retailer, which is the equivalent of a traditional banner-ad-to-email opt-in campaign. The retailer can then buy low-cost ad units that target people who have Liked their page, and also those peoples’ friends who are likely to have an affinity for the retailer as well. In the campaigns we have run, these units get a 7x higher conversion rate than other Facebook ad units. Those ads then click through to targeted, simple landing pages on the retailer’s Facebook Page or website that convert into a sale.

Replicating the proven email opt-in, email send, and simple landing page experience to Facebook as a Facebook Page Like, cheap ad buy targeted to the page’s fans, and simple Facebook landing page works remarkably well. The Facebook ad is essentially an additional newsfeed element that is placed off to the right. Adding a one-click Facebook Credits “Pay” option, support for normal ad units such as skyscraper units on the right rail (like Facebook used to display from Microsoft), and deep analytics that track what happens after users click on ads would increase conversions even further.

Is it social? No. Does it poise Facebook as a great place for retail ads and as a payment platform? For sure.

Zynga’s Mark Pincus: The Ethical Founder?

2011-04-18T14:45:00.000-07:00

This post was also published in VentureBeat.

The social era of computing has produced three multi-billion dollar companies: Facebook, Twitter and Zynga. As light is increasingly shed on the formation myths of Facebook and Twitter, a lot of new information casts doubt on the ethics and motivations of their respective founders. It is ironic that Zynga has had no such drama, since the company’s founder Mark Pincus has been lambasted for being unethical due to what TechCrunch dubbed “ScamVille”.

Was ScamVille really a scam? There is no question that the offer ad networks like OfferPal that Zynga was using were shlocking uninstallable toolbars and illicitly signing people up for mobile subscriptions. However, numerous major Fortune 500 companies were also using scammy offers at the time, which TechCrunch itself later noted. As I have written before, TechCrunch has a repeated inclination to quash people’s reputations with tabloid-style posts. For the technology audience, “Marc Pincus is running ScamVille” is a whole lot more interesting than “1-800-Flowers, Orbitz and Pizza Hut are running scammy offers.” Many are left with the impression that Pincus is a scam artist, and the entire saga is branded ScamVille as if it were a Zynga property such as FarmVille or CityVille.

Yes, Pincus did in fact say that “he did everything horrible in the book” to get revenue. By horrible, he did not mean backstabbing people, arbitrarily chucking cofounders, and such. In fact, what he did was hustle, and hustle through one of the biggest economic downturns in the history of business. He did indeed use offer networks at the same time that they were popular with large reputable companies. He copied competitor’s games. He stole talent out of established gaming companies like EA. He replaced or demoted several executives as the company grew quickly.

The type of hustling Pincus did is now considered de rigueur for startups, with Dave McClure now stating that the perfect startup has a hustler, a hacker, and a designer.

In sharp contrast to Pincus, the founders of Twitter and Facebook are facing a continuing barrage of ethical questions. Last week, Business Insider revealed that Twitter had a largely unacknowledged co-founder, Noah Glass. It’s become apparent that while Jack Dorsey may have invented Twitter, Glass and Florian Weber were also instrumental in its creation. They could have just as easily worked on the project in their off hours and started a company on their own. Instead, they took it to the management team at the failing Odeo which was desperately looking for something new to do. It’s now reported that Ev Williams took the idea and early product, told their existing investors it wasn’t showing much promise, spun it out, unceremoniously dumped Glass, and quickly pushed out Dorsey. After those reports, Williams himself acknowledged that Glass “never got enough credit for his early role at Twitter.”

Twitter clearly stagnated without its true founders, and years later still does not properly embed photos and videos like Facebook does, and following a conversation thread is so painful that it is not even worth doing. Currently, Twitter is a primarily a broadcasting platform with very few active users. Lest I get flamed by Twitterphiles, newly returned Jack Dorsey’s plan to reinvigorate Twitter is to make it usable by normal people.

The lawsuits around Facebook’s formation keep piling up and it such a drama that it led to an award winning movie about Zuckerberg's issues with the Winklevoss twins and Eduardo Saverin. Paul Ceglia is suing since he claims he funded the company in its early days but was cut out when it was reincorporated.

So why does Pincus get such a bad rap? There is no question that Zynga seriously annoys at least some members of the Silicon Valley digerati, myself included. Zynga is a Hollywood-style, hits-driven entertainment company whose target customer lives in the flyover states. So much so that Zynga has recently added Hollywood heavyweight Jeffrey Katzenberg to its board. There has long been a battle between Silicon Valley-based platform companies and Los Angeles-based entertainment companies, and Zynga is an LA-style company right in Silicon Valley’s backyard. Copying titles? Happens every day in Hollywood, as evidenced by the recent slew of vampire movies.

I am not saying that Zuckerberg and Williams are scam artists or unethical. Zuckerberg was very young and immature. Williams was under great duress through the collapse of Odeo. You can read the accounts and decide for yourself. However, I am questioning the taint that has followed Pincus. Given what we now know, which of the three would you rather be a cofounder with — Zuckerberg, Williams or Pincus? I know who I’d choose.

The Next New YouTube: Google’s Opportunity to Own Media

2011-04-09T12:01:00.000-07:00

This post was also published in VentureBeat.

There’s a reason Lady Gaga recently visited Google and snubbed Facebook. The music industry is on the precipice of another huge transition from downloads to streaming, and Google has the opportunity to own this transition. It can circumvent both Facebook’s growth as a media channel and Apple’s forthcoming streaming service.

There was a time when Myspace was people’s first stop after hearing about a new band. They would immediately go to the band’s Myspace page, where they could listen to tracks, see what people were commenting, and read what the artists were posting themselves.

Now people are going to YouTube first. As the Rebecca Black “Friday” video showed, YouTube is the hands down best platform for media to go viral. YouTube is definitely right up the artists’ alley; artists can add a fun background image on the channel, see how many video views they have, post a message to their fans, and also check out what all the comment trolls are up to. A YouTube “Like” is the ultimate +1. YouTube is even music label-friendly, with its fast-growing Vevo subsidiary (which is co-owned by music labels), as it provides a monetization avenue for music streaming.

Facebook is definitely hot and there are a lot of people there. On the other hand, the interface is not artist friendly, the apps are hard to deploy, and it’s just not fun anymore. It’s a utility – “Yes, mom, I am going to Lior’s bar mitzvah." And what gets the most traction on an artist's Facebook page? Posting a YouTube video. Although Facebook and Twitter now allow posters to attach media, there is an inclination to use those viral channels only to drive traffic to a YouTube video. Then you don’t have to deal with uploading a video multiple times and you know it will work on mobile devices, since they all support YouTube. And I am writing this as someone who has run numerous Facebook campaigns for A-list artists like Lady Gaga and Black Eyed Peas.

Although there aren’t specific statistics, I think that a significant portion of Facebook’s time-on-site is people watching posted YouTube videos. Facebook used to not allow embedded YouTube videos from going fullscreen, but recently had to allow this feature since people would double click the video, go to YouTube, and likely not come back.

YouTube has made some big moves lately, buying Next New Networks to help the next generation of YouTube stars make content, taking on Netflix by announcing that it will organize itself into channels and spend $100 million on original content, and buying the rights management technology behind Netflix.

As I posted last December and is now rumored, Myspace — declining as it is — is still a tremendous property for Google to acquire. It has a lot of uniques, every media property has a presence there, and has a perspective on what people like (aka their “interest graph”) that can heavily influence drive YouTube recommendations. Even simply redirecting all the traffic from pages Lady Gaga’s Myspace page to Lady Gaga’s YouTube page would give YouTube a huge boost as a media channel.

With the new Google reorganization, YouTube is now functioning as an independent unit. It’s time to make some aggressive moves. Yes, everyone is watching Google’s every “Desperately Seeking Social” move, and buying Myspace as a social strategy could blow up in their faces. But buying Myspace at a significant discount to grease YouTube’s growth makes a whole lot of sense.

Why TechCrunch is Over

2011-04-01T15:15:00.000-07:00

Disclosure: I write a lot for VentureBeat, a TechCrunch competitor, and over the years I have also written for BusinessWeek, AdWeek, ReadWriteWeb, CNET and InfoWorld. I write for fun, and don’t get paid, and can submit articles anywhere I like. So I have no personal gain from diminishing TechCrunch. I am simply pointing out why I don’t ever send them my content. I am in a place in my life where I can speak truth to (supposed) power, and yesterday’s shenanigans at TechCrunch prompted me to write this post.

On a bimonthly cadence over the past six months, Michael Arrington has made increasingly inflammatory posts on TechCrunch. It is one thing to take on made guys like Jason Calacanis and Dave McClure, no matter how irrational the basis. Yesterday, however, Arrington - in a vain effort to save his eroding site - seriously crossed the line and attempted to destroy the reputation of Mike Brown, a decent, hardworking guy.

The facts:

Fact #1 - TechCrunch has lost over half of its readers in the past six months.

In the last six months, TechCrunch has declined from 2.6m to 1m monthly uniques.

Fact #2 – Arrington has made increasingly inflammatory posts on a bimonthly cadence since the sharp traffic decline last September

September 2010 – Arrington writes that a group of angel investors getting together to discuss the state of their industry is collusion. However, in order for there to be collusion you need to have a market monopoly, and these guys' buying power is not that strong, as DST showed when they jumped into the superangel game. Angels have banded together like this for years – the first such group was Band of Angels, which did not magically materialize. It started with a group of angels getting together to discuss how they could optimize their processes by agreeing on a common set of conditions for the startups in which they would invest. This post was coincidentally put out in the midst of the steep drop in traffic and during acquisition negotiations with Aol.
November 2010 – Arrington writes that Jason Calacanis is insane because he is mad that TechCrunch ripped off his conference idea. Indeed, Jason Calacanis may be insane. But so is Arrington. The exact grounds upon which Arrington complains about Calacanis suing him about, he sued JooJoo about. Compare and contrast:

Calacanis has the idea to do a conference to launch startups. He contacts Arrington to do it with him. They collaborate and do a few successful conferences together. Arrington decides that Calacanis is a prick and doesn’t want to work with him. So he does his own conference, which looks like pretty much every other conference. Calacanis says they stole his idea and sues them. Calacanis eventually drops the case and Arrington gloats.

Arrington has the idea to do a tablet computer. He contacts JooJoo to build him one. They collaborate on tablet ideas. JooJoo decides that Arrington is a prick and they don’t want to work with him. So they make their own tablet, which looks like pretty much every other tablet. Arrington says they stole his idea and sues them. A federal judge throws out the vast majority of the case and Arrington says nothing.

Exact same thing, huh? Except Arrington posts big emotional outbursts arguing both sides of the same coin. And ironically, both Arrington and Calacanis copied Demo.
January 2011 – Arrington writes that it is unethical that Engadget buys ads to feed traffic to its site. The reality is that all large content sites buy cheap ads that drive traffic to the more expensive ads on their sites. It’s called business and making money. The real issue here is that compared to Engadget, TechCrunch is a podunk site. All of the Engadget editors end up quitting within a couple of months - who wouldn't after being treated like that by a coworker.
March 2011 – Arrington and Sarah Lacy write a completely slanderous article about Mike Brown saying he committed insider trading. They did not bother to do basic fact checking ~~or even ask Mike what happened~~ about whether actual insider trading had occurred. The article was soon amended with contradicting viewpoints, but they left the insider trading title up in order to drive traffic, and throughout the next ~~day~~ two days are promoting the article as a top exclusive with the same title. Seriously uncool.

Fact #3 – The days of TechCrunch and Arrington being a kingmaker are over.

Yes, there was a time when if a small startup was written about in TechCrunch it would get a lot of attention and probably get funding. Those days are behind us. For example, Arrington keeps pumping up Wavii and talks about how investors are "flocking" to see the startup. Did it get funded? No. VCs are investing in companies that are actually interesting and viable, not just companies that are promoted in TechCrunch. [An edit in homage to HN] A startup is much better off getting a thumbs up from Paul Graham than Arrington.

Fact #4 – The writing on TechCrunch has gotten incredibly stale.

If not for MG Siegler (Apple fanboyism aside) and Erick Schonfeld, TechCrunch would be a content-free environment. The rest of the writing has become incredibly self-referential and stale. Paul Carr has the magical ability to consistently write articles that say nothing other than what he did yesterday. Sarah Lacy keeps writing about startups in Indonesia that no one cares about, because even startups in first world countries like France can’t seem to make it. Alexia Tsotsis has no clue about underlying technology or any context but continually injects her opinions and should instead write for PopSugar. Steve Gillmor occasionally adds a rambling grandpa perspective. Robin Wauters, Leena Rao and Jason Kincaid are all competent at summarizing the news, and even add a bit of context, but their content is no different than what you can read elsewhere.

Folks like Vivek Wadhwa, Mark Suster and Ben Horowitz contribute incredibly insightful, interesting articles to TechCrunch. Like myself, they are uncompensated and writing for fun. I think at some point these guys are no longer going to want to be affiliated with what is going on at TechCrunch and will transition their content to VentureBeat or BusinessInsider.

Fact #5 – Arrington is that special kind of prick and everyone is starting to clue in.

There are people in this world that expect to be treated one way, and treat others the exact opposite way. I have met Arrington a few times, and every time he has been unpleasant for no reason whatsoever. But if anyone slights him in even the smallest way, he flips out. The parallels between the JooJoo lawsuit and the Calacanis lawsuit perfectly illustrate this cognitive dissonance.

I hope that the Mike Brown incident, which I think will result in a libel lawsuit that Aol will have to settle pronto, will finally make this fact about Arrington known to all. Yes, it must be hard to live amidst a rapidly declining site, in the shadow of Arianna Huffington, who in comparison is a media genius that is all about making the world a better place. But why drag innocent folks like Mike Brown with you on the way down?

Update 4/2 10:50am: Yes, I have a scathing wit. I usually make fun of multi-billion dollar companies like Google and the occasional multi-billionaire, because it really doesn't matter. I feel that TechCrunch is fair game since they have been writing intensely defamatory, unfounded stuff and are now pointing their guns at rank-and-file folks. In essence, this is a taste of their own medicine. I know that Compete has sketchy numbers but it is usually right about big overall trends, and TechCrunch regularly uses Compete graphs to point out how sites are in decline. :)

Update 4/3 10:30am: TechCrunch has substantially changed their article and have made it much more balanced. However, they continue to maintain that Mike Brown violated Facebook's insider trading policies and have kept "Insider Trading Scandal" in the title. Insider trading is illegal, and what is described is not illegal. TechCrunch should replace every instance of the word "insider trading" with "internal stock trading policies." For an example of real reporting, check out this Financial Times article, which does not use the word "insider" a single time, because (1) they know how damaging the word is, and (2) they are not trying to get pageviews at the expense of someone's reputation. In other news, it was commented that I shouldn't plug my own site in this article so I removed that sentence.

Update 4/4 12:30am: And they're still at it. TechCrunch is defending the use of the phrase "insider trading" by now scoping it to the "internal rule at Facebook he broke" - I assume on advice of counsel. Then in doublespeak they acknowledge that it was perhaps a "naive mistake" and not the equivalent of "insider trading at a public company", but that the SEC will still "come down on secondary markets" because of trades like this. Huh? How about some context? It should be noted that virtually all public and private companies have no such rules for rank-and-file employees, the SEC could care less, and Arrington and Lacy can go buy Aol stock tomorrow morning if they like. When people read about the "Facebook Insider Trading Scandal," what comes to mind, an employee breaking an internal rule against buying stock, or Gordon Gecko? What gets more page views, "Facebook employee breaks internal rule" or "Facebook Insider Trading Scandal"? There is a huge difference between breaking an internal rule and breaking the law, as the Financial Times well understands, and clearly TechCrunch does not. Shame.

Update 4/22 4:00pm: Today BusinessWeek is reporting that "TechCrunch...incorrectly reported Brown...was fired for insider trading." Thank you BusinessWeek for setting the record straight. Ironic considering that Sarah Lacy got her Silicon Valley start at BusinessWeek and it is a publication with very high journalistic standards.

Google: +1 on Search Links, -1 on Ad Clicks

2011-03-30T15:38:00.000-07:00

This post was also published in VentureBeat.

Google has finally unveiled its +1 social initiative, largely aimed at stemming Facebook’s ability to learn what links are relevant to others in a social graph. The Google +1 implementation, where people can recommend individual items within search results, is definitely a step in the right direction. However, it could also hurt Google’s revenue stream — I predict that adding a +1 option to keyword ads will have a negative effect on clickthrough rates.

Google has been gradually embedding interactivity in search results, lately even asking directly in search results if a particular Twitter handle is yours. The new +1 feature harkens back to a 2008 Google experiment that mimicked Digg’s interface and let users move search results up and down, and even comment on them.

This new feature where users can directly like particular search result links definitely will help Google better rank search results by involving crowdsourced humans instead of algorithmic computing, which have been increasingly gamed by search marketers.

However, Google +1 seriously begs the question as to why Google isn’t simply ranking results based on what people are clicking on. If a user clicks on one link and doesn’t come back to click on other results, that indicates they have found what they are looking for. A future Google +1 will likely let you rank any page on the Web using the Chrome browser whether or not it has a “Google +1” button on it, and therefore present a serious threat to the newly emergent StumpleUpon.

What Google doesn’t appear to have thought through seriously is the +1 integration with Google AdWords. It is a cardinal rule of advertising that you present the user with one call to action. Clicking on a +1 next to an AdWords ad makes no sense at all – it is already hard enough to get people to click on an ad without adding confusing paraphernalia around the unit.

A store selling futons in San Francisco that pays for a targeted ad to people in the bay area searching for futons wants people to click on the ad, not + 1 next to the ad. The Google + 1 AdWords implementation is an obstacle to conversions with very little upside. Google Instant is already impacting click through rates by automatically populating search results as users type, and Google + 1 is going to make the problem worse.

Google is clearly attempting to mimic the popular Facebook ad feature where people “Like” a Facebook page. However, in Facebook, Liking a page is essentially opting in for newsfeed updates — the Facebook equivalent of a mailing list opt-in — which is why marketers are willing to pay for ads that incent users to Like their Facebook page. Google +1 offers no such benefit. In addition, while users are happy to “Like” Disneyworld, chances are they are not going to like “25 percent on futons today only!”

Google +1 is a great step forward for Google as it is finally admitting that perhaps humans can be smarter than machines when it comes to detecting relevant content. But Google has already nailed how people like ads: By clicking on them.

How Friend Clusters Could Make Facebook Intimate Again

2011-03-23T15:54:00.000-07:00

This post was also published in VentureBeat.

For a so-called social utility, Facebook has been getting more and more useless.

At first, Facebook friend overload was an early-adopter problem for overnetworked Silicon Valley insiders. But now, friend overload is hitting the mainstream consciousness. Many people who have been using Facebook for a few years find themselves inundated with friend requests by everyone from elementary school classmates to work colleagues. The resulting mess of casual acquaintances on Facebook has quickly overwhelmed newsfeeds with uninteresting minutiae and people you really don’t care to see.

In response, there has been a lot of recent activity by startups exploring concepts related to small groups of friends. Foursquare CEO Dennis Crowley has long talked about how his location-based service has a more “real” social graph — people with whom you’re willing to share your location. Path is run by Dave Morin, a well-known ex-Facebook employee, and is delivering a mobile photo sharing network for your 50 closest pals. Newly popular startups like GroupIn are bringing group texting back into vogue. Even Mark Zuckerberg has come to the conclusion that “most people don’t want to create lists of things, but the act of adding friends is a very nice feeling. No doubt it would be better if everyone had these friend groups [automatically] created.”

The next attempt, Facebook Groups was a resounding disaster. Since anyone could add friends to a group, they quickly grew into large, amorphous collections of people. Your entire high school class may now be a group, but not your real friends.

So here’s the fix, according to my sources: Facebook engineers, longtime fans of graph theory, are starting to derive “friend clusters,” or tight interconnections amongst a group of friends. For example, Facebook knows when a substantial number of coworkers have friended each other, and even knows that there are more people on the periphery that are close to parts of the company. Facebook has been incrementally adding this friend clusters feature in subtle ways. When you pull up a photo album from a friend, in the “people you may know” section to the right will often recommend people that you probably know in common with that person. This is because Facebook knows not just that you have friend in common with the person you are looking at, but who else has a lot of commonality but is not currently in your friend list.

It is likely that Facebook will soon introduce automated lists, and present user with lists of people and ask them questions like “Are these your coworkers”? By adding heuristics like how often users message, comment, and tag each other in photos, it will figure out who are tight clusters of friends. Even further, as evidenced by Facebook’s acquisition of the group messaging service Beluga, by watching how quickly people respond to each other — a feature I like to call “response velocity” — Facebook will start to figure out who your real friends are.

There are people you answer the phone for, write back to immediately and comment and like their posts; and there are people you don’t do that for. Facebook is uniquely positioned to learn which is which — an advantage Google and other rivals can’t match.

Now that’s a real social utility.

Why Sentiment Analysis is the Future of Ad Optimization

2011-03-20T20:23:00.000-07:00

This post was also published in VentureBeat.

Sentiment analysis is a hot new trend in social media, with the promise of helping brands understand what consumers are thinking and saying about their products. Products including early contender Radian 6, newcomers such as BuzzLogic, and my own company’s Webtrends Social Measurement product are becoming pervasive in marketing organizations. But while consumer sentiment is important, what’s much more important is revenue.

When revenue is down 10%, “but people like us!” is not an acceptable response from the head of marketing. Sentiment analysis isn’t a solution unto itself, but it can be highly useful as a realtime feedback loop for advertising effectiveness and may soon be able to predict advertising results.

In the Mad Men-era heyday of mass marketing, marketing spend was impossible to quantify. TV, magazine, radio and billboard ads were purchased, and it was very difficult if not impossible to track exactly the return on investment of various slices of the marketing spend. Marketers would focus on issues like branding, messages and color schemes, with virtually no feedback loop other than the occasional focus group.

With the advent of digital marketing and online commerce, marketing spend and effectiveness is now tracked at the most minute level. How many ads are clicked on, how they convert, what is working and what is not is tracked at every level and segment. Even traditional legacy advertising is voraciously tracked, from Nielsen tracking how many consumers see a TV spot to QR codes on billboards acting as an effective realworld clickthrough.

In stark contrast to marketing of the past, today’s marketers are measured by how much revenue they bring in per dollar spent. What “sentiment analysis” does is give those marketers an alternative way to measure their effectiveness — tracking how customers feel about and how much they are talking about a brand. All that effort on branding, messages, and color schemes can finally be validated!

However, the number of positive mentions you generate is simply a step towards revenue. If more people are talking about Pepsi than Coke, but more people are buying Coke than Pepsi, there is something seriously wrong in the conversion funnel towards a purchase. To make sure you’re turning positive sentiment into revenue, you need to make sure you’re making proper use of the analysis you do.

For bread and butter products like Wheaties and cable TV, sentiment analysis is more customer service — dealing with customer complaints that occur in social media and routing the complaints to the particular department that can handle it, before the complaints spread. Comcast, a company that many folks love to hate, has been particularly pro-active at responding to customers on Twitter, and even Salesforce is jumping into the game with its Service Force social CRM offering.

For product and company launches and other new offerings, sentiment analysis can help you track in near realtime how a new product or piece of content is spreading and decide what opinions to re-promote to grease the wheels of message spread. Products like Klout and PeerIndex help further by quantifying the viral influence of people tweeting about your product, so you can prioritize retweets of positive mentions and quickly attempt to neutralize negative sentiment.

However, the more important story here goes beyond what people are saying about a single brand or product launch. For the first time in history, we can look back in time and see how word of mouth and opinion about a product spreads, turns negative, or simply vanishes. Tying historical shifts in sentiment to external factors such as ad campaigns will show exactly what has worked, what hasn’t worked, and what can inflect a campaign towards viral success.

Much like Wall Street tests its predictive algorithms by analyzing past stock market trends and the impact of externals factors such as news stories and government reports, companies like Topsy and Infochimps that store tweets and connections between tweets are sitting on a ton of data that can analyze past sentiment in order to predict future sentiment.

In the Mad Men era of marketing, marketers had no idea how their campaigns were doing. Nowadays, marketers can track how campaigns are performing in real time and get an idea of what people are saying about their brand. And soon, by analyzing past sentiment, marketers will be able to predict exactly how a campaign will perform, and in realtime place ad units in to tilt campaigns towards virality and conversion. Knowing that you should buy some Facebook ads targeted at a particular demographic when a multichannel campaign has had a certain amount of success on YouTube is invaluable. After all, there’s no better sentiment than having a customer’s money in your bank account.

FarmVille 2? Why Zynga Needs to Start Making Sequels, Fast

2011-03-01T08:55:00.000-08:00

This post was also published in VentureBeat.

Do your best impersonation of a movie-trailer voice-over artist and say it: “FarmVille 2. This time, it’s agricultural.”

That’s right: Like the Hollywood studios of old, like the stodgy makers of console games before it, Zynga, the San Francisco-based publisher of social games like CityVille, Mafia Wars, FrontierVille, and FarmVille, is inevitably going to get into the sequel business.

Zynga has been a phenomenal success story with continuing growth, incredible profits, and big investments from major players. If things continue, it will soon be the most valuable gaming company — even though it’s still privately held and rivals like Electronic Arts and Activision Blizzard are publicly traded. Despite the carping from some corners, Zynga’s success is well deserved, as it figured out the twin precepts of the new era of casual gaming: incremental gameplay through virtual-good acquisitions and asynchronous cooperative gameplay with friends.

Zynga has added phenomenal gaming talent to its ranks, and although it had some missteps such as Treasure Isle, it evolved the gameplay from FarmVille, its first breakout hit, into CityVille, an even more successful game in terms of user ramp and monthly active users. CityVille reached 100 million users in just 43 days last month. However, CityVille is now quickly peaking after its stellar initial growth, and lost almost 5 million monthly active users in February alone, just three months after launch. CityVille is still increasing daily active users, but the writing is on the wall: CityVille will follow FarmVille’s decline, only faster.

At some point, each simulation game hits an end. A farm or city becomes too large to manage. Zynga has stayed ahead of this problem by continually feeding new simulation games to the market, but we are very close to the point where moving on to yet another simulation becomes tiresome, just as the wave of simulation games in the 1990s ranging from roller coasters to railways to the Sims eventually faded away.

Entertainment is entertainment. Even Hollywood movies go through waves like this. In the late 1980s and early 1990s there was a wave of movies glamorizing competitive professions. What started out as great movies like Chariots of Fire that featured runners moved on to average movies like QuickSilver that featured bike messengers, and then quickly degraded into Over the Top, with Sylvester Stallone starring as a professional arm wrestler. After shaking itself off, Hollywood went back to the staples with movies featuring cops, firemen and lawyers.

So what should Zynga do now? It has completely mastered social gameplay and the launch of new social games. Its titles, even after declining, dominate the social gaming scene, with four of its titles totaling up to 202 million monthly users. However, as the fast cycle on CityVille from launch to massive growth to decline, all within 3 months shows, perhaps another simulation game will not maintain sufficient momentum to sustain Zynga’s growth.

As I pointed out last May, the answer is gaming franchises. It is useful to see how previous generations of entertainment companies handled this problem for a taste of the future. Rather than inventing yet another first person shooter, Activision Blizzard revamps an existing franchise, Call of Duty: Modern Warfare 2, with new graphics and gameplay, and hits $1 billion in sales within three months.

Zynga is sitting on multiple gaming franchises that are seriously due for graphics and gaming refreshes: Mafia Wars, FarmVille, and Texas Hold ‘Em Poker. Each of these games has an audience that has played it before and would be very willing to check out a new version. Just when you thought FarmVIlle would go away, here comes FarmVille 2!

You Have Zero Friends, Google - But One Secret Social Weapon

2011-02-22T13:35:00.001-08:00

This post was also published in VentureBeat.

One of the charms of Google’s once and future CEO, cofounder Larry Page, is that he’s never seemed particularly worried about being liked.

But Google is very worried about knowing what you and your friends like — a domain of data that Facebook has so far dominated. And under its brash new leader, it could be gearing up for a real fight with Facebook over this priceless information about consumers’ preferences.

And Google has a secret weapon in the like battle that no one seems to be talking about.

It has been almost a year since Facebook introduced its Open Graph API in April 2010, offering websites social plugins to enable logins, let people easily “like” content on the Web, show which of your friends were on the site, what your friends recommend, and even what activities your friends have performed on the site. The login and like plugins have been enormously successful for large, popular sites like The Huffington Post, CNN and CitySearch.

However, the Internet is vast, and for the rest of the Web, it is very unlikely that your friends have had any activity at all. The average person has about 150 Facebook friends, not all of whom likely share similar interests. So when you show up at, say, a website for a new movie, the chances are infinitesimal that one of those 150 people has performed any type of activity that would register on Facebook.

As the South Park episode making fun of Facebook put it, “You have zero friends.” Even on large sites, this engagement can be irregular: Out of my thousand Facebook friends, only one has currently shared an item on CNN.com.

This gap between what your friends have liked and how you can find things that are interesting to you presents an opportunity for Google to finally inject itself into the social sphere. Google is now talking about how its new social project, reportedly called Google +1, will leverage the “interest graph,” where users can find not just what their friends like, but what people similar to them like.

Google’s new social strategy is apparently hinged upon its bargain-basement acquisition of Slide for a reported $182 million, the once-hot social-apps startup. For that price, Google got Slide founder Max Levchin, who’s reportedly leading Google’s social efforts. Slide, originally a widget for photo slideshows on MySpace, jumped on the Facebook-apps bandwagon, but its social games like SuperPoke rapidly faded as Zynga and others overtook them.

As I’ve argued before, if Google wants to buy failing companies to bootstrap its social efforts, it should acquire MySpace, as I pointed out in December. MySpace was actually an innovator in the interest graph, has almost as many uniques as Twitter, and is still a top music destination that dovetails very well with Google’s Vevo and YouTube properties.

But Google has one secret weapon in the battle for likes on the Web. And that’s Like.com.

Yes, Google owns that domain, through the acquisition of visual-search startup Like.com last year. Google launched Boutiques.com with Like’s technology, but hasn’t done anything with the Like.com site.

Could Google turn Like.com into its social supersite? Facebook is attempting to trademark the word “Like”. But since Like.com preceded Facebook’s usage by many years, any attempt to challenge Google will end up in the kind of bruising battle Page seems to relish.

Rather than the wonky, message-board inspired name of Google +1, Google should seriously consider pushing the “Like” moniker. Who cares what your sister and your college freshman year roommate like at Gap.com and CBS.com? Google, through its trove of search data, knows far more about what you will like. And it already owns the perfect website for those insights. What’s not to like?

Interactive TV Has Finally Happened - Just Not on TVs

2011-02-18T11:10:00.001-08:00

This post was also published in VentureBeat.

Ever since Yahoo Connected TV launched at CES in 2009, there has been a steady stream of TV app platform launches, including Google TV, Samsung, Broadcom/Adobe, Boxee, Blu-ray players, MythTV, and even Microsoft Xbox. However, there haven’t been any breakout apps for Internet-connected TVs — so-called “smart TVs.”

And the dirty secret? The TV apps out there are rarely used. I know this first-hand: At Transpond, the social apps-developer I founded and sold to Webtrends last summer, we made a couple of connected-television apps for one of the major broadcast networks, and the apps had almost no traction.

So what happened? It’s pretty simple. TV apps are cumbersome and awkward to use. Using a remote control to navigate across a bunch of app features is slow and confusing. In the process, you annoy everyone else watching the TV. This is the reason that Apple is not supporting apps on the Apple TV, even though it is essentially an iPod Touch with an HDMI port instead of a touchscreen. Games are the only apps that people want to run on a big screen, and they usually want to run highly interactive, multilayer games that are well beyond the capabilities of connected televisions. In addition, delivering TV apps required implementing a ragtag assortment of quirky APIs from players ranging from Yahoo Widgets to proprietary offerings from Blu-ray manufacturers.

Instead, people are using their smartphones, tablets, and notebook computers for all of the much-ballyhooed interactive TV scenarios. Who’s that actress on Entourage? Let’s look it up on IMDB. What’s that song at the beginning of Gossip Girl? Let’s Shazam it. What are people saying about this episode of Glee? Let’s search Twitter for #Glee. Even the onscreen guide, the one staple interactive unit that you’d expect to run on the TV screen, is moving to your palm, with apps such as the Comcast’s Xfinity Remote iPad app that lets viewers browse TV listings and even program their DVR.

There is an entire category of TV engagement apps emerging on mobile devices. ABC and Fox have launched iPad apps that can identify what TV show you are watching, using audio soundprinting technology from Nielsen that works like Shazam but for TV shows, and offer up options to interact with the show. GetClue lets viewers “check in” to TV shows and offers a recommendation service based on people’s expressed preferences.

The only popular connected-TV apps are the ones that let you select video and audio content on demand, such as Netflix, Amazon Video on Demand, and Pandora. Even these apps are now being replaced with a new generation of mobile devices that can transmit what they are playing onto television screens. Much like using the iOS Remote app to play iTunes music on a stereo with an AirPort Express, Apple’s AirPlay will stream video from any iOS device to a TV with an Apple TV set-top installed.

It is not a huge leap to assume that Google will iterate on its failed Google TV launch and make it so that Android devices can easily stream video to TVs. Vizio already announced at CES last month that their new tablets will be able to seamlessly hand video streams over to Vizio TVs. Even Intel got in the game at CES, and launched WiDi 2.0 which will enable mobile devices and notebooks to stream full 1080p HD video to any TV with a WiDi adapter.

With flat panels relatively commoditized, TV manufacturers attempted to differentiate with connected-TV features and 3D. However, the market has moved and the real differentiation is offering interactive features in the remote control. When the core differentiator for TVs becomes the controller you hold in your hand, Apple becomes a very scary competitor — and Google looks more like a friend. TV manufacturers should seriously consider bundling Android-based controllers that can run engagement apps and transfer streams to their large screens. It’s either that, or watch their customers change the channel once and for all.

Why Most Facebook Marketing Doesn't Work

2011-02-17T14:11:00.000-08:00

This post was also published in ReadWriteWeb.

For almost four years, since the Facebook Platform was launched, I have been involved in delivering Facebook apps for top brands such as CBS, NBC, Lifetime, Universal Music, Visa and more. Here's what we have learned doesn't work, and more importantly, what does work.

Deep Campaigns Don't Work

First, deep campaigns don't work. Digital agencies love deep, expensive campaigns on Facebook, with tons of pages, interaction, and art. It fits in with how agencies build microsites and websites, and justifies the $100,000-plus price tag that they like to charge. Examples include lightweight games, prediction contests, treasure hunts where you include friends, and such. Unfortunately for agencies and the brands that drop a lot of cash, Facebook users decidedly don't like deep campaigns.

They do not like to spend 20 or 30 minutes on a single brand's page, unless they are consuming innovative, funny, or exclusive content. So a travel site looking for a long time spent on a page should not put up a treasure hunt on a world map where you invite your friends and can together find great prizes after exploring cities. Sounds good in a pitch meeting, but it results in abysmally numbers of active users.

Facebook users are very sophisticated, and there is no way a single campaign is going to compete on game mechanics with CityVille. If you want to build CityVille, it might work. But, even Netflix pulled their Facebook app. You're better off putting up a bunch of funny videos from around the world and leave it at that.

Lots of Apps on One Tab Don't Work

It is easy to think of a Facebook tab like a Web page, and throw a bunch of features on it - such as a poll, gifting, and some videos - all on one tab. However, most users do not show up on a Facebook tab like they do on a Web page. They are usually coming in by clicking on a page's newsfeed posting ("What kind of traveller are you? Take the quiz!"), a friend's newsfeed posting ("I'm a cranky traveller! What kind of traveller are you? Take the quiz?"), or a Facebook ad ("Find out what kind of traveller you are!").

Now, if after clicking on one of these links a user is dropped into a Facebook Page tab with eight different things on it, they are not going to see a quiz immediately and move on. There should only be one engagement feature per tab.

Sweepstakes Don't Work

After an initial onslaught of Facebook sweepstakes promotions, marketers are learning that sweepstakes have very low conversion rates and almost no viral uptake. We're also learning that they attract unengaged users who are there for the prize rather than a relationship with the brand.

Facebook users like to click around and look at stuff, and absolutely do not like filling out forms. We have run highly promoted sweeps campaigns for major artists that included things like backstage passes and a limo ride to the show that had abysmal conversion rates. There is absolutely no incentive to make sweepstakes social.

Why would you invite more people to join a sweepstakes? It reduces your own chances. Have you ever seen a "I just entered a sweepstakes and you should to" posting on someone's wall?

One attempt to increase viral spread in sweepstakes is to offer more prizes when there are more entrants, but all that does is confuse users with conflicting agendas. There is a disincentive to invite people since it reduces your chances of winning, but if enough new people join up perhaps you can win something else... "Ah, too confusing, I'm going to watch videos instead."

Photo and Video Contests Rarely Work

A lot of brands like to do photo and video contests, but unfortunately they do not have the user base that likes to submit photos and videos. Travel and photography brands? For sure. Mobile carrier? Beverage brand? Not likely. Even clothing brands can't pull this off.

Uploading a photo or video is a big investment on the part of the user, and they do not expect to do it for the vast majority of businesses. These campaigns also require the labor to moderate the submissions. If you must run a photo or video Facebook campaign, the best way to do it is actually NOT in an app.

Instead, have users upload the photos and videos to the brand's page, and moderate them there. Then have users get their friends to Like the photos or videos. This way, the campaign leverages all of Facebook's viral channels around photos - when the user uploads the photo, when they Like the photo, when their friends like or comment on their photo submission, it is all highly likely to show up in their friends' feeds, drawing traffic. The great thing about this is that it is easy to do for free, since using all of Facebook's photo and video features are free, and users get to use the known Facebook photo and video interface, which increases conversions.

Like Blocks Rarely Work

Like blocking, where a user has to "Like" a Facebook Page in order to access a feature, typically has a 50% or more drop off rate, even when there is something there that is actually worth liking the page to get, such as exclusive content or a great coupon. Putting a Like block on basic content will almost guarantee a 100% drop off rate.

Be very, very selective about Like blocks and be sure to tell the user that it is worth it to them. A Like is the mailing list opt-in of the Facebook world, so be willing to offer up some goodness and know that most will opt not to Like.

Extended Permissions Rarely Work

A brand on Facebook should be like a casual friend or neighbor and not try to suck people into heavy levels of interaction. What do you do with a friend? Comment on their photos, like their status, vote on their outfit.
Asking the user for a laundry list of access to their profile usually results in a 30% or more drop off rate, and that is for well known brands that they trust. Do you really need to know their relationship status? Generally a brand already knows its demographic - does a youth-oriented clothing brand really need to validate that it is 16 to 25 year-old women that are engaging with the brand?

So while it sounds good to ask for extended permissions, do the math and monitor the drop off rate to ensure that it is worth it to you, otherwise the overall campaign ROI may not turn out the way you want, especially if the campaign is being graded on number of engagements.

Unbranded Apps Don't Work

It's got to look good, and be on brand. In the early days of Facebook, a brand could put up a basic presence with some turnkey apps, and users accepted that. Now that Facebook is all grown up, a brand presence needs to be on par with its website. Facebook users are savvy and will judge your brand in comparison to the best they've seen.

Dedicated Facebook Storefronts Kinda Work Right Now, But Soon Won't Work

Dedicated Facebook storefronts are the rage on Facebook right now, but they are unfortunately not integrated with an e-commerce site's existing payment and inventory systems, and are therefore a logistical nightmare. The best bet right now is to list featured products on a Facebook Page with click-thrus off of Facebook to the e-commerce site.

Now that Facebook is supporting iFrame tabs in pages, an existing e-commerce site can be skinned to fit in a 520-pixel-wide Facebook Fan Page, thereby integrating existing payment and inventory systems into the Facebook Page.

So What Does Work? Promotions and Consistent, Lightweight Engagement

Make sure your fans get something in return for liking your page with promotions likes offers for fans that they can easily redeem. The more lucrative the deals offer, the more sharing with friends with happen. Fans want things like exclusive products/services, drastically discounted prices akin to Groupon type deals, and early notification and registration for upcoming events, ideally exclusive to fans. Promotions should make the fan feel like they are a brand insider, not just a standard consumer.

A big secret of Facebook marketing is that it is easy and cheap to drive promotions using ads targeted only at your fans that link to landing tabs that deliver the offer and encourage fans to share to their newsfeed.

A brand on Facebook should be like a casual friend or neighbor and not try to suck people into heavy levels of interaction. What do you do with a friend? Comment on their photos, like their status, vote on their outfit. These types of interactions take seconds, not minutes, and definitely not hours.

A brand on Facebook should offer their users regularly updated, simple to interact with engagement features. Each of the engagement apps should be fully branded, and run in a separate tab with traffic driven from wall posts, newsfeed and Facebook ad units to increase engagement. Start with a personality quiz. Then two weeks later put up a poll. Then try a trivia app. For special events, put up a gifting app for Valentine's Day, or for the holiday season, a holiday song card.

Some brands, like media properties and well-known consumer brands, get an immediate fan base for this type of lightweight engagement. For the rest, building a fan base on Facebook is no different than building a mailing list in the previous generation of the Internet. It takes consistent engagement, and builds over time.

Methods to accelerate growth include tying Facebook ad campaigns with engagement apps and driving traffic from the homepage. The apps should still be lightweight and fun, with the conversion goal of getting the user to like the brand.

The point is to regularly put up new, fresh engagement features that are easy and fun for users to interact with, that they will want to post to their wall and share with their friends. Then users will interact with your brand just like they interact with their friends on Facebook!

How Microsoft's Nokia Payoff Could Take Apps Global

2011-02-15T16:03:00.000-08:00

This post was also published in VentureBeat.

The mobile operating system wars are a battle for the future of computing, not a battle for the future of phones. Former Morgan Stanley analyst and newly minted venture capitalist Mary Meeker highlighted this fact in her latest Mobile Internet Trends presentation. The key trend: Smartphones and tablets together outshipped PCs for the first time last quarter.

The good news for developers: The tumult in the mobile market may mean that they have more leverage with the creators of new platforms than they ever had with Microsoft during the era of Windows on the PC.

What escaped the legacy mobile industry is that phones are no longer phones but are in fact full-fledged computers that required full-fledged operating systems. Computer hardware and software? That happens to be Silicon Valley’s specialty. No wonder that existing players were not able to compete with the likes of Apple and Google, the duo now dominating the smartphone category with their modern mobile operating systems. Even simple feature phones — the voice-and-text-capable models that still vastly outsell smartphones — can’t escape this destiny. The smartphone of today is the feature phone of tomorrow.

Microsoft jumped late into the game last year, doing what it does best — copying and arguably improving the iOS and Android operating systems into Windows Phone 7. It is now replaying its strategy from its successful Xbox playbook of spending hundreds of millions, if not billion, to gain adoption of Windows Phone 7.

Operating system wars are battles for distribution and developers. Distribution can be bought, but developers are fickle and hard to budge. The current modus operandi for a typical mobile developer is to write an app for Apple’s iOS — the underpinnings of the iPhone and iPad — first and see how it does. If it gets some traction, next comes a quick port to Android. Once these two platforms are successful, a developer may wait for Microsoft to show up and pay up some of its market-development dollars to port to Windows Phone 7, but it had better be a lot of dough to be worth the trouble.

For example, the very popular mobile game Angry Birds is slated to ship on Windows Phone 7 in Q2 2011, long after its massive success on iOS and Android. The only thing Microsoft can do to shorten this lag is to increase Windows Phone 7 distribution.

As simple as this scenario sounds, the downside for iOS and Android developers was that international growth has been hampered. Large swaths of Europe, Asia, and Africa are dominated by Nokia handsets, and Nokia was unable to deliver a modern operating systems despite years of effort. Even though HTML5 offers a some amount of portability across devices for developers, Nokia had very limited support for HTML5 relative to the modern Web browser in iOS and Android.

It’s no shock that Nokia failed to implement a modern smartphone operating system. Its attempt to leapfrog its Symbian legacy was Meego, a joint venture with Intel. Predictably, it created bloated, non-usable software in an effort reminiscent of Taligent, which was IBM, Apple, and Motorola’s efforts in the 1990s to create an operating system that could compete with Microsoft Windows NT and NextStep.

Here’s a newsflash to big technology company executives: if one team can’t build a viable operating system, putting them together with other teams that also couldn’t build a viable operating system and having them report to multiple entities is not going to solve the problem. I’m sure it makes a lot of sense in strategy meetings and everyone feels good about joining forces, but the end result is very predicable to any engineer.

In an ironic twist of fate, HP/Compaq, Microsoft’s staunchest ally, acquired Palm last year and last week shipped a slate of new phones and tablets based on the Palm operating system and ARM processors. Nokia was indeed a “burning platform,” and the last remaining fire truck was Palm. Nokia did not move aggressively enough against a leaderless HP to snap up the last remaining chess piece in the smartphone wars. HP is not likely to succeed as it has always relied on Microsoft for its developer community and is building its own hardware in an attempt to replicate Apple's distribution, but without Apple's economies of scale.

Life would be simpler for developers if Nokia had adopted Android, making the mobile-OS market a two-horse race, but Microsoft intervened. Last week, Nokia folded its hand and opted to use Microsoft Windows Phone 7 as its primary smartphone platform in exchange for large payments in cash and in kind from Microsoft. Microsoft is attempting to guarantee distribution for its new mobile operating system, and is betting that once it locks down distribution, it will be able to attract its legions of developers to Windows Phone 7. The hurdle for Nokia is that it has now effectively been reduced to a commodity hardware vendor in the smartphone market, and it must focus on improving its clunky handsets and funky touchscreens to compete with stunning Windows Phone 7 devices from the likes of HTC and Samsung.

The big question is whether the promise of worldwide promotion with Nokia will push developers to support Windows Phone 7 in addition to iOS and Android. Microsoft Windows programmers are cheap and widely available to do porting work, and Microsoft will still spend a lot in market development dollars to convince developers to port their software, much like they did for the Xbox. This is a strategy that might take a while to bear fruit, but Microsoft is playing for the long haul. It must save its Windows franchise from becoming eclipsed by a wave of mobile devices, and will keep spending as much money as it takes to secure a position in the next wave of computing. With Microsoft’s dollars and Nokia’s global reach, there’s now a third way to cash in on the global apps gold rush.

Ariana Huffington is Right, and Rupert Murdoch is Wrong

2011-02-07T17:03:00.000-08:00

This post was also published in VentureBeat.

In the past week, we saw two moguls splash out big money on online content. News Corp. CEO Rupert Murdoch revealed he’d invested $30 million so far in developing The Daily, a subscription-only magazine for the iPad. And AOL CEO Tim Armstrong plunked down $315 million for Arianna Huffington’s Huffington Post.

What a contrast on the day of the Super Bowl: Murdoch (pictured left) took out a big-bucks television ad for The Daily during the football game (admittedly on his own Fox network, so he probably gave himself a discount). Meanwhile, Huffington (pictured right) and Armstrong got priceless free publicity as news of their deal roiled the Internet.

Could you ask for a better example of the difference in mindset between old media and new media? Take the top-down, orchestrated launch of The Daily. The reality didn’t match the fanfare: Short of must-read articles and clumsily walled off from search traffic and social media, The Daily — essentially a glossy magazine produced on a daily schedule — is the wrong product for the media future.

The reality is that people are not reading magazines because they are magazines, not because they are on paper. What people are reading is online media, whether you call it a blog, a website, or “content.” You are Robert Murdoch’s problem, since you are reading this right now online, and not tomorrow in the Wall Street Journal — another Murdoch property — or in “The Daily” on your iPad.

Clearly old media does not get this blog thing, and as the saying goes, in the land of the blind, the one-eyed man is king. While a lot of folks have counted AOL out, under CEO Tim Armstrong’s leadership AOL is becoming the top new media destination. The Huffington Post acquisition comes on the heels of its acquisition of the popular technology blog TechCrunch, and adds to a vast stable of popular sites ranging from BloggingStocks to PopEater.

What is unique about the Huffington Post is that it is that is has massive scale — 40 million monthly uniques — and is segmented across numerous verticals such as news, style, business, media, and even divorce. These high-traffic verticals will bring tremendous scale to AOL’s advertising sales, as an ad unit can now be bought for The Huffington Post’s style and living sections, as well as, say, PopEater. All of a sudden, PopEater ad units are worth a lot more since they are part of an AOL-Huffington Post “lifestyle” ad package. In addition, the Huffington Post brings a well known brand under the AOL umbrella that, love it or hate it, actually means something.

The other thing a combined AOL-Huffington Post has going for it is talent. After having not run into AOL people in almost a decade, over the past few six months I find myself interacting again and again with smart, talented folks at AOL. At Transpond, the social marketing company we sold to Webtrends, my current employer, we did social media campaigns for AOL properties last summer. At the AOL campus in Dulles, I ran into an old friend who just moved there from Silicon Valley to run a division. After launching PostPost, a social newspaper that is a side project of mine, I got a call from a smart guy who just started running AOL News to talk about how social feeds are affecting news. Why are all these people going to AOL all of a sudden?

One name: Tim Armstrong. Armstrong, Google’s former head of sales, joined AOL as its CEO and put in place the verticalized content strategy. Armstrong is based in New York and knows the media industry well, and is attracting very strong talent in advertising product development as well as content.

For example, AOL’s Project Devil real-time ad units are very compelling to advertisers, equaled only by WidgetBox’s specialized ad units. It recently acquired Pictela which makes it easy for advertisers to syndicate content through ads. These guys are on fire.

Contrast Murdoch’s pick as editor of The Daily: Jesse Angelo. If you’re outside of the New York media bubble, you’re probably asking yourself: Who? Though young, he’s a News Corp. lifer, steeped in the print world and his company’s peculiar rituals of catering to its quirky, newspaper-loving CEO.

Compare that to Armstrong’s hiring-through-acquisition of Arianna Huffington, a global media brand and a mogul who can now go head-to-head with Murdoch himself.

And Murdoch’s iPad efforts? Well, AOL is launching with Editions, an iPad magazine which will automatically pick the best of all AOL’s content for you. Now add all of the Huffington Post’s output to that, and you’ve got the real tablet newspaper. This is in stark contrast to the The Daily magazine, a paid app for subscribers only.

The editorially curated content of The Daily and its ilk on the iPad will lose in a competition to blogs just like their Web analogs already do. AOL can feed all of its interesting content with personalization into its Editions iPad app and come out on top. For that matter, the Huffington Post has over 40 million uniques, is updated constantly, and already comes in an iPad-friendly mobile format. Which iPad “magazine” do you think the next generation of readers will flock to? The Huffington Post, now a familiar online brand, for free, or the as-yet-unknown Daily for $40 a year?

AOL has a ton of upside. It is currently valued at $2.3 billion, and $1 billion of the valuation is arguably based on its legacy dialup business. So its content business, in Huffington’s hands, is really only currently worth $1.3 billion. Wall Street is tough when a company sheds legacy revenue as it builds new revenue streams, or as Henry Blodget so eloquently put it, “crapped the bed for two quaerters in a row.”

But Wall Street should also respect comparables. Even though it declined, AOL’s quarterly ad revenue is $331 million. Demand Media recently went public and is valued at $1.6 billion on quarterly revenues of $65 million, so roughly the same valuation for a fifth of the revenue. There is no question that AOL has far better content than Demand’s content farms, which pay freelancers low rates for basic how-tos and other easily churned-out content. With the addition the Huffington Post, AOL will attract more large, premium advertisers.

What next? Let’s assume that AOL can’t or won’t buy the likes of Gawker Media or the Drudge Report. (Huffington has built a bigger and more “civil” — read: “advertiser-friendly” — version of both of those websites.) Given Armstrong and Huffington’s emphasis on reaching women online, logical targets include Sugar Inc. and Glam Media.

But even without bulking up further and just building atop the Huffington Post, AOL could be the tech company turnaround story of the 2010s, on par with IBM in the 1990s and Apple in the 2000s. Watching them crush the failing efforts of old-media brands to adapt to the world of iPad will just be the cherry on top.

Maybe Murdoch should have taken Huffington up on the chance to blog for her.

The iPadification of the Web

2011-01-29T16:59:00.000-08:00

This post was also published in VentureBeat.

Design on the Web needs a reboot — and the iPad may provide the push publishers need to toggle the switch. But will smarter-looking online offerings save old media?

Creators of Web content have poured considerable effort into reinventing their websites as top-down, gorgeously designed experiences for Apple’s tablet and other mobile devices, in the hope that what they give away on the Web might turn into something their audience will pay for as an app.

That rethink is starting to reach into the desktop, ranging from the Huffington Post’s Glide App for Google’s Chrome Web Store to the Mac App Store version of Mashable, a popular tech blog.

You might ask why Mashable needs a Mac App Store version: Don’t users have Web browsers on their Macs? True. But the iPad has a browser, and a screen large enough to view websites comfortably. That hasn’t stopped iPad app developers.

The iPad has driven a new take on the content site — a streamlined, sexy version. One typically might see navigation on the left, related content to the right, and articles that float open in the middle — a simple, uncluttered format. Most importantly, as with the iPad’s App Store, the Mac App Store and Chrome Web Store offer a micropayment mechanism that lets people pay small amounts of money with a single click in order to subscribe to content.

Apps, furthermore, have a dedicated presence, putting themselves at the top of a user’s menu of online activities. A Web browser contains infinite possibilities — but users only install a finite number of apps, giving app publishers an advantageous position in mindshare.

There is no question that these new, “iPadified” sites look far better than their Web analogs. If anything, they look more like the mobile versions of websites. And since mobile sites are by definition focused and simplified, they are quite often better experiences. As venture capitalist Fred Wilson noted on his blog, sometimes companies should just use the mobile version of their site as their actual website.

Think about how Web design happens in the real world. Does anyone really care about your mission statement? In a groupthink-friendly marketing meeting, it gets tacked onto the homepage. And then a social-media expert recommends a Facebook plugin and sharing links for a dozen or so popular sites. Then a recommended-content widget to drive more pageviews. Sales wants more ad inventory. (Startups like BrightTag have sprung up purely to manage this mess.)

Against that tide of flashy flotsam comes the iPad. For the smaller screens of mobile devices, hard decisions have to be made, and the crap gets cut. Which raises the question: Why was it ever there in the first place?

Woe betide the publishers who don’t iPadify their content. Entrepreneurs — full disclosure, myself included — are more than ready to do the job for them. The first generation of news aggregators, like Digg and Google News, used algorithms to present headlines in bare-bones format. Now, a raft of “social newspapers” like Flipboard, Paper.li, and PostPost, a side project of mine, are plucking headlines shared by users’ friends on Facebook and Twitter and displaying them in elegant, iPad-friendly formats.

Facebook and Twitter themselves, for that matter, provide elegant, stripped-down interfaces for reading the news, or what users’ friends consider news, at any rate. As a result, an increasing amount of traffic to news sites now comes from social links.

Against this tide, iPadification appears like a sane response. The embrace of mobile design and interface metaphors provides publishers the hope that they can retrain users to consume content as an experience, starting with the homepage, rather than a series of links that they click from an endless variety of sources.

But can it, really? Ultimately, iPadification and socialization aren’t conflicting: Well-designed newsreaders driven by social links seem poised to offer the best of both worlds. This scenario has already been played out in the music industry. An article in a newspaper is no different that a track on an album, and users have clearly decided they like to play DJ with music and editor with content. No matter how nice the labels made CDs, whether box sets or exclusive special content, users just want to download a track, not an album. From the user perspective, why should an article be any different? Why take an editor’s mix when you or your friends can put together their own?

The transition from paper to digital is likely to cull the weak, and only a few large players such as the New York Times, the Economist and the Wall Street Journal, along with some of the top fashion-magazine brands, are going to make the cut. Taking ’90s-style CD-ROM “multimedia” and putting it into an app won’t save the vast middle tier of media. For the rest, either they’ll adapt to the economics of the open Web, as upstart new-media brands like Mashable and VentureBeat have, or they’ll fade away, apps and all.

Even the New York Times, perhaps the pinnacle of editorially curated content, is embracing iPadification and socialization after initially fighting it. News.me, a collaboration between the Times and New York City-based incubator Betaworks, the backer of link-sharing service Bit.ly, was supposed to launch late last year. It’s not out yet, but when we finally get a chance to see what they’ve been up to, we’ll get a glimpse of media’s iPadified, social future.

With Schmidt Out as CEO, Google can Stop Copying Microsoft

2011-01-21T10:33:00.000-08:00

This post was also published in VentureBeat.

There’s much to praise in departing Google CEO Eric Schmidt’s tenure. But if the stagnation of recent years can be pinned on one fault, it’s this: Schmidt’s Microsoft obsession.

Sure, Microsoft gets lots of flack for attempting to knock off Google’s Web search with Bing. But the truth is that under Schmidt’s stewardship, Google has been obsessed with replicating Microsoft products. Windows, Internet Explorer, Office, Exchange, and .Net? Chrome OS, Chrome Browser, Google Apps, and Google App Engine.

Ironically, when Schmidt first joined Google, he told John Battelle that he was looking forward to not competing with Microsoft, after being battered by Microsoft during his stints as CTO of Sun and CEO of Novell.

Schmidt leaves Google a healthy company. It has completely dominated search as a money-making business, even though the search product definitely is in the midst of a much-needed retooling. But now that Schmidt is moving on — Ken Auletta in the New Yorker suggests that the post as executive chairman is just a temporary gig before he leaves for good — can Google drop the so-last-century obsession with faded tech idea like operating systems and email?

Schmidt’s Microsoft obession has some history, which I witnessed firsthand. Schmidt spent the formative years of his career at Sun Microsystems, a company whose very soul was combatting Microsoft. In 1998, a year after Schmidt left, I arrived at Sun when it acquired NetDynamics, one of the first application server companies, where I was CTO.

Back then Java was still new, e-commerce was still starting to scale, and there was no standard Java way to add data and logic to an HTML page. We went and met with the Java folks about it, and they told us they were going to create “Java Server Pages” or JSPs, a pretty hackneyed notation. “Why are you doing that instead of using XML?” I asked, referring to the Extensible Markup Language, a more fluid and up-to-date way of doing things that’s now a standard way of exchanging data. “Because that’s how Microsoft does it with Active Server Pages,” was the reply. I left the meeting thinking that these guys were insane. I soon learned that almost every division of Sun was trying to compete with Microsoft on Microsoft’s terms, from office productivity software to software servers to consumer operating systems.

After Sun, Schmidt was the CEO of Novell, and launched or acquired failed products such as SUSE Desktop Linux in an attempt to compete with Windows and the Mono project to replicate Microsoft .Net on Linux.

Schmidt claimed he’d learned from those experiences at Sun and Novell. But is it really that surprising that, once Google started gushing cash from its advertising business, that Schmidt used it to take on Microsoft yet again?

In the end, there is really no point of copying Microsoft on its own turf; as Schmidt has now found out three times, it is a lost cause. Google’s enterprise business — Google Apps and the like — have scored some wins, but are far from achieving Microsoft’s scale.

No wonder why: Imagine you are a typical business running Microsoft Outlook, Office, Exchange, SharePoint, .Net, and such. Google comes in and says, “We can rip some of this stuff out, it will be very painful to migrate your data, and you have to retrain all of your users.” And Microsoft comes in and says “we will migrate all of your servers to our cloud over the weekend, you guys can come back on Monday and everything will look exactly the same, except now it’s hosted and you can fire your IT department.” Which way do you think most businesses are going to go? It’s a nice business. It’s just not the future. Why bother competing for it?

Product companies have to be run by product people -– Steve Jobs at Apple, Larry Ellison at Oracle, Bill Gates during Microsoft’s heyday, Marc Benioff at Salesforce, and Mark Zuckerberg at Facebook. These guys know how to drive their companies into new products such as iPads, social advertising, and application platforms. To the extent that Schmidt, who shared power with cofounders Larry Page and Sergey Brin, was a product person, he was about last century’s products, not this one’s.

Here’s hoping Page, who came of age when Microsoft was already fading, is looking 10 years into the future, rather than 10 years into the past. Imagine if Google had put the same amount of energy into its Orkut social network (that launched weeks before Facebook in January 2004) that it put into Google Apps. Now that Google is back in the hands of its original product visionary, we will finally see what Google is really made of.

Google Already Knows its Search Sucks (And They’re Fixing It)

2011-01-12T18:05:00.000-08:00

This post was also published in VentureBeat.

It’s a popular notion these days Google has lost its “mojo” due to failed products like Google Wave, Google Buzz, and Google TV. But Google’s core business — Web search — has come under fire recently for being the ultimate in failed tech products.

I can only ask: What took you so long? I first blogged about Google’s increasingly terrible search results in October 2007. If you search for any topic that is monetizable, such as “iPod Connectivity” or “Futon Filling,” you will see pages and pages of search results selling products, and very few that actually answer the query. In contrast, if you search for something that isn’t monetizable, say “bridge construction,” it is like going 10 years back into a search time machine.

Search has been increasingly gamed by link and content farms year by year, and users have been frogs slowly getting boiled in water without realizing it. (Bing has similarly bad results, a testament to Microsoft’s quest to copy everything Google.)

But here’s what these late-blooming critics miss: Yes, Google’s search results do indeed suck. But Google’s fixing it.

Yes, the much acclaimed PageRank algorithm that ranks search results based on the most number of inbound links has failed, since is easy for marketers to overwhelm the number of organic links showing that something is interesting with a bunch of astroturfed links. Case in point, the Google.com page that describes PageRank is #4 in the Google search results for the term PageRank, below two vendors that are selling search engine marketing.

Facebook, which can rank content based on the number of Likes from actual people, rather than the number of inbound links from various websites, can now provide more relevant hits, and in realtime since it does not have to crawl the web, a Like is registered immediately. No wonder Facebook scares Google.

But the reality of Google’s success was actually not PageRank, although it makes for a good foundation myth. The now-forgotten AltaVista, buried within Yahoo and due to be shut down, actually returned great results by employing the exact opposite of PageRank, and returned pages that were hubs and had links to related content.

Google’s secret was that it could scale infinitely on low-cost hardware and was able to keep up with the Internet’s exponential growth, while its competitors such as AltaVista were running on expensive, big machines running processors like the DEC Alpha. When the size of the Web doubled, Google could cheaply keep up on commodity PC hardware, and Altavista was left behind. Cheap and expandable computing, not ranking Web pages, is what Google does best. Combine that with an ever-expanding data set, based on people’s clicks, and you have a virtuous circle that keeps on spinning.

The folks at Google have not been asleep at the wheel. They are well aware that their search results were being increasingly gamed by search marketers, and that this was not a battle they were going to win. The answer has been to dump the famous blue links on which Google built its business.

Over the past couple of years, Google has progressively added vertical search results above its regular results. When you search for the weather, businesses, stock quotes, popular videos, music, addresses, airplane flight status, and more, the search results of what you are looking for is presented immediately. The vast majority of users are no longer paging through pages of Google results: They are instantly getting an answer to their question:

Google has the unique position of learning from billions and billions of queries what is relevant and what can be verticalized into immediate results. Google’s search value proposition has now transitioned to immediately answering your question, with the option of sifting through additional results. And that’s through a combination of computing power and accumulated data that competitors just can’t match.

For those of us that have watched this transition closely and attentively over the past few years, it has been an amazing feat that should be commended. So while I am the first to make fun of Google’s various product failures, Google search is no longer one of them.

Amazon’s Narcissistic App Store

2011-01-07T11:51:00.000-08:00

This post was also published in VentureBeat.

Why did Amazon launch an Android app store this week? Chalk it up to a case of Apple envy.

Thanks to the iPod, iPhone, and iTunes, Apple is now making an estimated $5 billion per year in digital content distribution. Amazon.com, caught by surprise, has been struggling to keep up in the fast-growing digital content market. It missed the boat with music. (Discount Kid Rock MP3s, anyone?). Amazon’s online-video service is caught in a netherworld between iTunes and Netflix. Even at its new lower price point, the Kindle will soon be eclipsed by the iPad and Android tablets; already, Apple forced Amazon to lower its exorbitant book distribution fees.

Despite these multiple failures, Amazon still wants to make a go of it. Everybody else has an app store, from Apple to Google to Nokia and even HP. Why shouldn’t the world’s biggest online store sell apps, too?

Give Jeff Bezos this much credit: He sees that everyone is vertically integrating from content to distribution to device, and Amazon.com needs a piece of this action before another fast-growing digital content revenue stream flows away.

The problem is that Bezos doesn’t own a mobile platform, so he has to horn in on someone else’s. Google’s Android, as an open-source system, allows third-party app stores, so it’s a natural target.

But embracing Android, while certainly easier than trying to machete into Apple’s walled garden, has its good and bad sides. There is an old corollary about open source: the great thing about open source is that anyone can do anything with it, the bad thing about open source is that anyone can do anything with it. Generally open-source projects have a natural center and one main branch, and it takes quite a lot of mismanagement to cause people to fork a project.

We are starting to see some wireless carriers such as Verizon start to deploy their own stores. That’s understandable, as they actually sell phones and services, and already sell content to their customers — though, like past app-store attempts by carriers, it’s unlikely to be successful.

Google’s Android Market definitely has its problems. Like Facebook, it allows any developer to submit an app, and then users can flag dangerous or fraudulent apps. However, a Facebook app hanging your browser is very different than an Android app crashing your phone. Clearly there needs to be some better application filtering and sandboxing.

But does this posit the need for an entirely new Android app store from Amazon, which will manually approve apps like Apple does with the iPhone? What’s cool about Android is that there is no Big Brother approving apps. Amazon will also offer app recommendations — a vital need in the app world, and one that Amazon’s vast stores of customer data can help in. But this is a category that others such as GetJar and Chomp fill without having to deploy an app store.

The one clearly important innovation Amazon is offering is dynamic pricing, which will discount apps automatically to increase sales. But Google, which is a master at dynamically pricing ads, could easily copy this feature.

The problem here is that Google has finally gotten all of the carriers and handset manufactures in line and is shipping relatively consistent and stable Android phones. Android is finally a viable contender to the iPhone despite its early fragmentation.

Yet now, instead of software and hardware fragmentation, the Android platform has to contend with fragmented app stores. While the Amazon app store might be good for Amazon, it is definitely not good for the Android ecosystem.

The good news is that it is likely to fade into the ether, since it will be difficult to convince carriers and handset manufacturers to promote yet another app store — or explain to end users, who already suffer brand confusion about who makes Android phones, why they would need another app provider. But if Amazon’s innovations in pricing and recommendations spur Google to improve its Android Market, then Amazon’s store will have served a purpose. Just not the one Jeff Bezos may have had in mind.

Will 2011 be the Year Online Video Unravels the Internet?

2011-01-03T13:48:00.000-08:00

This post was also published in VentureBeat.

The explosive growth of online video over the past couple of years has begun to unravel the way both businesses and consumers have used and paid for Internet access over the past decade. Although past Internet growth has been exponential, the deluge of video that is coming in the next decade has already forced a series of legal, regulatory, and business disputes that have set the stage for significant changes for the next decade of video on the Internet.

A lot of this has been talked about in the lofty intellectual framework of net neutrality, which advocates present as the principle that providers of Internet access should not discriminate between types or sources of traffic on their network. But what it really comes down to are a new set of business arrangements for who will pay to get the bits from point A to point B. A host of developments in the past year have set the stage for major battles over bandwidth in 2011.

In April, the US Court of Appeals in Washington, DC overturned a 2008 Federal Communications Commission ruling forbidding Internet service providers from throttling BitTorrent, a popular video sharing protocol. With that ban overturned, ISPs now had free reign to meter particular bandwidth-hungry protocols.

Comcast had already effectively worked around the FCC decision by capping consumer consumption to 250 gigabytes, a relatively large amount of bandwidth that most consumers never came close to reaching. However, with the advent of HD streaming from Hulu, Netflix, iTunes, Amazon.com, and others watching 100 hours of HD video, or just 3 hours a day, can exceed that cap, prompting many “over the top” users to transition to more expensive “business class” plans that do not cap bandwidth.

Right before the Christmas holiday, the FCC issued a description of an upcoming set of rules regarding net neutrality for service providers. Wired broadband providers such as Comcast and Time Warner could no longer “unreasonably discriminate” against competing content providers like Hulu, but they could theoretically still discriminate against bandwidth-hogging protocols like BitTorrent.

In a King Solomon-like decision, the FCC also decided that wireless providers like AT&T and Verizon Wireless could definitely discriminate against particular protocols and apparently even particular providers such as Hulu, although this aspect is not completely clear until the full rules are published early next year. Most wireless providers had already capped their “unlimited” data plans earlier this year in response to the increasing consumption of video on their networks.

This FCC decision to allow discrimination on wireless neworks set the net neutrality community into a holiday-season tizzy. Despite the uproar, it has to be argued that since bandwidth is indeed limited on wireless networks, allowing providers to discriminate was a reasonable decision.

At some level of bandwidth, even net neutrality advocates cave. I had a funny exchange with a prominent net neutrality advocate earlier this year after he had posted on Facebook that he was using GoGo, the inflight Internet-access provider, on a plane. “Aren’t you glad GoGo caps your neighbors from sucking up all the bandwidth with Hulu and YouTube?” I asked. “This is different,” he responded.

The FCC thinks that wireless networks, too, are different, with inherent limitations in bandwidth. So it ruled they can discriminate in order to maintain predicable service, although the may revisit this once fourth-generation, or 4G, wireless technologies like WiMax and LTE get larger penetration.

While most of the fuss was about the legal landscape, the biggest video salvo came on the business front in late November, when Level 3, an Internet backbone provider that had recently entered the content delivery network business through its acquisition of Savvis’s operation, publicly complained that Comcast was attempting to extort large fees in order for Level 3 to deliver Netflix’s video streams to Comcast customers.

Level 3 claimed that Comcast was doing this in a discriminatory manner in order to promote its own competing Fancast property and its soon to be acquired stake in Hulu via the Comcast acquisition of NBC Universal. Comcast in turn argued that it was simply charging for a standard “peering” arrangement in order to deliver a vastly increased amount of data from Level 3, that Level 3 had underbid to win Netflix’s business and was trying to have Comcast, in essence, subsidize its contract.

For many readers of VentureBeat who invest in or operate Internet businesses, the practice of paying to serve content on the Internet is well known. The more successful a company is at distributing its content, the more it has to pay in hosting bills. All the main hosters used by startups and large companies alike, ranging from MediaTemple to Amazon.com to Rackspace tier their prices based on the number of bytes sent out.

Why do content companies have to pay by the byte sent if the Internet is “free”? Because, in fact, the hosters in turn must pay to plug into various backbones, and they pay by the amount of traffic they are sending upstream, and deduct by the amount of traffic they are accepting back. The word “Internet” is short for “internetworking.” What’s presented as a single network is in fact a collection of interconnected networks, each of which pay to send data to each other. This system of “the more you send, the more you pay” has been in place since the start of the commercial Internet. It’s called “peering”: If two companies are sending each other the same amount of data at an interconnection point, they are by definition “peers”. If one is sending a lot more, it has to pay more.

The commercial Internet has long had a “fast lane,” called a content-delivery network, where companies like Akamai and Limelight Networks have servers and data centers located in the same facilities as ISPs or close by. They pay the ISPs for a high level of peering connections and copy content to those colocated facilities. So when you are reading a New York Times article, or watching a YouTube video, chances are it is being served from an Akamai server very close to you, and the content provider is not paying to send the content from their server through their backbone links. This is cheaper for a media distributor since the CDN only has to pay for the uplink into your ISP or to colocate servers at your ISP, and is faster as well since it is not hopping across a bunch of networks.

The most interesting aspect of the Level 3 and Comcast fracas is that it is an attempt to use regulatory and fair-trade claims to change how the commercial Internet has worked to date. It is unlikely that the FCC or Federal Trade Commission will force ISPs to deliver an unlimited amount of data for free. What if Netflix was plugging directly into Comcast’s network? Wouldn’t they be expected to pay a connectivity fee like they are currently paying their backbone and CDN providers? Peering arrangements are the fabric of how the commercial Internet has operated, and it is unlikely that regulators will attempt to change this.

Netflix already accounts for an estimated 20 percent of primetime Internet traffic, a figure that is constantly growing. That company can easily switch to Akamai or Limelight which already have the infrastructure in place with ISPs like Comcast to delivery video streams. However, it is likely that regulators will force ISPs like Comcast, which also provide their own competing video streams and services, to offer CDNs reasonable and nondiscriminatory pricing for peering connections.

The FCC mandate requiring wireline ISPs not to discriminate will be pushed to the limits by multichannel video providers like Comcast and AT&T U-Verse, since it is a fundamental aspect of their operation to discriminate. A multichannel wire coming into your home might provide digital TV, digital telephone, and Internet data. But it’s not three different connections: It’s just one, with Comcast, AT&T, Time Warner, Verizon and the rest operating their networks to deliver a certain amount of bandwidth to each service.

As it stands right now, these providers secure video content licenses from firms like CBS and HBO and deliver it with dedicated bandwidth to proprietary cable boxes. It really is no different than Netflix licensing the same content, paying for connectivity with a CDN, and streaming it to a Roku box. But although both signals are coming across the same cable, for now everyone is committed to keeping them separate from a regulatory perspective.

As more and more video viewing shifts from cable television to Internet video, multichannel providers like Comcast and AT&T are very likely to want to shift dedicated bandwidth from the digital television portion of their networks to the Internet portion, and allow viewing of their licensed video content on Web browsers and Roku boxes in addition to proprietary cable boxes. Such a shift will likely cause a huge battle with net neutrality advocates and streaming competitors such as Netflix. It is not clear how the FCC and FTC will rule on this issue, and is very dependent on the upcoming government climate.

One option would be to force providers to lease dedicated bandwidth to video streaming competitors at reasonable and nondiscriminatory pricing, much like how in the early days of broadband phone companies were forced to lease their lines to competitive DSL providers. This would enable legacy providers such as Comcast and new entrants like Netflix to play on a relatively even field.

But as the heated discussion around net neutrality shows, there’s no guaranteed bandwidth for reason in this discussion.

A New Year's Resolution for Google: Buy MySpace, Stat!

2010-12-20T22:25:00.000-08:00

This post was also published in VentureBeat.

For all the money Google has thrown at MySpace over the years, the search giant of Mountain View might as well have bought the troubled social network. For years, News Corp. CEO liked to brag that Google paid him more in its landmark $900 million search deal than he paid to buy MySpace in the first place.

Oh, sure, no one’s bragging now. News Corp. executives are openly talking about dumping MySpace, and Google only recently renewed its advertising agreement with MySpace, after months of delay, in a deal that smacked of throwing good money after bad.

But that’s a sunk cost, as economists like to say, and chump change for Google’s multibillion-dollar money machine. What Google really needs is a convincing social strategy to get Wall Street and Silicon Valley’s collected punditocracy off its back. MySpace is for sale. And Google should jump at the chance to buy it.

The stratospheric success of Facebook in 2010 has put Google on edge. Five hundred million-plus users, $2 billion in advertising revenue forecast for next year, the gaming and e-commerce platform of the future, and one out of five pageviews. Can you blame Google for flailing at finding a strategy to compete with Mark Zuckerberg’s social juggernaut?

The reality is that Google will have as much success replicating Facebook as Microsoft has had replicating Google with Bing. Google’s engineers keep thinking it can use standards to win against a proprietary platform, a strategy that Sun Microsystems — remember them? — employed against then-nemesis Microsoft when Googel CEO Eric Schmidt worked there. Ranging from OpenSocial, a widget platform, to XAuth, a content-sharing protocol, all of these “standards” have failed to stop Facebook and its magnetic attraction for users, developers, and advertisers.

The dealmakers of Mountain View, meanwhile, have acquired a grab-bag of companies like Slide and Jambool with the hopes that their key talent somehow understands social Web apps better than Google’s famously cosseted and out-of-touch nerdocracy.

The apparent fruit of these efforts — a toolbar-like add-on to existing Google sites called either Emerald City or +1 — does not seem like a viable strategy either. There is no there there: a social network requires somewhere to be social.

The right strategy for competing with Facebook is not to take Facebook head-on. Facebook is great for sharing links, photos, and events with people you do know. With recent upgrades to photos and groups, it’s getting even better at that.

But there is still a huge opportunity for communicating with people you don’t know, something Facebook is weak at by design. It doesn’t take much observation to see that people love to gather together around common interests, particularly around media properties like bands, TV shows, and movies. It can’t hurt that those also happen to be major advertising categories.

During former Facebook COO Owen Van Natta’s painfully brief stint at MySpace, he actually put a viable strategy in place. His experience at Project Playlist, a music-sharing startup, showed that users were very interested in sharing their tastes with friends and strangers. At MySpace he soon put in place a playlist system using MySpace’s legal music content. Acquiring iLike’s recommendation system promised to accelerate that, and a redesign would make it all look great.

However, the corporate overlords at Fox were only interested in maximizing revenue rather than adjusting and growing the business, and Van Natta was out. Only after further revenue declines did his concept of “social entertainment” actually ship. At the time MySpace still had more revenue than Facebook; it still has roughly as many unique users as Twitter — a persistent object of Google’s acquisition interest, despite its unproven revenue strategy.

So what would Google do with MySpace? It already has some fantastic properties that it can tie into the site. Vevo, the music site spawned from YouTube, is fast becoming the premier destination for music videos on the Web, the MTV of the social generation. That and the rest of YouTube ties in perfectly with MySpace’s music core. Like MySpace Music, it’s also a joint venture with the music labels. YouTube videos, already ubiquitous in MySpace user profiles, could spread throughout the network.

Though Google’s Orkut social network, a Friendster clone, is fading, it still has pockets of strength like Brazil. Those users can be migrated into MySpace to create an international beachhead. Google News can feed into the MySpace homepage.

MySpace has a reputation for bad design, but its new design is remarkably good. Those cats in Hollywood actually know how to do mass-market fun, something Googlers just can’t grok, and even Facebook can't match with its boring, tightly controlled brand Pages.

Sure, there’s a downside — the institutional pain of integrating disparate cultures and creaky technology. But both Google and MySpace need a radical shakeup to succeed in social, and an acquisition could be the galvanizing event that forces change on ossified organizations. And fear is a powerful motivator. Google and MySpace can grow irrelevant separately, or challenge Facebook together. Eric, Rupert, there’s never a bad time to make new friends.

Introducing PostPost and a New Way to Finance Startups

2010-12-08T22:00:00.000-08:00

Yesterday we launched PostPost, a realtime Facebook newspaper that I created over the past few months. The launch was covered in Time, CNN, Mashable, and other news sources. PostPost lays out all of the interesting links, videos and photos that your friends have posted to their Facebook profiles, in the familiar format of modern news sites like the Huffington Post. Since it is the Post of posts, we called it PostPost.

Previous attempts at this type of solution relied on strangers choosing what is interesting like Digg, an algorithmic solution like Google News, and editorial solutions like the Huffington Post and Drudge Report. Facebook’s underlying platform lets PostPost display what your friends have found interesting, a truly personalized news experience.

Does this sound like a company or a feature? Can’t someone else create something like this in a couple months? In fact, we can ask this about a lot of the “startups” that we read about every day.

I wrote the first version of PostPost in the midst of selling Transpond, a social marketing platform company that I had founded, to Webtrends, a period of "merger stasis" when not much gets done since decisions are deferred. PostPost was an experiment in technology, in that it is a 100% clientside. I first wrote it in Python on Google App Engine, then in PHP since Google App Engine would be expensive if the app popped, and then chucked that and rewrote the whole thing in just JavaScript on the browser so that there would be no server and it would scale infinitely and in real time direct to Facebook.

Once I finished the first version of PostPost and showed it to a few friends, we were all pretty enamored with it. It is addictive. And then we realized that it was potentially valuable. It’s the next Digg! The next Huffington Post! The standard course of action here is to raise money, hire ad sales people, do deals, and create a company around it.

In the midst of writing PostPost, Flipboard and Paper.li launched with very different approaches. Both have servers that have choked and offer news that is significantly delayed. Flipboard is well funded by KP and targeting the iPad only, and provides an innovative user interface for pad-based browsing. Techrunch is raving that VC's were dying to invest in Paper.li, but I found it to be pretty lacking since its server based architecture updates your news once a day - to be frank, if I want to read 24 hour old news, I'll go buy the paper version of the New York Times.

I completely understand how Techcrunch, super angels, and feature startups are all highly invested in creating "companies" out of features. However, I did not want to participate. I had just been through this whole process, was now at Webtrends and committed to helping drive social and mobile there. From a technology perspective, PostPost was boring – we wrote the entire shipping version in less than 120 manhours, and that included the two server side versions that were tossed, and there isn’t even a big data server to scale and optimize. There are some more fun features to add, like sorting by Like velocity and mobile versions, but all in all the product was fully baked in short order, and was competitive with much larger organizations due to its unique technical architecture.

In the midst of this, I showed it to friends of mine at TigerLogic (Nasdaq:TIGR), where I serve on the advisory board. Among its products, TigerLogic has an innovative search product called Yolink that searches within a set of links for your search terms and surfaces the relevant paragraphs. And we had a joint epiphany: PostPost was the perfect use case for Yolink, since with Yolink search users could search within all of the posted links from all of the disparate data sources. A deal was quickly consummated for TigerLogic to pay to add design polish and finalize the product and for us to share downstream revenue, and PostPost is now being launched by TigerLogic.

I think that this type of outcome will become more and more common in Silicon Valley and elsewhere as more and more of these types of “feature companies” launch and search for alternative means of financing beyond seed financing. It is that rare situation where everybody wins: Entrepreneurs get a share of downstream revenue and don’t have to be attached to a project for four years. Corporations get access to innovative products that add new revenue streams and promote and cross-sell their existing products. Investors can focus on the bigger opportunities. And we can all stop pretending that features are companies.

Why Google Needs the Video Digital-Rights Technology behind Netflix

2010-12-04T23:00:00.000-08:00

This post was also published in VentureBeat.

Google announced yesterday that it’s purchased Widevine, a video digital rights management company mostly known as the technology behind Netflix’s video protection. Widevine gives video sites the tools to license, encrypt, and distribute videos to a variety of device platforms.

So why does Google suddenly need a credible DRM solution? It’s all about gaining the trust of the networks. Bear with me, and I’ll explain.

People have been saying for years that hordes of consumers would soon unplug their cable boxes and rely exclusively on streaming video. In the last few weeks we’ve seen signs that might actually happen. Cable subscriber numbers have dropped two quarters in a row, accentuating that last quarter’s first-ever drop in subscriber numbers was no fluke. And organizations like HBO have made the leap to online streaming and may soon charge direct subscription fees that skip cable providers once the price is right, thereby maintaining their growth in response to cable’s TV’s demise.

As Hulu and Netflix have figured out, people are more than willing to pay an $8 monthly fee for access to good television content, and they’re even happier to not pay their cable companies $60-$100 per month. The networks were only getting $1 of that cable bill per subscriber, so they are now increasingly happy to cut the cable companies out and put more per subscriber in their pockets. From this context, it’s no surprise that Comcast is buying NBC in order to secure its valuable television and cable television programming like Bravo and USA Network.

In the midst of this accelerating transition to streaming television, Google has been struggling to promote its streaming products such as YouTube and Android/GoogleTV as preferred viewing platforms. There has not been much uptake after striking deals to stream content like older CBS shows on YouTube, and the networks quickly blocked GoogleTV from running their content soon after its launch.

Owning Widevine’s technology will enable Google to negotiate content deals from a position of trust, rather than as the owner of YouTube. It can tell networks, “Hey, it’s the same technology that Netflix is using, and you signed a deal with them!”

A “YouTube Plus” akin to Hulu Plus, with trusted DRM that offers network television and movies under a well-known brand will finally give Google a counterweight to the iPhone/AppleTV and iTunes hegemony. People say that YouTube isn’t a place for premium content, but the YouTube music-video spinoff Vevo, which has emerged as the “Hulu of music,” has proved them wrong.

Groupon is Google’s $6 billion Facebook Hedge

2010-12-03T14:28:00.000-08:00

This post was also published in VentureBeat.

Why is Google willing to spend over $6 billion for Groupon? The local advertising market is massive — yellow pages ads still bring in more revenue than Google’s annual revenue. Local has been an extremely difficult market for online ad solutions to capture. Consider how a yoga studio in Cleveland can advertise. With Google AdWords, the yoga studio can target people searching for the keyword “yoga”, but this is an expensive, nationally bid-up keyword, and not a word the people search every day. Adsense provides a bit more context, and the ad could be placed in websites that talk about yoga, but there aren’t that many people looking at pages like that to click on the ad. Google Maps lets the yoga studio ad coupons to its location, but it has not had much uptake. The incredibly large local ad market has remained primarily elusive to Google, to the point where it considered purchasing Yelp for a large sum even though it did not have that much local ad revenue.

Facebook’s Growth is Fueled By Local Ads

By contrast, Facebook has had tremendous success in the local advertising market. Facebook was the first platform to provide cheap and effective geographic, interest, and age targeting. So the yoga studio in Cleveland can now target college-educated women aged 25-35 who live in Cleveland and have listed yoga as an interest. In a few short years, these local, highly targeted ads have grown Facebook’s ad revenue to over a billion dollars a year from zero. What is amazing about Facebook’s local advertising success is that these local ads are being purchased self-service by businesses, a beautifully scalable model in a business dominated by direct sales organizations. Facebook is soon expected to allow its ads to be displayed on third-party sites like AdSense currently does. These highly-targeted local ads can be placed everywhere you go on the web.

Enter Groupon, the new Valpak

What makes Groupon special is not its much talked about tipping point where a deal does not happen unless a certain number of people sign up. Due to Groupon’s broad traction, virtually every single one of its deals gets sufficient signup to convert. Groupon was the first company to use the tried-and-proven sales technique of the yellow pages and Valpak to target local advertisers — direct, door-to-door salespeople who sign up local services and retailers. Groupon has quickly built a direct salesforce that has signed up local businesses across the country.

While detractors of the Groupon model point out that the net of a Groupon campaign often results in a loss to the local business, they are not considering that all advertising at the outset is typically a loss to a local business. A local TV ad, local newspaper ad, or Valpak coupon also costs money that could be considered a loss and typically does not produce immediate positive cash-flow relative to the ad investment. The value of a Groupon promotion produces cash over time with new repeat customers and should be viewed as a customer acquisition cost, which typically must be amortized over time. In addition, Groupon is also launching a service with 10% discounts that is much more in line with typical couponing systems.

Will Groupon Salvage Google’s Local Ad Hopes?

As a way for Google to quickly enter the nascent online local ads market, Groupon is definitely a better acquisition target than Yelp. Coupons are simple and understandable to local businesses, do not have the baggage of negative reviews like Yelp, and have a very high conversion rate. There are no other advertising companies that can match the rumored multibillion-dollar acquisition price, so Groupon is there for Google’s taking. The challenge for Google as it attempts to maintain its revenue growth is that the Groupon model is not a direct self-serve ad business like Facebook’s or that of Google AdSense. Google’s next step will be to attempt to transition its businesses to doing self-serve ads. The reality here is that Google has to spend $5 billion, whereas Facebook could achieve Groupon scale within a few months by adding a self-service deal a day per geographic region to the right rail of its homepage or directly within a user’s homepage feed with about 2 weeks of coding.

You've Got Mail! How Facebook Can Avoid Becoming the Next AOL

2010-11-12T18:13:00.000-08:00

This post was also published in VentureBeat.

What’s the difference between Facebook and the AOL of old? On Monday, Facebook is expected to announce that they are adding true email functionality, and users will be able to send emails to @facebook.com addresses, as well as use software clients like Outlook and Thunderbird to read and send emails. With the introduction of email, Facebook has now completely replicated the features of AOL’s 1990s-era desktop client. Both offer messaging, profiles, profile names, chat, pictures, groups, games, and news, and thrived on the simple promise of connecting you with your friends.

So, Just How Similar are They?

AOL, the fabled “walled garden” of mediocrity, was hugely popular before the broad popularity of the wild, unkempt Internet intervened. AOL offered everything a user could want in a nice, consistent interface, and @aol.com email accounts persist to this day. Facebook has long offered simple messaging between users on its website, and has become a popular way for users, especially younger ones, to send messages to each other as casual acquaintances change jobs and email addresses over the years.

There was a time when TV and billboard ads showcased AOL keywords for brands, just as Facebook page URLs are showcased today. And Facebook extracts significant revenues from brands for premium advertising. Placement on the AOL homepage cost a huge sum, just like prime placement on Facebook does. Setting up a brand page on AOL cost a large monthly stipend. And while a brand can set up a basic presence for free on Facebook, the social network mandates minimum ad buys in order to offer promotions.

Your Mom is on It

Facebook is a nice, safe Internet alternative where developers, users, and brands all have to play nice or get punted. There is no porn, spam, or hate groups. That, too, was AOL’s value proposition: a clean, well-lighted place online. Since Facebook opened up to all users in 2006, AOL’s army of moms has been migrating to Facebook in droves — and friending their kids.

Mass-Market Mediocrity

With 500 million users and a something-for-everyone menu of features, can Facebook escape the mediocrity of Web portals like AOL and Yahoo, whose @yahoo.com addresses are as tired as @aol.com addresses? Uninspired features like Facebook Groups and Facebook Places don’t bode well for the site.

Yet Facebook has made a very significant, brilliant shift from its “homepage to the world” predecessors: allowing other sites to connect. With the introduction earlier this year of the Facebook Open Graph and Social Plugins, any website can augment itself with Facebook’s social features, and it is expected that sites will be soon be able to include Facebook’s highly targeted and lucrative ads.

Perhaps @facebook.com email addresses will end up looking as lame as @aol.com in a few years. But Facebook has far more going for it than its website. By spreading its roots throughout the open Web, Facebook won’t have to worry about the state of its own garden.

The iPhone App is the Flash Homepage of 2010

2010-11-08T12:46:00.000-08:00

This post was also published in VentureBeat.

In the late 1990s, it was common for companies to spend $50,000 to $150,000 for a Flash homepage that looked like a beautiful brochure. However, they soon learned that Flash was cumbersome, slow to load, expensive o build, and hard to update, and moved on to HTML. Now only specialized, high-end sites are Flash only.

The exact same thing has replayed itself on the iPhone. Companies have paid $50,000, $100,000, and more for an iPhone app. Now they have to keep the iPhone app in sync with their regular web site, and have to add additional native apps, each at a high price point, due to the hypergrowth of Android, and newly viable platforms like Windows Phone 7.

Businesses are moving on to HTML5

Banks and airlines, commonly known as technology laggards, are well ahead of the rest of the industry when it comes to mobile access to their systems. Banks and airlines are deploying highly functional, HTML5 mobile optimized websites that offer a high level of functionality relative to their full-fledged websites and existing iPhone apps. What is it that banks and airlines have figured out that Silicon Valley startups with their focus on native Apps have not figured out?

Compare the banks and airline mobile experience to that of the top digital agencies, many of which are still obsessed with Flash home pages and have sites that render incorrectly if at all on mobile handsets. This was first pointed out in a hilarious post by Nick Jones in August with screenshots of the top digital agencies, most of which do not render at all on a mobile browser, and then followed up. AdAge followed up with an article in September about the World’s Worst Agency Websites for iPhone and iPads,.

Even at my company Webtrends, with a powerful mobile analytics solution, and recently acquired mobile apps technology, our website renders well on a mobile phone but we are still in the process of optimizing the content so that it easier to navigate.

The native vs. HTML5 battle is irrelevant to businesses

The digerati in Silicon Valley have been arguing ad infinitum about the merits of native vs. HTML mobile apps. Businesses have now picked a winner, given the prohibitive cost of multiple native apps, and the features of an average business app which can be amply supported with mobile HTML5 browsers, which even include GPS.

Carol Steinberg, SVP of E-Commerce for NBC summed it perfectly: “We’re really keen on ROI and making sure what we’re investing in the mobile platform is a worthwhile and good investment. I am just starting to feel that HTML5 will be able to give us the functions we need on our m-commerce site versus app development for the iPhone and Android, which means three platforms we have to maintain and upgrade.” Even Bob Muglia, Microsoft’s President of Servers and Tools, recently stated that “HTML is the only true cross-platform solution for everything, including (Apple’s) iOS platform”.

There will always be a place for native apps — particularly in communications, gaming, graphics intensive applications — and for the interim they’re an efficient mechanism to process payments until phones are updated with better payment systems. Some businesses may still continue to deploy native apps on one or two platforms that have some additional features. An increasingly popular and almost indistinguishable method of creating a content-oriented app is to wrap a native shell around a browser showing a HTML5 mobile optimized site using technologies like PhoneGap.

Overall native apps have run their course. They get lost in the app store and are hard to find, requiring businesses to post “Available on the App Store” icons on their homepages, where they could just as easily post a “SMS this site to your phone”. Even with over 6 billion apps downloaded, research has shown that most of these are ignored or disposed, and users are only running on average 4-6 apps each, most of which use very native features like communications and the camera.Important apps like maps and Facebook are considered core to the device and are even built in to feature phones nowadays.

How Microsoft Might Win the Mobile-Phone Battle after All

2010-10-15T12:36:00.000-07:00

This post was also published in VentureBeat.

While there is broad consensus that Microsoft has actually delivered a decent phone OS with Windows Phone 7, pundits are universally panning Windows Phone 7’s future due to the market traction of iPhone and Android, Palm’s HP reset for WebOS, and the reawakening of Nokia and RIM. Mobile is clearly a huge trend that is displacing desktop computing, and people so soon forget that when Microsoft feels its turf is threatened, it is a fierce competitor.

Remember the Xbox

In the late 1990’s, there was a huge race to the living room, with combatants such as Sony making a play to be the digital center of the home. Microsoft felt enormously threatened by this trend, and decided to enter the gaming console business that was dominated by the Sony Playstation. Pundits laughed and claimed that Microsoft would fail enormously in this effort.

However, Microsoft was in it for the long haul and willing to invest enormous amounts of money to ensure success. Six years later, Microsoft lost over a billion dollars on its Xbox initiative. 10 years later, Microsoft is still losing $172 million a year on its Xbox division, but the Xbox 360 is outselling the Playstation 3 and Microsoft sells more games per console than Nintendo. Xbox is profitable when including Microsoft’s game sales, and it is one of the three top consoles in the world, and the favorite amongst many gamers with exclusive titles such as Halo.

The Xbox achieved its success with three factors: user experience, market development dollars, and exacting hardware standards. Microsoft is addressing all three of these categories with its Windows 7 strategy.

Windows Phone 7 offers a better user experience

Microsoft invested a ton of time and money into making the Xbox gaming experience better than the Playstation 2. It took Sony years to catch up with its Playstation 3. Glance at a Windows Phone 7, and tiled out in a beautiful inteface you can see the weather, the time of your next meeting, and your favorite team’s score. Glance at an iPhone and you will see a bunch of icons to click. The iPhone can’t show what’s actually going on in those apps because it doesn’t have real multitasking and its user paradigm is almost four years old from the days when the phones had less memory and processing power. Glance at an Android phone and you will see a bunch of icons to click and perhaps a few widgets that show information but chew up a ton of valuable screen real estate.

In addition, items on Windows Phone 7 elegantly flow and move across the screen, since all of the phones have OpenGL graphics and advanced signal processing features which enable Microsoft to leverage the best-of-breed speech-recognition technology it acquired with TellMe to drastically improve user-phone interaction.

Android was built to mimic the iPhone. Windows Phone 7 was built to beat them both, and it shows. Sometimes a lot of time and money creates feature creep debacles like Windows Vista. Fortunately for Microsoft, a lot of time and money also sometimes creates design wonders like Windows Phone 7.

Microsoft is willing and able to buy content

Much like Microsoft spent over a billion dollars to get Xbox going, Microsoft has allocated a reported $500 million in market-development money to accelerate its platform. That’s a lot of money, and the reality is that they don’t actually have to pay off that many app developers to get a decent apps ecosystem going on Windows Phone 7.

Most users only actually use a handful of apps, and that those apps are pretty predictable, such as Facebook, OpenTable, and Shazzam. The vast majority of apps other than games could easily be made in HTML. If you want to check the flight status of your upcoming flight do you go the App Store and download the United Airlines app or do you just go to www.united.com and use their nice mobile-optimized website? Apps had their day, but are increasingly being relegated to use only for multimedia and gaming. A lot of apps are simply wrappers around HTML5 sites that will be very easy to port to Windows Phone 7, especially when you get a nice check from Microsoft for doing it and leads to dev shops in China to do the porting work.

As well, phones are rapidly becoming a gaming platform, and Microsoft will use Windows Phone 7 as their competitive offering to Sony’s PSP and Nintendo’s DS. If there is particularly hot upcoming game, Microsoft will likely pay for exclusive deployment to Windows Phone 7 just like they did with Halo on Xbox.

Windows Phone 7 devices are consistent and well-made

Microsoft spent a lot of time with its chip manufacturer, IBM, and its manufacturing partner, Flextronics, to ensure that the Xbox provided a best-of-breed, integrated experience, and it has a lot of experience certifying that Windows licensees provide compatible PC hardware. In order to avoid the fragmentation that handset manufacturers are engaging in with Android, Microsoft is imposing exacting hardware and software standards and testing labs to ensure that Windows Phone 7 handsets are consistent and do not deviate in user experience. Windows Phone 7 will potentially offer a consistency across handsets similar to the iPhone.

A three-phone future?

Android’s rise over the past year has proven that consumers are willing to purchase smartphones that are comparable to iPhones, and Windows Phone 7 is decidedly better than an Android device. RIM and Nokia have never had to reinvent themselves in the onslaught of competition which is why they have been thrashing for years trying to respond to the iPhone.

Microsoft spent the 1990s responding to the Internet threat with Internet Explorer, the 2000s crucifying the Sony PlayStation with the Xbox, and they will spend the next decade taking on the iPhone and Android to produce a competitive Windows phone. Given Windows Phone 7’s stellar user interface and voice recognition features, Microsoft’s allocation of massive amounts of money to purchase apps, and the tight control Microsoft has exerted on its hardware partners, Windows Phone 7’s has a very strong chance of catching up with iPhone and Android in a couple of years.

If you still want to count it out, ask your average teenager how they feel about the Xbox.

It's Collaboration Software that's Dead, not Email

2010-07-30T09:56:00.000-07:00

This post was the source of a CRM Magazine article.

Facebook COO Sheryl Sandberg caused quite a stir by stating that email was becoming obsolete. Sandberg drew her conclusion from data on the communication behavior of teenagers, who predominately use SMS and social networking, and extrapolating that this generation will never use email. This is no surprise, since Email has evolved into a communication tool used primarily for business, and teenagers are not in the workforce yet. In ten years when these teenagers have jobs need to coordinate a project between say a web design firm, a hosting company, internal IT staff, and their boss and organizational stakeholders, what are they going to do, text them all?

Sandberg is right that Email is pretty much dead for social communication. When you want to ask a friend what they are doing tonight, you text. When you want to ask a colleague what they are doing for lunch, you chat. To ping a friend you haven't talked to in a while, you post on their wall. When you want to contact an old friend and ask them what's up, you have to send them a Facebook message because you have no idea what their email address is anymore. Even newsletters and special deal emails are going the way of Twitter and Facebook newsfeeds now, although flash sales sites such as Gilt have gone retro email in order to be "exclusive". Net net, your email inbox is not the center of your social life anymore like it was 10 years ago, and the extent of your social email is emails from grandma that start with "Dear" and Evites from folks who haven't figured out how to make Facebook invitations yet.

Various companies have brought to market numerous attempts to replace email as the primary vehicle of workplace communication. There is no quicker way to make a group of people in a conference room grimace than to announce you are going to use Basecamp, Central Desktop, or their kin to manage a project. These services constantly spam your inbox every time someone adds a comma to a document, use numerous different logins as each project is owned by different vendors or partners. Even worse, these tools are slow, arduous, and have user interfaces that look completely primitive, although a few years ago they were considered the height of AJAX user interface design. And to top it off, these project management services get out of date very quickly because people inevitably start emailing each other rather than updating the project online, especially when executives with blackberries are in the project loop and near the end of a project when there is typically a frenzy of activity. Wikis such as Sharepoint and Jive Software definitely will continue to have a place as a storehouse of institutional knowledge, but they are also quickly outpaced by email when it comes to near-real time collaboration.

Email is still the center of work life and will continue to be so for a long time. It is ubiquitous and binds everyone from employees, executives, customers, partners, and vendors together into a cohesive whole. Emails can be sent to diverse groups across projects and organizations. Email is easily sliced, diced, and forwarded. And nowadays Email can handle large attachments, and is used as the notification vehicle for services like YouSentIt for extremely large attachments. Email definitely has its downfalls. It's not secure. If someone isn't on an initial email thread it is impossible to get them added to all the replies and subsequent forwards. People are constantly searching through their emails to find old exchanges and attachments.

Google is the only larger player that has been innovating in enhancing email, in addition to startups like Xobni and Gist. Gmail's search capabilities and threaded conversations, which will finally have the option of being turned off, definitely set the bar for finding emails and figuring out what is going on in various email exchanges about a project. While Google Wave was widely panned, it was a definite attempt to make collaboration look more like email than to replace email completely. As more and more people use web interfaces to manage their email, it is very likely that these email web interfaces will gradually present more and more collaboration, search and management features. From a work perspective, Email is here to stay. But Sandberg is right, don't send out an email asking someone if they want to meet up for a drink tonight!

Adobe Finally Ships the Real Flash for Phones

2010-06-23T15:00:00.000-07:00

This post was also published in VentureBeat.

When my company Transpond added support for Nokia smartphones, we were excited that we would be able to deliver Flash videos in apps deployed to Nokia handsets. Instead, we were shocked to learn that there were no Flash video players that worked on the devices, even though the handsets supposedly supported Flash. We talked with Nokia. They couldn’t find one. Then we called our friends at Adobe. The only one they could recommend was JW Player, which didn't work on Nokia's Flash-enabled phones. Between Nokia and Adobe, we could not get a way to play Flash Video (FLV) files on a Nokia/Symbian handset.

Flash Lite is not Flash

We discovered Adobe’s dirty secret: while Adobe’s asserts that 80% of videos on the web are viewed in Flash, virtually no online videos other than YouTube are viewable on shipping, Flash-enabled mobile device since they use a limited version of Flash called Flash Lite. And since most mobile devices include a native YouTube player, they didn't need Flash to play YouTube. In essence, no one was watching any Flash videos on any smartphone, and Adobe’s entire Apple gambit about Flash video was a PR ploy.

When SmartphoneMag.com tested playing Flash videos on Flash Lite 3 devices, they found that they could not watch video on many popular Flash video sites including Atom.com, blip.tv, Break.com, imeem, Metacafe, and Vimeo. (http://www.smartphonemag.com/cms/blog/9/tutorial-everything-you-need-know-about-flash-lite-3-and-playing-back-flash-web-videos). The reason for this is that the latest version of Flash Lite only supports a subset of the four year old Flash 8 ( http://www.adobe.com/products/flashlite/faq/), which has since been replaced by Flash 9 and then Flash 10. Most websites and Flash video players are implemented with Flash 9 or Flash 10 and will not run an Flash 8. It is like trying to run a Mac OS X application on an old PowerBook. The reason the mobile version of Flash was so limited was that mobile devices did not have to the processing power to handle the full, modern version of Flash.

New Mobile Devices Now have the Real Flash

Adobe is now shipping the full Flash 10.1 for Android with the introduction of new, more powerful Android devices such as the HTC Evo 4G that employ the powerful Snapdragon 1ghz processor. Now that smartphones have much more processing power, Android 2.2 will run the same Flash that runs on a PC, and will therefore run all of the Flash content on the web. As always, there are some exceptions: Flash developers are obsessed with “hover” events that only work when a mouse hovers over an element which does not work on a mobile device where a user can't hover, and many Flash implementations are not built to resize themselves to a screen's limit and target 1024x768 sized screens, which will require a lot of scrolling by the user.

For Most Apps, Flash Does in Fact Suck

Flash on mobile devices does in fact suck, even on devices with the new, more powerful processors. Loading a massive Flash site on a PC is bad enough, let alone a mobile device, and blinking Flash ads suck up a ton of processor power that is better used to render a web page’s content and scroll through the page. For most non-game mobile apps, and even regular websites, both developers and users are much better off with HTML5, as evidenced by the slew of HTML5 announcements from even the staunchest former Flash supporters. If an App is going to be very sophisticated and interact extensively with features like the phone's camera, a handcoded, native App for each target platform is the ideal solution.

Flash Games will Actually be a Differentiator

However, in the gaming segment, Flash support on mobile devices will prove to be very useful. There are a ton of existing Flash games that will never get ported to the iPhone/iPad, and many Flash game developers will continue to produce fun Flash games, since they do not have the skillset or inclination to learn how to program in the iPhone’s complicated Objective C language. In addition, it will take quite some time for all of the video players on the web to get upgraded to HTML5.

Now that the Flash on new smartphones will be the real Flash rather than Flash Lite, devices that support Flash will have quite an edge over Apple when it comes to games and video. Support for more apps and video really didn’t matter when competitor's phones weren’t competitive with the iPhone, but now Android devices are outselling iPhones, and the new generation of Android devices such as the HTC EVO 4G and Droid X are arguably just as good if not better than an iPhone. Flash support will actually be a differentiator, particularly in the lucrative 15-35 male market that is very game and video focused. Despite all of the recent acrimony, Apple may very well reverse course once it ships more powerful iPhones that can support the full Flash. Apple has a long history of emphatically stating that it will not support something and then changing it's mind. Steve Jobs' rants about Intel and Microsoft went far beyond his recent Adobe vitriol, and soon after Macs switched from PowerPCs to Intel processors and Microsoft invested in Apple.

iPhone Now as Fragmented as Android

2010-06-09T12:00:00.000-07:00

This post was also published in VentureBeat.

At Transpond, when we were building apps on the iPhone and Android platforms last year, all of our engineers were enamored with the iPhone and annoyed with the pesky Android devices.

The iPhone environment was remarkably consistent. There was a single 480×320 screen resolution and API consistency across iPhone, iPhone 3G, and iPhone 3GS. Even though the original iPhone doesn’t have GPS, it provided an approximation based on cell towers, and our customers like CBS and NBC are more interested in syndicating video and engaging users, so we did not need the 3D graphics of the newer generation iPhones. All in all, the iPhone platform presented a clean, wonderful experience for our engineers where they could write one piece of code and it would run beautifully on all of the iPhone and iPod Touch devices.

Android, by comparison, was a disaster. Every Android device had a different screen resolution. Every hardware feature had to be checked, since every Android device had different hardware configurations. Android was a huge, fragmented environment where the engineers had to constantly test for different things. What’s the screen size? Is there a camera? Is it running proprietary extensions that would conflict with the app? Compared to the iPhone, supporting Android was a huge pain from development to quality assurance to production.

This all changed in the first half of 2010. The engineers at Google, with backgrounds in Java and UNIX, recognized this problem and came up with a solution: the Nexus One. A lot of people thought that the Nexus One was Google’s entry into the handset market. This was actually far from the truth. The Nexus One is the equivalent of the Java Reference Implementation or UNIX POSIX and X/Open: a baseline of what handset manufacturers would have to support in order to create a real Android handset. If a developer wrote an app that ran well on the Nexus One, but it did not run well on a Motorola Droid or HTC EVO, the problem was clearly with Motorola or HTC, not with Android. In addition, Google obsoleted the 1.5/1.6 generation of handsets. So a developer could now target the Nexus One, adjust for various screen resolutions, test for hardware features such as a camera, and feel confident that their app would run on Android 2.0/2.1/2.2 devices. If a problem arose, it was a problem for Motorola or HTC to fix in their next patch, not for the developer or Android.

Apple, on the other hand, took the pristine iPhone OS platform and has added a ton of changes in the past two months. The iPad introduced a new screen resolution and did not include a camera. The iPhone 4 added yet another screen resolution and a front-facing camera. iOS programmers now have to make their apps run on three different resolutions and check for hardware features like cameras. While the variations are not as extensive as in Android, iOS has almost all of the same permutations. Especially from a programmer’s perspective, since programmers do not check for device type, they check for feature. For example a programmer is not writing “if iPhone or iPhone 3G or iPhone 3GS or iPhone 4 then there is a camera”, they are writing “if there is a camera”.

Apple’s form factor and feature disparity had to happen at one point or another. Although Apple presents a limited product line, market requirements between phones, music players, and tablets is fragmented and has inherently resulted in fragmented features. However, it is incredibly bad timing for iPhone programming to become as complicated as Android programming when compounded with Apple’s onerous App Store policies, Android outselling the iPhone in Q1, and forcing developers to program in an obscure language such as Objective C.

Why Worry about AT&T’s New Rates? Your Phone Bill will Soon be $60

2010-06-02T12:00:00.000-07:00

This post was also published in VentureBeat.

Mobile plans are ridiculously confusing. Voice, text messages, and Web surfing — it’s all data, right? Yet carriers make consumers guess — the minutes they’ll spend talking, the number of text messages they’ll send, and worst of all, the amount of data they’ll use in a month in order to avoid steep surcharges.

The only thing that’s sure: It’ll cost you. Mobile phone plans for typical usage of 800 minutes of talk time, 100 text messages, and 2 gigabytes of data typically run between $150 and $200.

When Apple and AT&T introduced iPhone plans, people complained about the expense. The one silver lining: They were unlimited. Now Ma Bell, by introducing new, capped plans, will have new iPhone customers once again play the guessing game. It’s a game only a regulated utility could love.

In the fiercely competitive world of Internet service providers, flat-rate pricing won out. Consumers loved it: They could budget against it. Here’s the good news: AT&T is mounting a last stand against a flat-rate wireless future. With new gadgets, and new wirelss technology, your phone bill will soon be a flat $60 a month, tops.

Wireless carriers would like you to think voice and data are different. They’re not. When you talk into your mobile phone, your voice is digitized in real time and transmitted as a data signal. Apps that use your phone’s data connection to transmit voice, such as Skype and Google Voice, do the exact same thing. The only difference is that you are not paying for “minutes of talk” with those voice-over-Internet apps. You only pay for data, and voice calls do not actually use that much data. The industry standard for a voice call is 64 kilobits per second. Compression cuts that in half. So 800 minutes of talk time amounts to less than 200 megabytes of data. In that context, Apple’s rejection of a Google Voice app for the iPhone suddenly makes a lot of sense, since Google Voice gives you a phone number and the ability to send and receive text messages, all over a data connection.

Every once in a while, new products present such glaring price disparities with legacy products that everyone realizes what something is really worth. Such a seminal moment occurred in 1996, when AOL moved to a $19.99 monthly flat rate for dial-up Internet access and killed off its remaining pay-by-the-hour competition. It happened again in 2002, when Rhapsody offered unlimited music streaming for $20 a month.

A similar watershed moment is happening in the mobile data market as faster wireless networks are getting lit up across the United States. The hot new devices are mobile hotspots like the MiFi or Overdrive, which connect to third- or fourth-generation wireless networks and rebroadcast their Internet connections as Wi-Fi signals, which almost any device can connect to. Verizon and AT&T are shipping 3G mobile hotspots with 5GB/mo. — the equivalent of 20,000 minutes of talk time, remember — for $60 a month. Sprint is shipping a 4G mobile hotspot with unlimited, high-speed 4G data for $60 a month.

That’s down considerably from slower 2G data services road warriors used to hook up their laptops, which ranged from $80 to $100 a month. Unlike cell-phone voice and data plans, which always seem to be creeping up in price, mobile hotspot plans are getting faster, cheaper, and delivering more bandwidth.

The digerati are starting to do the math. A few weeks ago, I had a meeting with Jen Herman, an old-time mobile entrepreneur who is now at Zynga, who turned me on to a new trend: coupling an iPod Touch running Skype or an unlocked Android handset running Google Voice with a small MiFi hotspot. Some people keep it in a purse or backpack, while others just velcro it to the back of the handset. The handset uses the hotspot’s Wi-Fi connection, which in turn communicates via 3G or 4G to the carrier. This geeky setup offers everything you’d get from a $200/mo. smartphone plan and more: voice, text, mobile data, and a connection you can share with your laptop, iPad, and any other gadget you might carry.

Right now, mobile hotspots are the province of the technically savvy. But the writing’s on the wall. Sprint’s aggressive 4G pricing will force AT&T and Verizon to match. And $60 a month is just the beginning, as competition drives prices down. The best part: We won’t just save money when the wireless guessing game comes to an end. We’ll save time. And we can spend that time coming up with clever new things to do on the network.

Google TV is Sony’s Last Stand Against the Apple Juggernaut

2010-05-20T12:00:00.000-07:00

This post was also published in VentureBeat.

Everyone’s buzzing about Google’s new TV platform. But the real battle in your living room is Apple vs. Sony.

Over the past few years, Apple has muscled its way past Sony as the top purveyor of premium, high margin consumer electronics products. Sony has long had a deep culture of NIH (Not Invented Here) ranging from Betamax in the 1980s to the Memory Stick in the 2000s. But the iPod replaced Sony’s Walkman, the iPhone replaced Sony Ericsson handsets, and the resurgent MacBook and iPad have leapt past Sony’s Vaio PCs.

Apple’s unique blend of software, hardware, content relationships and rich developer ecosystem has eviscerated Sony’s core markets. The television set, Sony’s last bastion of premium consumer electronics, is already undergoing a relentless assault by Samsung. Now it’s facing a rumored Apple TV upgrade.

Upcoming: Apple TV

Apple’s much maligned Apple TV mini set-top box has long been due for an upgrade. Even Apple executives call the product a “hobby”. The next step for Apple is to start producing actual TVs. A lot of people who live in small apartments or dorms already use 24″ and 27″ iMacs as their primary TV viewing device. This trend has been widely rumored in late 2009 and early 2010 (although I think I was the first to publicly blog about it back in August 2008).

Apple doesn’t actually produce parts like its own display panels. The 27″ iMac screen is manufactured by LG, for example. Display panels, even large ones, are commodities. Instead, Apple specializes in beautiful packaging, excellent integration of hardware/software, and a seamless user experience.

Imagine a stylish, aluminum TV with a lighted Apple logo that comes in sizes ranging from 37″ to 60″. It automatically connects to the Internet and streams all of your iTunes video and audio content. It is CableCARD compatible so you can still get HBO until they finally decide to let you stream it direct. It has an iPod Touch based remote app that lets you easily find content and control the TV. It can easily install apps such as weather, sports, and games just like an iPhone, so your family can play Monopoly together.

Do apps on TVs even make sense?

The TV is the last frontier in Silicon Valley’s relentless drive to computerize every screen. With the price of fully Internet-enabling a screen at below $300, everything that people see and touch is being turned into a computer: mobile phones, billboards, price displays, and with the iPad even magazines, books, and newspapers.

Some say that running apps on a TV is silly. The same people said that running apps on a phone was silly. TVs that can run content apps make a lot of sense when coupled with the trend towards unplugging from cable and streaming all content from the Internet. Apps like Netflix, Amazon Video on Demand, and YouTube are incredibly useful when integrated into a TV. Add to that pulling up the weather, sports scores, horoscopes, and games and all of a sudden apps on TVs make a ton of sense. Most modern TVs already include an integrated computer with chipsets from Intel and Broadcom that run the Linux operating system in order to control onscreen guides and decode digital media signals in real time. So the incremental cost is not that high to add a full fledged platform like Android to a TV.

Many newer high-end TVs already include app frameworks, such as Yahoo Connected TV and Flash Lite. Content companies are likely to only support apps on a few platforms, so Sony needs to partner with a platform that will offer content companies scale, reach, and developer infrastructure. Pictured below, for example, is a CBS app Transpond has delivered running on a Yahoo Connected TV.

Sony’s Google TV bet

Stylish, high-end TVs is the last consumer electronics frontier for Apple to dominate, and it will make apps as much of a differentiator on TVs as they were on smartphones. In order to survive, existing TV manufacturers like Sony need an open platform with an apps ecosystem, and will flock to Google’s Android TV platform just like existing smartphone manufacturers had to flock to Google’s Android phone platform.

Google, with partners like Intel, Logitech and Sony, is launching a smart-TV platform that fully computerizes TV screens, replacing cable boxes as well as integrating an Android-based app store. Apple has been successful in consumer electronics because it created both well designed products and iTunes — an end-to-end user experience around discovering, purchasing and enjoying music, TV, movies, and apps.

If Google TV is going to be a successful consumer electronics product, Intel, Sony, Google, and Logitech will need to deliver both a great Android-based consumer electronics product and a compelling end-to-end user experience that supercedes the functionality of cable boxes and delivers the broadest and best consumer media consumption experience.

With Social Game Market in Flux, what Zynga Needs is Farmville 2

2010-05-16T12:00:00.000-07:00

This post was also published in VentureBeat.

There’s been a lot of chatter over the past few weeks about the long-term viability of social game developers. Facebook essentially shut down the viral channels social games were using to fuel their growth and is now attempting to force game developers to use Facebook’s own virtual currency, the very expensive Facebook Credits. While social game developers like Zynga are contemplating moving games to their own destination sites and launching full fledged mobile versions, they in fact have a much bigger challenge that needs to be addressed: their games have got to get a lot better.

Social Games are Now a Hits-Based Business

While there’s a tendency to think of social gaming as an extension to the casual gaming market, they are, in fact, a major growth market that is quickly becoming a high stakes, hit-based business. Social gaming is now generating over $1 billion a year in revenue and attracting major gaming players such as Electronic Arts. Now that free social viral channels are no longer available to promote a game, it costs quite a bit of money to launch a successful social game.

Zynga’s launch of its new title Treasure Isle was relatively successful, but this launch did not leverage viral channels and must have been enormously expensive to promote. Without viral channels, the only avenues for promotion are Facebook Social Ads (where Zynga is reportedly already spending a third of its revenue), and cross-game promotion, where a click in Farmville to promote Treasure Isle has the opportunity cost of a missed click for an offer or virtual good purchase. Even after this significant investment, Treasure Isle did not become a huge hit like Farmville. It ended up with the same metrics (daily active users, monthly active users, and % daily active users/monthly active users) as other Zynga titles such as Café World.

Now that the cost of promoting a social game has become extremely high, development will transition from the scattershot, let’s-see-what-goes viral approach in the early days of the market. New game titles are shifting to a much more calibrated approach with fewer titles that have a higher level of investment in order to hedge the promotion costs. EA Playfish has publicly stated that its revenue target for individual social games is as high as $1 billion, just like successful console game franchises. There is going to be a lot of upfront thought, development, and promotion for individual titles with that level of revenue target.

Social Games are Going to be Much Higher Quality

Even within Zynga’s short lifetime, its level of investment and the quality of its games has increased significantly. Mafia Wars is made of text and images. Farmville is a scrolling 2D graphics game that requires an order of magnitude more effort to develop. So what’s next? Emerging gaming platforms go through the three phases of game infrastructure: text, 2D graphics, and 3D graphics. A small team can create a text game and even a 2D game. By the time games get to 3D graphics, though, they’re extremely expensive to create.

In the past year there have been two huge developments for web browser based gaming: Flash 10 support for 3D gaming, and HTML5 support for 3D gaming via WebGL engines such as GLGE and Copperlicht. Very soon, web browser based casual gaming is going to go 3D. And although the Farmville audience is not interested in first person shooters, who doesn’t want their farm to look photorealistic, watch things grow and move as if they were cartoons, and see how different elements in the game interact with each other with a high level of realism? Similar casual games for the iPhone 3G, with its OpenGL graphics, look far better than the current stock of games in Facebook. Flash 10 and WebGL have now made it so that browser-based games will look as good as iPhone games and casual games like MapleStory that have a lot of the same game mechanics as social games and currently require web browser plugins. In addition, Facebook is improving its platform by streamlining its APIs away from its proprietary FBML, so very soon Facebook social games will look like the 3D casual games that currently require a browser plugin, such as this screenshot of MapleStory.

3D gaming is inherently a hits-based model. The cost of a great 3D console game is increasingly expensive, estimated as high as $60 million, with the average at $28 million. Fortunately, 3D social gaming can be done iteratively, but the costs are still very high. On the low end, it will take a team of 3-4 engineers six months to develop a title, with another six months of iteration, totaling a little over $1 million, before any promotion cost. On the high end, titles like Farmville that need Facebook, website, and mobile versions require teams of up to 100 people and already cost $20+ million/yr to develop and deliver. After the transition to 3D social gaming, these high-end social games will start to reach the development cost of console games.

The Competition is Coming

Zynga is clearly the leader in this new gaming platform and was the first to master the art of social obligation in a game – a friend helped you out on your farm, so now you need to help them out. However, every new gaming platform has a clear initial leader that blazes the trail for other game companies. Farmville is to Facebook as Super Mario Bros is to Nintendo and Halo is to Xbox. Eventually others catch up, and now companies like RockYou and EA/Playfish are starting to have results as good as Zynga’s new titles.

Well known franchise properties like Madden NFL and Civ have announced support for the Facebook platform. No doubt Disney/Marvel is right behind them. These games will get consumer name recognition, a ton of upfront investment, and great name-brand advertisers and offers. Some of these games will be released completely for free just to drive purchases of their console equivalents.

The Shift to Franchises

Zynga has great things going for it: two well known titles that can become franchises — Mafia Wars and Farmville. Zynga has figured out how to attract and retain the elusive 35-50 female demographic. And Zynga has figured out how to maximize casual gaming revenue via offers and virtual goods purchases. However, it is now competing against companies with massive gaming franchises that have all acquired companies with the talent to do exactly what Zynga is doing. Adding Zynga Live, its own destination site, is a great step in Zynga’s move to determine its own fate, but the company’s future is nevertheless contingent on the quality of its games, not its ability to leverage the Facebook platform. Historically, it’s been incredibly difficult to create a new game franchise. Rather than try to replicate Farmville and Mafia Wars into a bunch of similar titles like everyone else is doing, it’s time to double down an the franchise and make a Farmville 2 that looks a lot better and re-engages the existing audience that has gotten bored and moved on. Hey, Call of Duty Modern Warfare 2 pulled in $1 billion, and pretty much everyone who saw Iron Man is going to see Iron Man 2. Welcome to the big leagues.

Why Google can’t Out-Open Facebook with XAuth

2010-04-19T12:00:00.000-07:00

This post was also published in VentureBeat.

XAuth, Google’s attempt to head off Facebook’s domination of online content sharing, is fraught with problems. It appears to be built with good intentions, allowing smaller social services to persist in a Facebook- and Twitter-dominated world. But unlike OAuth, the standard many of those services use today to link publishers’ websites to their services and which allows any website to work directly with any identity provider, XAuth actually stands in between the two and directs traffic. And that spells trouble. I should know. I’ve tried what they’re doing before.

I was the CTO of Sun Microsystem’s Liberty Alliance, where we invented the concept of federated identity, and am the inventor on the patent that covers federated identity. We first attempted to do the exact same thing –stand in between the websites and the identity providers in order to provide a seamless interaction.But no one wanted a single third party in that position — least of all privacy advocates. Instead, we delivered a specification that is very similar to how OAuth works today. Trying to evolve OAuth so that it becomes a service that intermediates direct relationships is a nonstarter.

The thesis of XAuth is that there are too many login and sharing services for a publisher to choose from, and that XAuth would only show the ones that are relevant to a user. This is the same principle as Google’s OpenSocial platform for developing social applications. OpenSocial’s creators posited that there were too many social networks for developers to choose from, so Google would provide a single open API that would access multiple social networks. We all know how that played out – there is only one social network that matters anymore.

The point of logging in and sharing is to share with friends. If people are all on one social network, why do they need to choose from a list of 20 providers to share? Most publishers offer logging in and sharing via Facebook and Twitter, which are both very easy to implement, and they get to service the vast majority of their customers.

I believe it is no coincidence that XAuth is launching right before Facebook’s F8 conference, its annual gathering for developers. The aim of XAuth is not to make it easier for users to login and share information, but to curb the inroads that Facebook is making into Google’s core advertising business. Facebook’s $500 million in estimated annual revenue is still small compared to Google’s $23 billion. But Facebook has steadily progressed over the past year, passing Google first in terms of minutes spent online, and recently in terms of unique visits.

Why should Google be so worried about Facebook? It really boils down to an obvious truth. Facebook is about people, and Google is about the algorithm. And who uses computers? People. And the algorithm doesn’t even work anymore. Search for “futon” and take a look at all of the results that have been gamed by advertisers. Who can tell you what a futon is the most comfortable? Not Google.

By spreading Facebook features into websites, Facebook will learn who is using which sites and what content is popular for which types of people. Websites will increase registrations, increase pageviews, increase sales, and most importantly be able to display much more highly targeted ads. The ads that Facebook displays next to profiles are way more targeted than the ads that Google thinks someone might like based on the content of a page.

To better understand the urgency of XAuth, I’ve included a table laying out current and upcoming Facebook features that publishers will love to integrate into their sites and that will displace some of Google’s most lucrative features. The people at Google are not stupid, and they wil

l have to pull more tricks out of their hat than just XAuth.

Current/Future Facebook Feature	Replaced Google Feature	Benefit to Publisher	Benefit to Facebook
Facebook Connect	Google Friend Connect	Increased registrations and logins.	Learn which sites are popular and how they are visited.
Facebook Search	Google Site Search	Returns what products and content is popular within a social network, increasing pageviews and sales.	Learn what products and search terms are popular.
Facebook Like	Google Buzz	Posts content to newsfeeds drawing traffic from friends.	Learn in real time what content is popular and viral.
Facebook Banner Ads	Google DoubleClick	Higher CPMs since social and profile targeting are better than content or behavioral targeting.	Google’s banner ad revenue.
Facebook Text Ads	Google AdSense	Higher CPMs since social and profile targeting are better than content targeting.	Google’s text ad revenue.

Can the algorithm evolve to beat the people? If it doesn’t, Google could face a Facebook-dominated world. Here’s an illustration of what one popular publisher, the Huffington Post, might look like after Facebook takes over. It’s Google’s worst nightmare.

TV 2.0: Hulu’s Flatlining, and the Networks are Ready to Innovate

2010-04-15T12:00:00.000-07:00

This post was also published in VentureBeat, where there is feedback from the founders of TiVo and Brightcove.

Hulu — a joint venture of NBC Universal, News Corp., and Disney — has had a good thing going. The ad-sponsored video site carries numerous TV shows through agreements with the broadcast networks. And for the past year, it’s made good money selling ad space on network shows and luring in viewers with its quality streaming. But that’s all about to change.

The Hulu value proposition as a destination for premium online video was always doubtful given that Hulu is owned by content companies that stream the same content from their own websites. Sure, there was a window of time there when it was very difficult to stream good quality video with a modern player, but that window is long gone. The networks now all offer excellent streaming high-definition 1080p players (although some properties such as AmericanIdol.com could definitely benefit from a phone call to Brightcove or Ooyala for a player and streaming upgrade). On top of that, with Comcast’s acquisition of NBC, the content itself is now owned by the folks delivering the pipe.

CBS never allowed Hulu to syndicate its content, in a very prescient decision on its way to becoming a top 5 video destination. Viacom recently pulled its popular “Daily Show” and “Colbert Report” shows off of Hulu, really letting the air out of the balloon.

Hulu sells ads on the video it streams, meaning that Hulu’s ad sales team competes with the networks’ own ad sales teams. Hulu’s sales pitch to the networks was, “let us compete with you on your new content and we will help you monetize your older assets”. But Hulu hasn’t been able to monetize the older TV shows it runs. Pull up any TV show over two years old on Hulu, and all of the ads are public service announcements. (Although Google, ever the expert on remnant ad inventory, bought up all of this inventory for a pittance over the Christmas holiday season to play precursors to its Super Bowl ad.) So the Hulu trade off is not working. Yes, it’s profitable, and yes, the number of streams served is growing, but the number of unique users has been flat for almost a year.

If Hulu is not going to be the solution for premium content owners, what is?

The TV networks always complain when they are not in control of when and how a viewer watches their content. They complained about VCRs, and then DVRs, both times because users could skip the commercials. It took a long time for DVRs to finally make the networks money. Nielsen had to start tracking who was watching time delayed commercials, and advertisers had to agree to include these views if they occurred within three days. Video streaming, on the other hand, forces users to sit through commercials. The trouble is, there was no system in place to track the number of views, making it hard for network TV’s ad sales teams to pitch the inventory to advertisers.

The good news is, in January of this year, Nielsen announced that it would start combining TV and online viewing of shows into a single rating. With Nielsen’s move, the networks have an independent auditor that can verify that viewers are watching a particular show. This presents an opportunity to integrate Internet distribution into their existing business model, which they have not been able to do even with on demand video on cable. So from here, we’re going to see some real evolution taking place in TV. It’ll no longer be something simply ported into the online world. Instead, we’ll see the networks fully move online and develop new business models for broadcasting to an internet-based audience.

Following is a prediction of five steps we’ll see these networks take in the coming months:

(1) Allow content to be streamed online at the same time as or within an hour of when it is broadcast over the air. For three days these streams are counted by Nielsen just as if a viewer watched the show live or on a DVR.

(2) If the video is played in fullscreen mode, show all the same commercials as in the broadcast version, just like a DVR, but also force the viewer to watch the commercials. If the video is played within a browser window, use shorter, online-style, 15 second commercials, and place sponsored engagement features such as quizzes and polls below the video player.

(3) After three days, replace the commercials with different commercials that are sold outside of the upfronts. This presents an opportunity to sell popular “season catchup” packages and other such products, so the online ad sales teams continue to have a unique product to sell.

(4) Allow the network’s streaming players to be embedded on any site, so that a thousand Hulus like Boxee, Windows Media Center, AppleTV and TV.com can blossom and help increase ad views for a small cut of the revenue. Since the network’s commercials are now being propagated, companies like Boxee can be harnessed as part of the syndication solution.

(5) And the thorniest issue: affiliate stations. It used to be that if you wanted to watch CSI in San Francisco, you could only see it on KPIX, CBS’ local affiliate. Now you can wait a few days and see CSI online from CBS.com. The local affiliates will need to be cut in on the Internet action, and they will also need to adapt to changing times. With cable, satellite, and now Internet streaming, there is no real compelling reason to have the same content broadcast over the air. In fact, it is a disincentive — Disney makes far more money per subscriber from cable systems on ESPN than on ABC, since they are simultaneously broadcasting the ABC content for free. Network affiliates are now differentiated by local ad sales and local programming, not last-mile content distribution. Although it will require some infrastructural changes for both the networks and the affiliates, the networks can extend their ad platform so affiliates can place ads for viewers within their geographic areas that stream shows. In addition, broadcast affiliates should be able to stream the shows from their own websites with additional, local engagement features surrounding the show.

This model I’ve outlined above will enable the networks to sell ads over the air, on cable, via DVR and online at the same time and have them all measured by Nielsen in a single rating number. Affiliates are included in the model since they can also distribute their ads to their local markets. Online ad sales teams can sell additional ads after the initial viewership period. And all the content is embeddable and monetizable across the web. The unique aspect of web content is that it is easy to create engagement — and particularly social engagement — around that content, which accelerates content uptake.

The Evolution of 1:1 Marketing - Facebook Pages and the CPF Model

2010-02-17T17:17:00.000-08:00

Facebook Pages were only introduced last May and have grown massively... for example Lady Gaga's Facebook Page has nearly 5,000,000 fans, one of the Top 10 pages on Facebook. Transpond has created several Apps for the Lady Gaga fan page such as song cards and the amount of user engagement in newsfeed posts, comments, likes, etc. is mind-blowing.

Last week I was in Katoomba, Australia (you probably haven't heard of it and that is the point here) and River Deep, Mountain High, the outfit that was taking us climbing and abseiling in the Blue Mountains was running a Facebook promotion. If you get 10 of your friends to Fan their Facebook page, River Deep, Mountain High will give you a coupon for $350 AUD, roughly $300 US. That is a $30 CPF, or cost per fan. In 1:1 marketing terms, a fan is the rough equivalent of someone who has opted into an email list, and a CPF is the equivalent of cost per email to acquire relevant mailing lists.

Now why would a small business pay $30 for a CPF? When someone is a fan of your business, not only do all their friends get notified that they now like your business, but you can send them newsfeed posts that show up on their Facebook home page, just like when one of their friends posts a status update. But there is a contract here: it is very easy to "hide" messages from a Fan page or to "unfan" the page. So your messages need to be short, relevant, and actionable, such as:

This small San Francisco gym is posting a message for free that its fans found relevant. In the past, they would have had to send an email for this that would need to be formatted nicely, delivered via a costly service such as VerticalResponse or ExactTarget, and subsequently ignored by the majority of receivers that rarely open vendor emails let alone personal email.

Transpond is introducing "Fan Required", a new feature that requires a Facebook user to become a fan of a fan page in order to use an interactive feature such as watching a new music video or clicking through on a coupon. In the past, marketers have often asked for an email address in order to access exclusive content. This new Transpond feature will incentivizing users to join the evolved version of the mailing list, the Facebook fan, and they can now be messaged on their Facebook home page instead of via email.

Google's Vertical Search

2009-12-18T13:46:00.000-08:00

I have been writing for a while about how Google's search results stink, and how vertical search is far better. Some companies might continue on their existing trajectory towards failure, but not Google. Over the past six months, Google has been steadily adding vertical search features, although of course in a very Google way.

Rather than having the user pick a category such as music or stocks and then search, Google guesses what vertical your search is in and puts that result at the top of your search results.

Examples include:

Addresses -> Maps

Businesses -> Map & Reviews

Stock Quotes -> Stock Chart

Music Artists -> Artist Tracks

For some types of searches, Google just shows the results in the Google Suggest feature, so you don't even have to click search! Examples include:

Weather

Flight Status

Missing are Facebook & LinkedIn for people searches and shopping comparison for product searches. I can understand Google's reticence about integrating successful social networks since Google lacks one, and Facebook and LinkedIn results inevitably end up near the top. The AdWords free-for-all based on product searches is not one I think they will ever optimize for the enduser.

The Google vertical search progress is impressive and I have found myself using vertical searching less and less and going back to the Google mothership. Well done.

The Microsoft Comeback

2009-12-03T18:27:00.000-08:00

Everyone is writing Microsoft off, including the New York Times epitaph last month. I think that it is premature to discount Microsoft.

The Cloud

The overall transition to cloud computing has been incredibly slow. Most small and medium sized businesses are still running their own mail servers, file servers, wikis and applications, and the fact remains that most of these businesses are running Microsoft software on their desktops and servers. When these businesses finally transition to cloud computing, what are they likely to do? Try to migrate everything to GMail and Google Apps? That is a huge pain and requires a ton of user training.

Microsoft is going to come in and say "we will migrate your Exchange to hosted Exchange, your files to hosted NTFS, your Office to Hosted Office, your SharePoint to hosted SharePoint and your .NET/MS SQL Server apps to Hosted Azure. All for less than the cost of an upgrade cycle."

And then Microsoft will turn their license revenue stream into a monthly revenue stream. Which means they will no longer have to add a bunch of useless features and change file formats just to get customers to "upgrade" to a new version of Microsoft software.

Windows 7

I have been running Windows 7 on my home machine for about a week and I am very pleased with it. I use a Mac at work so am shifting back and forth between the two operating systems and there is not much different. What always hoses Windows machines is adding software, but I don't add software anymore and run the same suite of stuff on both machines (Firefox, Thunderbird, Skype, MS Office, and Acrobat Reader). As many have noted, the window management on Windows 7 is far superior to Mac OS X.

Bing

As I have been posting for years now, Google search sucks, and vertical search is much better. Bing is very good at vertical search. Who cares if the SEO spam links that are below it are "better" than Google's when users have already found what they are looking for at the top of their screen? When "search" = 1 result, the game is over.

Innovating is Hard When You're Microsoft

Look, everyone loves to hate Microsoft, even when the do actually innovate. Back in 1998 I used a NEC Mobile Pro 770 running Windows CE. It had instant on, 8 hours of battery life, a 640x200 pixel screen, almost fullsize keyboard, Internet Explorer, and a lite version of Microsoft Office. It was a GREAT machine. 10 years later everyone is heralding the advent of NetBooks, when Microsoft was the innovator of the segment.

But Copying is Easy!

What Microsoft is really, really good at is copying, and it does not take much to copy Google Docs, Mac OS X, and Google Search. And it does not take much to give a Microsoft software user a hosted experience that is very similar to their desktop experience. They could still royally screw this up, but I think they are starting wake up in Redmond.

Feed the Feed - How to Populate the Real Time Web

2009-10-22T16:27:00.000-07:00

Now that search engines like Google and Bing are incorporating status updates from Twitter and Facebook, getting your content into peoples' feeds has become more important than ever. Sites like The Huffington Post that are Facebook Connect enabled are seeing tremendous traffic growth from just newsfeeds, and this will be magnified by their links showing up in search results. So how can a Facebook Connect enabled site easily add engagement features that entice users to post links into their newsfeeds?

We at Transpond call populating the real time web "feed the feed", and the latest version of our Write Once Engage Anywhere technology offers Apps that automatically detect if they are embedded in a Facebook Connect enabled site, and prompt the user to share their engagement activity to the web.

For the CBS TV.com Emmys feature, Transpond powered the nominees poll, red carpet poll, fashion face-off, videos library, and image galleries. All of these features were tied into Facebook newsfeed updates.

When voting on a gown in the red carpet poll there is a "Publish to Facebook" checkbox placed directly below the Vote buttons.

Clicking on a vote button indicating whether you like or dislike the gown then prompts you to share your thoughts with your Facebook friends using the standard Facebook publish dialog.

The feed story than shows up in your news feed and on your friends' Facebook homepages and mobile apps.

If the user is not logged in via Facebook or the site is not Facebook Connect enabled, embedding a Transpond App prompts the user to share their activity with Facebook, Twitter, and MySpace icons:

You can easily "feed the feed" with your content by adding Transpond Apps to your website and Facebook/MySpace fan pages. Integrating deeply into Facebook Connect enabled sites is just another example of how transforming an App into a native part of its host is a far better solution that generic solutions such as embedding Flash.

How Facebook Will Become the Top Ad Network

2009-10-20T21:42:00.000-07:00

Facebook Connect is growing like a wildflower through websites, dramatically increasing registrations and logins now that users do not need to remember an account and password, and also driving traffic when users publish website activity to their Facebook newsfeeds and draw clicks from their friends.

Now when a user goes to a Facebook Connect enabled website, the website contacts Facebook to get their Profile photo and name.

Since Facebook knows a lot about people from their Facebook profiles, it lets advertisers place super targeted "Social Ads" on Facebook.com. These ads are already drawing over $500M in revenue for Facebook.

The next logical step is for Facebook to let Facebook Connect enabled websites show these same targeted ads and share revenue with the websites. So when users log onto Facebook Connect websites, they see the same highly targeted ads that Facebook shows them when they browse Facebook. And users are more likely to click on these ads on websites that they are browsing than on Facebook where they are engaging in a social experience.

Transitioning ads from one high volume website into a network of websites is the same thing that Google did. First Google offered AdWords that showed ads based on what a user was searching for at Google.com, and then it offered AdSense that let websites show the same ads based on what was on the page a user was looking at. Google then augmented its website ad network by purchasing DoubleClick's display ad network.

Facebook's ads are much more targeted than Google's ads. A Google ad at ESPN.com can assume that the user is a male aged 20-35 and then randomly show a Toyato truck ad or a movie ad for the new Farrelly brother movie. A Facebook Connect ad would know that the user (or a lot of the user's friends) are a fan of Something About Mary, that the user had checked out Facebook Connect enabled Movies.com earlier in the week, and show the Farrelly movie ad. If the user is not logged into Facebook Connect, Facebook will at least know which types of ads are doing better for different demogaphics.

Facebook surprised everyone with its rapid revenue growth to $500 million in Social Ads... its evolution into a Social Ad Network will accelerate revenue into Google territory.

Will Twitter Get 250m New Users or Will Facebook Copy its Features

2009-10-13T17:11:00.000-07:00

Which of these is more likely to happen:

(1) Twitter adds 250 million new users that use it regularly.

(2) Facebook copies all of Twitter's features.

As I wrote in March, it is not difficult Facebook to copy all of Twitter's features, and they have since shamelessly done so.

Think of your stay-at-home mom in the midwest that is using Facebook to keep in touch with all her friends. She wants to subscribe to businesses to get deals and see what her favorite TV stars have to say. What's she going to do? Try out Twitter with its lack of inline photos and videos and unintuitive nonthreaded comment streams, or become a fan of their Facebook fan pages and have everything cleanly inserted on her Facebook home page? No brainer.

As reported in Techcrunch, Comscore shows Facebook continuing to grow while Twitter is flattening out:

Twitter is great and all, but it needs to fix its UI ASAP if it wants to grow. And no, expecting moms in the midwest to find random 3rd party applications does not count!

The Accelerating Speed of Business

2009-10-08T00:28:00.000-07:00

The way that Internet companies do business has fundamentally changed over the past couple of years. Platforms like Facebook and the iPhone have accelerated from nothing to ubiquity in just a year or two. How can a business keep up?

Well how does Facebook itself operate? Scrum style engineering. Bold new features that are pushed out and then iterated. Marketing is accomplished via blogs and PR. Sales are self-service, and some features such as Apps are free.

Here's a summary of how the new way of operating impacts each functional area of a social Internet company:

	Wired	Tired
Leadership	Launch and iterate	Consensus
Engineering	Scrum	Waterfall MRD/PRD/spec/etc.
Marketing	Blogs and Twitter	Whitepapers, emails, and webinars
Sales	Self-service freemium	Direct sales and limited trials

Recently I have been interviewing a lot of executives. The most challenging thing is that a lot of really good, solid people are steeped in the way we all did business 10 years ago. It is hard to figure out who can adapt to this new way of doing business.

This market moves very quickly. There are no visionaries here, but people who know the market well. When it is clear to the people who know the market well that something is about to change, what should a company do?

One way to accomplish this would be to have a series of meetings where the team would seek input from everyone impacted and attempt to achieve a consensus that a new feature should be added. Then marketing would meet with customers and create a Marketing Requirements Document that the team would iterate on and approve. The next step is a Product Requirements Document that the team would again iterate on and approve. Then engineering can create a detailed specification to match the PRD and meet with marketing to ensure that the specification matches the PRD. Up next is user interface design and iteration. Then engineers can implement the feature for the next big push of the website.

As I am sure you have guessed, companies that operate this way are dead or dying. The competition has just shipped 10 features in the same amount of time.

The new way to do this is to quickly create a wireframe of how the new feature should work. A cross-functional product team should in real time edit this spec and remove functionality until the bare minimum for a functional feature is left. At this point there should be a go/no go gut check decision now that there is a concrete wireframe to look at. The wireframe is then quickly skinned and implemented, and shipped with the next maintenance push of the website. The feature is announced via blog and Twitter. If people don't respond to the feature, the company has learned very quickly with minimum wasted time that it needs to move on. If people respond to the feature, the team can then iterate on the feature based on user feedback now that there is traction. Once there are sufficient users and higher level features to add, there is a self-serve upsell opportunity for the feature.

I visited Zynga this morning, and one of their company mottoes is "Zynga Fast". Facebook moves fast. Zynga moves fast. Companies in the social and Internet ecosystems need to move as fast if not faster. Which means people at these companies need to be just as agile. The way we did stuff 10 years ago no longer applies.

Why MySpace will Spank Facebook on Media

2009-08-21T16:36:00.000-07:00

A couple of months ago I spoke on a panel at Digital Media East along with the Ali Partovi, the CEO of iLike. We were asked what we would do if we were Owen van Natta, the CEO of MySpace. There was a broad consensus amongst the panelists that MySpace should focus on its music/media core competence.

Ali suggested that MySpace buy Twitter. I suggested that MySpace buy iLike! Which drew a laugh from the audience, but this is definitely the right move for MySpace, and not for the reasons covered in the press.

MySpace Knows What You Like

On MySpace, people have friended musicians and other entertainment properties. Those media profiles in turn reference each other as influences. They essentially have a linked social graph of what people like to listen to and watch, how they have friended each other, and also how those entertainment properties relate to one another as influences.

With iLike This Can Now be Monetized

This is incredibly, incredibly, incredibly valuable! People that like to listen to some random band also for whatever statistical reason are also inclined to like a new TV show or drink Coca Cola. Or whatever. There is a ton of research in this area for ad targeting. And with acquisition of iLike, MySpace can now pump these existing musical preferences through iLike's system and have the most extensive media recommendation engine.

So when an entertainment company wants to launch a new band, TV show, or movie, they can plug into this MySpace recommendation system and be able to easily reach the people that are likely to purchase the new content. With the special bonus that these people can also be reached on their Facebook profiles in addition to MySpace.

And it Will Look Better than Facebook

An individual's Facebook profile is much more accessible and pleasant than a MySpace profile. But for a media property, a live, fun MySpace profile is far more suitable than a Facebook Fan Page with its dull, frozen FBML/FBJS interface.

MySpace all of a sudden is one hot property! Congratulations to Owen van Natta - definitely linked recommendations was going to be the next step at Playlist.com, so he had a key insight on how to leverage MySpace's hidden asset.

Commercial Open Source Redux

2009-08-15T11:56:00.001-07:00

A big congratulations to SpringSrouce, a commercial open source company with an estimated $20M in annual revenue after years of effort sold for 20x trailing revenue. Pundits such as Matt Asay point to this as another success, after pointing out that in the Commercial Open Source Failure piece I wrote for BusinessWeek that I also missed the XenSource and Zimbra exits, two companies with <$10M in revenue that also sold for >20x trailing revenue.

I am in full agreement that these companies all had great technology in interesting spaces, but lets be clear that these are technology acquisitions, not business acquisitions like MySQL and JBoss. I do not think that Citrix and Yahoo! are patting themselves on the back about their acquisitions of XenSource and Zimbra. At least VMWare using SpringSource as an accelerator into cloud computing makes a lot of sense.

As the New York Times pointed out last week, the trend here is that enterprise IT spending has fallen into the gutter and is not going to climb back out. And even with the open source marketing message, commercial open source companies are selling proprietary software with direct sales, marketing at tradeshows, and supporting it with support staff into a market whose growth is almost on par with the rate of inflation.

These companies are fundamentally no different than the enterprise software companies that preceded them, which is the main point I am making and the point that no one in all of these "rebuttals" wants to address. Yes, a few will be successful as businesses, and for the rest there will be technology acquisitions, some exorbitant. But in the end the enterprise software market as we knew it is history and is morphing into cloud computing.

The Commercial Open Source Failure

2009-07-27T22:26:00.000-07:00

This post was also published in Rachael King's BusinessWeek column.

So what happened to open source as a business? There was a wave of “commercial open source” companies that were going to change the world, including SugarCRM, Alfresco, Jasper, Pentaho, and ActiveGrid, a company I started in 2003 to bring open source software into businesses. Each of these companies were going to lower costs with the open source business model and displace existing vendors in categories such as CRM, Document Management, Reporting, and Business Intelligence.

It’s been over six years, and no commercial open source companies other than Red Hat, MySQL, and JBoss have had liquidity events. So what happened? Oracle and IBM, which derive the vast majority of their software revenue from proprietary software, have an increasing share of the software market. And there’s a bunch of commercial open source companies still trudging along.

1. The only successful open source companies sell commodities. Linux, MySQL, and JBoss are the only open source companies with significant liquidity vents, and their success is more indicative that operating systems, databases, and application servers are commodities than that open source is a successful business model. No one can succinctly tell you the difference between Linux and IBM’s AIX, or JBOSS and Oracle WebLogic, so why not buy the cheaper one!

2. It costs as much to deliver open source software as proprietary software. Many open source companies exhibit at tradeshows, have salespeople, systems engineers, customer services departments, and on top of that employ the vast majority of developers that are working on their open source project. So their costs are comparable to proprietary software companies that offer free trial versions for lead generation. It’s great that some random guy in Lithuaniacan fix a bug for the commercial open source company, but the headache of maintaining a community and integrating random code patches is just as expensive as fixing reported bugs with your own people. So commercial open source companies have the same cost structure as the enterprise software companies that preceeded them.

3. Selling software is miserable. Selling software to a large business means approal from architecture committees, security audits, achieving approved vendor status, business unit sponsorship, executive sponsorship, etc. Enterprises see IT as a cost center and IT does whatever it can to not have to deal with yet another software vendor, especially a small startup that is likely to go out of business or get bought and then deal with software that’s no longer supported, making the IT buyer look bad.

4. Customers are switching to SaaS intstead of more software. Let’s say you run a division of a company and you need customer relationship management (CRM) or business intelligence. What are you going to do? Call your IT department so they can find software, purchase it, customize it, deploy it, and then roll out to your users, all while charging your through the nose? Or call a service provider like Salesforce.com or GoodData and be up and going tomorrow? No brainer.

So when is open source successful? When it’s free and supported by a broad community of developers, not just one company trying to extract revenue. At my own company Transpond, where we help companies reach their audiences and customers on social networks and mobile platforms, we use a ton of open source software including Apache, PHP, Tomcat, MySQL, JQuery, Debian Linux, Quartz, Eclipse, Maven, and more, and we haven’t paid anybody anything other than contributing code to some of these projects. The point of open source was for people to share the costs of developing, debugging, and deploying common infrastructure. That does not mean that every successful open source project can sustain a commercial company, especially when they are delivering complicated applications rather than simple plumbing.

Business-as-a-Service

2009-07-23T00:24:00.000-07:00

I remember during the .com how many companies wouldn't say what their products did or how much they cost on their website. The one that particularly comes to mind was E.pithany, whose website was laden with benefits and customer praise, but after spending 15 minutes perusing their website, I couldn't figure out what they did.

Business-as-a-Service is one of the best aspects of Software-as-a-Service: the commerce is frictionless. We at Transpond consume many services ranging from email to source code control to customer service systems, and we have never had to talk to anyone, negotiate a contract, or deal with anything complicated. We look around online, find a vendor that we like, check out their terms of service, use their free trial, and if we like it, we start paying monthly for the service.

What I have found surprising when looking for services is we still run into some that don't answer the three basic questions that every business should answer:

What do you do?
How do I get it?
How much does it cost?

While looking for a SaaS subscription billing service, I checked out one that has received a lot of press lately but did not have any indication of pricing or a guide on how to integrate the technology. I sent them an email stating specifically what we needed and asked for information on pricing and integration. They wanted me to schedule a call with a sales rep! So perhaps they are delivering Software-as-a-Service, but definitely not delivering Business-as-a-Service. Of all companies, why don't these guys let me choose what I want from a menu and then start billing me for it!

At Transpond, we definitely subscribe to the Business-as-a-Service philosophy and answer these three questions quickly and simply:

What do you do?
Home page headline: Easily Create Apps for Social Networks, Mobile, and Connected TV.
How do I get it?
Home page and every page: "Get Started" button or link.
How much does it cost?
Products/Overview: Price list.

While it seems the entire web is Business-as-a-Service now-a-days, we should recognize the pioneers, which include Google, WebEx, PayPal, Intuit, and Salesforce. These companies were all very clear about what they did, how to sign up, and how much it would cost... and they all grew into huge businesses, some without ever publishing a phone number!

Real Time or Popular Recent Time?

2009-07-21T15:44:00.000-07:00

On one hand the "real time web" is great, but on the otherhand it is overwhelming. I find myself checking in and out of the stream. In some ways, I miss Facebook's old weirdly algorithmic way of summarizing what everyone was up to on my homepage. There is a bit of that sandwiched to the right of the Facebook homepage, and Tweetdeck try to guess at popular tweets, but I find these interface lacking.

TweetMeme and The Hype Machine are interesting takes on what is popular on the overall stream.

What is ironic is that Facebook redesigned to mimic Twitter, but there are popular Twitter sites that are mimicing how Facebook used to work. Something in between the two is likely to be the eventual answer...

Introducing Transpond

2009-07-21T15:17:00.000-07:00

As covered last month in the Wall Street Journal, VentureBeat, and other media, iWidgets is now called Transpond and has a new url: Transpond.com.

Why the name change? Since we started the company to deliver what we then called "native widgets", the market has developed a name for what we were doing, which is "Apps". Widgets became pigeonholed as blocks of Flash that didn't do much, while the kinds of units our company helps you build for Facebook, MySpace, iGoogle, and now Palm Pre, are definitely called "Apps".

So rather than hold ourselves back with our name, we update the name to Transpond, which in the telecommunication field means to "amplify a message on a different frequency." Well that's what we do, we take your message and amplify it virally onto new platforms!

In addition to our rebranding, we have also released an updated site that makes it supereasy for marketing and web folks to deliver native social network and mobile apps. The screen shot below shows a simple three step wizard that you can use to quickly deliver a fully branded, native App for Facebook, MySpace, iGoogle and Palm Pre.

Over the next few weeks, we will add numerous viral types of applications, reintroduce drag-and-drop styling, and add additional native platforms. Stay tuned!

Woah - Apps Are Expensive

2009-05-14T15:58:00.000-07:00

MediaPost posted an article about a new Forrester research report on the cost to create an app: "Among the initial considerations is cost: Forrester estimates that mobile apps range from $20,000 at the low end to $150,000 for more sophisticated ones. Since most marketers don't have the in-house resources to build apps, the report suggests turning to experienced mobile app developers."

This is the same price range I have seen for custom Facebook and MySpace apps as well. Flat and decreasing web traffic is forcing publishers to syndicate their content into social destinations and mobile platforms, but at a low-end of $20,000 a platform, that’s a lot of money for a publisher to get their content out.

Writing a custom app is like making an e-commerce website n 1995 - you had to use CGI and add your own thread pooling, session management, etc. This is exactly why we started iWidgets, to provide an easy, cost-effective on-ramp to the future. The Forrester report is the first independent confirmation I've seen of what it costs to deliver even the simplest app.

Journalism vs. Blogging

2009-05-06T13:36:00.000-07:00

I have a couple of journalist friends that have been lamenting the demise of journalism in general and newspapers in particular. Both of my parents were journalists (AP, UPI, NYT, Time-Life), so I was brought up with and can appreciate journalism as we once knew it.

However, journalism itself changed drastically even before blogs and the Internet. As "the news" became a big business, there was this obsession with making the news "objective" by massaging facts to appease the overall audience. Telling people what they didn't want to hear meant they would watch/read less, which meant less advertising revenue. We saw this during the prelude to the Iraq War, and even today with editorial boards going into contortions over what to call "torture." Dan Lyons pointed out how the business press is sycophantic in its reporting of Apple.

The turning point for me was watching CNN last year during the oil crisis. There was a story on the price of oil, with a breakdown of how the $110 for a barrel of oil was distributed between gas stations, refineries, oil companies, taxes, etc. At the end of the piece, there was an interview with an oil industry lobbyist that stated that the price of a barrel of oil had no relevance to the profits of the oil companies. Did CNN question this or state that this was in conflict with the facts that they had just laid out? No. That wouldn't be fair. Maybe they would lose their access to the oil lobby!

When the mainstream news media refuses to question or challenge anything at all so as to not annoy some people, it is no longer journalism in my opinion. If the reporter is looking at a blue car, does he/she have to report that some people think that the car is red, rather than reporting that some people are color blind? Is that really venturing an opinion?

Nowadays, I read blogs for my news. I read tech blogs, design blogs, liberal blogs, conservative blogs. I see which ways different people are spinning a story, and I form my own opinion. Guess what: Sarah Palin has no clue about foreign policy. The bank bailouts have no metrics associated with them. It's called torture if I would be arrested for felony assault for doing it to someone. There are some things that can be ascertained by simply observing, and should be reported as such. It does not matter if it pisses people off, just tell things like they are! There is definitely a place for fact-checked, insightful articles, but putting them in a Wolf Blitzer-style, "don't want to offend anyone" context that does not point out the obvious mutes the story and is no longer relevant to anyone.

And stop wasting trees to send text around! :)

MySpace is MTV 2.0

2009-04-27T14:30:00.000-07:00

Hmmm... to listen to music. When I was a child, that meant an LP or a tape. Then it moved to CDs. Then to digital downloads and iPods. Where is this going next? Free streaming! Virtually all music is already online as videos, and even more is coming with deals the labels are making with YouTube and Hulu. In essence, music has become advertising supported.

It is easier to look up and play a song on fi.zy or Songza or to set up a playlist on Project Playlist than to look inside a music collection with iTunes or Windows Media Player. The web interfaces are more straightforward and you don't have to think about whether or not you have already paid for a song in order to play it. It is only a matter of time before 3G/4G phones stream music reliably, which will be much more convenient than syncing an iPod/iPhone.

Many pundits are saying that MySpace is dying and that Owen Van Natta can't turn it around. I agree that Facebook has far exceeded MySpace in uniques. But MySpace has longer engagement numbers. Why is this? You can not browse MySpace without running into music. And the artists are all crosslinked, linking to their influeces and posting on each other's walls. YouTube and Hulu are super boring compared to this. So MySpace started as a musician site, veered around for a while, now has streaming music, apps, quizzes, cross-linked artists, etc. It is the #1 music site that a lot of people go to when they hear of a new band.

Music is highly targetable - if you listen to Depeche Mode, that says a lot more than where you live or how old you are. MySpace has a solid shot to becoming the next media distribution portal, the next radio, the next MTV.

Oracle-Sun: Best of Breed Doesn't Matter Anymore

2009-04-21T16:09:00.000-07:00

10 years ago the enterprise mantra was open systems and best-of-breed. Customers wanted the best server hardware, best operating system, best database, best application server, best middleware, and expected vendors to make that stack work together. Now there is a trend towards vertically integrated stacks from IBM, HP, and now Oracle with its acquisition of Sun.

Apple vs. Microsoft is playing out on the enterprise level, and vertically integrated stacks with a unified experience are edging out open systems. Why is this happening? It occurs to me that each of the layers of the enterprise stack have been completely commoditized - can anyone tell me the difference between AIX and Solaris, Oracle WebLogic and IBM WebSphere, DB2 and Oracle, etc. in a way that would make sense to a CIO? There is barely a difference anymore for technical people, let alone those signing the checks.

Essentially vertically integrated stacks of mainframes and minicomputers were replaced by layered open systems and are now being replaced by vertically integrated stacks of open systems.

The big question for Oracle is whether it can successfully start to sell server hardware and balance monetization vs. stewardship of open source like MySQL and Java. Imagine if you had a gardening service you really liked, and it was bought by Jiffy Lube and they called you up and said that they were going to "improve operating efficiencies" etc. You might consider finding yourself a new gardener.

Java Cloud Edition

2009-04-19T12:30:00.000-07:00

Last week Google announced Java support for Google App Engine. Contrary to Simon Phipp's complaint that "it's wanton and irresponsible" to only support a subset of Java, I applaud what Google has done. Here’s why.

Java is almost fifteen 15 years old, and is a huge amalgam of classes that are no longer necessary for web development. What Simon seems to be suggesting — that Google include the Swing user interface classes, AWT, and Java2D for a cloud-based offering whose only interface point is a web browser? — makes no sense.

Google is solving a huge business problem with Google App Engine's Java support. One of the biggest challenges facing enterprises is that they have a ton of data, a ton of backlogged applications that their users want that are based on that data, and no way to deliver those applications. I learned the hard way at ActiveGrid that scripting languages was not a good way to solve that problem since it required a new type of server to be installed inside the firewall. A couple of years ago I theorized that the problem could be solved with a "data wiki" type of approach that would combine a simple form editor with tiered access controls, which I still think is a viable opportunity but runs up against the challenge that enterprises do not like to buy or install software anymore, especially especially from startups.

With Google's App Engine, enterprise developers can write straightforward JSP/JDO Java applications that can connect their existing back-end databases with Google's Secure Data Connector. The apps can then be moved to run inside the firewall on a standard Java EE server. I imagine Google may even have an enterprise version of App Engine that enterprises could run inside their firewall, just like the Google Search Appliance.

Kudos to Google. Their App Engine for Java should be called “Java Cloud Edition.” They have solved a big enterprise application development problem, and have also helped to refocus Java for the cloud. Cloud services aren’t a mere trend, it’s an evolution in the software industry. Companies that aren’t cloud-based run at a huge and costly disadvantage. At iWidgets we run a Java-based cloud backend for customers, and we are not using Java classes like Swing. Anybody complaining about some of the legacy Java classes are falling by the wayside isn’t in touch with this industry transition.

I think Sun should take the class subset used in Google App Engine for Java and call it Java Cloud Edition.

Startup 101: Capital Efficiency

2009-04-02T10:00:00.000-07:00

You may have read in BusinessWeek or TechCrunch when iWidgets closed an A round in January, despite the tought economic climate. In addition to having a strong product that solves a big headache for content publishers, a big part of why we got funded is our capital efficiency.

iWidgets spent only $1.5M in 18 months to bring our iWidgets platform to market, launch it with a major customer (CBS), and then sign three more customers.

Our leading competitor spent $10M in the same amount of time, just laid off a large portion of their staff, have no business model, and a product that solves yesterday's problem.

While you can’t build a business without a plan, capital efficiency is the often-overlooked key ingredient for a successful startup. Capital efficiency isn’t just about not wasting money, it’s also about not having any fat. Too often, bloated, fatty companies are insulated from market realities — you can’t feel it when the road starts to get rough. So it is not just in this economic climate that startups should be capital efficient, it is always.

Here are the eight cardinal NO’s of capital efficiency, plus the four things you HAVE TO spend money on.

- No Management

A small team of top-notch engineers does not need a VP of Engineering, it needs a technical lead. An Engineering VP costs a bunch of money, and in a fast product cycle does nothing but slow things down. For most of iWidgets' life, the company was composed of four engineers and me. We had a very clear direction: We wanted to integrate website content deeply into popular destinations. But there were a million features that we could do, and we iterated a few times on which ones to include, until some started to stick in the market. We did not have to ship a complete, moon launch product, and we did not have to have big team meetings to align ourselves. I would say, “I met with these three companies, I see a need for X at each of them, let's do a minimal version of the feature and see if they bite.” We did this a few times before we had a product that people needed. Adding a bunch of chiefs to the mix would have only slowed this process down.

- No Sales

A sales person is going to have a quarter to ramp up and set up Salesforce just the way they want it, is going to require sales tools, and is going to come up with a million reasons as to why an account is moving forward. They are never going to tell you your product sucks or that no one wants it. Why would they? They’d be out of a job. The worst thing is, they are shielding you from the market. The CEO needs to hear the “NO.” The CEO needs to get the blown off by a friend of a friend at a large media company. Why? So that he/she can get a sense of the market. It is the job of the founders to get a few customers using the product. A sales guy is not going to do it for you and is instead just going to waste money.

- No Marketing

VCs are going to tell you that you need a marketing person. In my experience, there are very few marketing people that can function in a pre-product company. Their role is essentially market research at that point, and for that you should just use consultants. But I know of plenty of companies without marketing people that have great marketing. At iWidgets, where we have been in the business and trade press countless times, constantly have inbound calls from major media organizations, have a clearly differentiated product, and a business model that prospects like. Once you have all that, a marketing person will do great, because they can actually execute. But a marketing person is not necessarily going to get you all that, and in fact is likely to get in the way.

- No Tradeshows

I have a policy of no tradeshows. They are a complete waste of money, especially if you have to travel and put together a booth. But policies need to have exceptions. We bought a $5K booth at the Facebook f8 developer's conference because it was cheap, plug-and-play, and a great opportunity for us to get feedback about our product since we had just launched into beta. We also thought that we would meet a lot of Facebook folks, but instead our booth was deluged by Google employees working on OpenSocial and iGoogle.

A huge decision that took a lot of hemming and hawing was launching our 1.0 product at the Demo conference last year. The Demo show was $18,500 + travel: super expensive. Ordinarily I would not even consider spending that kind of money. But we were launching with CBS, and the SVP of Entertainment at CBS had kindly agreed to participate in our launch on stage. Given that, we had to provide a venue suitable for such a senior executive, I don't think he would have done it at a free-for-all like the Techcrunch50. As a result, we got inbounds from every television network within two days. I still look back on that and don't know if I would spend that kind of money again, but what's done is done, and I have no regrets.

- No Office

We didn't have an office for over a year, and would have staff meetings around my dining room table. We had a constantly running Skype chat window where everyone could talk to each other. Once the engineering team got to 5 people we sublet a few desks for engineering from a friend of our CTO. Once we had a signed termsheet for our Series A, we got an office, and instead of an office ended up getting a live/work loft because it was cheaper (and better!).

- No Servers

This is a big one for me: Do not install a single server. Use SaaS for everything, even source code control and bug tracking. You will save a ton of cash and will not need any IT people. We use SaaS for everything, including Amazon EC2/Rightscale for our website and backend, Google for email and wiki, CVSdude for source code control and bugzilla bug tracking, BrowserCam instead of a QA lab of machines, Quickbooks Online for accounting, Zoho for CRM, Packetel for Fax, Egnyte for file sharing, and TriNet for HR/Payroll.

- No Administrative Staff

Do it yourself, you will actually know what is going on in your company. I once briefly worked with a guy at a pre-revenue company that needed a ton of infrastructure, including an admin to take notes and log action items during his staff meetings, and even hired a consultant to fire people for him. Needless to say, a lot of money got spent without very few results.

- No Travel

Skype video. Enough said.

And now that you know the NO’s, here are the YES’s, which are just as important.

- Yes Engineers

Hire the best you can find.

- Yes Lawyers

They feel like a rip-off, but hire lawyers that understand startups. And get them to kick some cash into your seed round which covers what they are charging, so it turns out to be a wash.

- Yes Bookkeeping

Use Quickbooks and a part-time bookkeeper, they are cheap and your accounting will be suitable. P&L statements are an important way to keep track of what you are spending money on, and investors are going to want to see it.

- Yes Wireframing

Wireframe everything before building it, it will save a lot of time and mis-steps, and therefore money. I am a big fan of Axure Pro and we even wireframe simple three step wizards to make sure they are understandable and flow smoothly. It is better to figure out early what works, validate new features with customers before they are implemented, and the engineers appreciate getting a straightforward spec that is not going to be subject to too many changes after the feature is added.

As I’ve pointed out, sometimes you have to break the rules to take advantage of a one-time opportunity, but these are the guidelines I’ve developed over the years and I’d recommend them to anyone starting a business — not just “in these tough economic times.”