Marsha Keeffer's WinMarkets Blog

Harvard Business Publishing: Umair Haque - What Apple Knows That Facebook Doesn't

2008-08-20T23:02:50Z

Too often, we don't recognize the power of platforms - even in Silicon Valley. Nilofer Merchant, Rubicon's CEO, writes frequently on the topic and ties it together with strategy.

The piece below by Umair Haque, draws an interesting difference between the way Apple and Facebook are both conducting their businesses. Some would argue against viewing Apple as 'open,' given the proprietary nature of the iPod and iTunes. Either way, it's great food for thought.

"Today, platform wars ain't what they used to be. On the one hand, there's Facebook - playing a textbook game of platform strategy, but slowly suffocating the utility of its own network. On the other, there's Apple - ignoring many of the rules of platform strategy, but radically redesigning the long-suffering mobile value chain with the iPhone App Store.

How do we make sense of this? Why do Facebook's elaborate games of platform strategy seem to be destroying value, while Apple's platform anti-strategy promises to explode the boundaries of value creation in an industry where those boundaries have long been held to be fixed and immutable?

Yesterday, we saw platforms as mechanisms to strategically control complements. Strategists and economists studied platform wars intensely - with Annabelle Gawer and Michael Cusumano's excellent Platform Leadership being perhaps the reference work for strategists.

Today, I think there's perhaps a simpler and more powerful way to think strategically about platforms.

Let me advance a simplifying proposition: platforms are markets. The most useful way to think about platforms today is simply as markets.

The App Store's name is revealing: it tells us that Apple doesn't see a platform to be manipulated, but a market to be made. It is that understanding that's at the heart of Apple's furious domination of the mediascape.

Markets - and networks, and communities, as I've discussed - are strategic weapons of shock and awe. Why? Here are three ways in which they radically alter the structure and dynamics of entire industries.

Markets alter the basis of competition. Apple took something terminally closed - the mobile value chain -and pried it radically open. Facebook - still thinking in yesterday's terms - took something radically open - the www - and is trying to make it a little bit more closed.

Apple took something radically evil - the mobile industry - and is making it a little bit more good: finally, now that it's usable, there's an incentive for you to get stuff that's actually useful on your phone, instead of just being a zombie whose head is getting ripped off by suits scheming up hidden charges in boardrooms.

Facebook - still thinking in yesterday's terms - took something radically good - the self-organizing incentive for people to share knowledge with others on the www - and is making it a little bit more evil: exclude people from accessing it, trying to pollute it with ads, subvert it with pseudo-friends, silo it across mini-networks, dilute it to the point where low-quality apps proliferate like weeds.

Markets cause strategic domino effects. Markets are strategically radical: once the basis of competition has been altered, an economic tsunami is unleashed, often unstoppable. The dynamics of competition shift irrevocably. In mobile, for example, Apple's market driven approach has each player striving to be more open than the last.

Markets atomize the value chain. The App Store is radical, ultimately, because it atomizes the value chain: where once a handful of scale-driven players could produce and distribute mobile apps, today, any number of players can enter. What was once monolithic is shattered into a million pieces. If the market can coordinate those millions of pieces effectively, the new value chain is hyperefficient. The industrial era DNA of incumbents simply can't fight that kind of radical fragmentation: it's too slow, dull, unimaginative, and evil.

Ultimately, Apple is playing a textbook game of next-gen strategy: using markets to alter the basis of competition, topple incumbents with domino effects, and atomize the value chain. Incumbents playing by yesterday's rules are trying to fight a limit break with a spoon.

Facebook is doing largely the opposite: clinging to yesterday's basis of competition, signing deals with incumbents instead of toppling them, largely failing to atomize media - unless it's for zombies, vampires, and werewolves. Too often, that's where platform - instead of market - thinking leads.

What would it take for Facebook to stop thinking platforms, and start thinking markets? Well, simply start charging people for apps, for a start: that would amplify incentives for crappy apps to go the way of the dinosaur. If advertisers are subsidizing apps for people, Facebook's market will always be distorted - because advertisers need consumers more than consumers need advertisers today.

The understanding that platforms are markets is one of the most vital differences between revolutionaries and laggards across today's strategyscape. Who else knows that platforms are really markets? Google, of course. Who's blind to it, and still plays by yesterday's rules? Microsoft, AOL, Yahoo. But that's just a start: the most interesting examples come from players outside tech industries altogether: Ford, the Gap, and Bear Stearns, to name just a few players trapped by platform logic.

This conclusion also helps us answer another critical question on the minds of today's investors, entrepreneurs, and would-be revolutionaries: when will today's crop of startups start making serious cash? The answer: when they shift from platform logic to market logic.

That's a subject for another post (or maybe a book :) - for now, let's discuss. Is platform thinking holding players back - are there players who are still using platform thinking to great effect? Who do you think who should be thinking in terms of markets instead of platforms? Where else do you see players shifting from platform thinking to market thinking?"

Wall Street Journal: When Does Technology Cross Ethics?

2008-08-15T22:17:24Z

Can the use of new technology be unethical? Or does such use never cross the 'bright line' of ethics?

A piece in the Wall Street Journal raises those questions:

"Police in Washington D.C. arrested a man they believe is responsible for a string of assaults, the Washington Post reported this week. The breakthrough in the case came when investigators placed a tracking device on the car of a convicted rapist. There wasn't much evidence linking the man to the assaults beyond his past and the fact that he lived in the area. But thanks to the GPS device, the police caught the man committing an assault.

Here's the catch: The police didn't have court approval to place the device. And, according to the Post, this is an increasingly common tactic."

Read the entire story here.

Ars Technica: Pew Internet Report - Only half of US Netizens use search engine daily

2008-08-07T21:57:44Z

Ars Technica assistant editor Jacqui Cheng wakes us up to the fact that many Americans may be on the Internet, but they're not surfing with the style we use in Silicon Valley.

That smacking sound you just heard? It's the entire Googleplex smacking their lips at the growth opportunity. Jacqui's key sentence is this: "There's an entire 50 percent of the Internet just waiting to become daily users of one search engine or another, and that means there's still a chance to go for the gold."

Here's an excerpt....

"Believe it or not, some Internet users still don't use a search engine during the course of a typical day. That number is shrinking, however, according to new data from the Pew Internet & American Life Project. Almost half of all Internet users today use a search engine on an average day - a number that has increased from only a third of Internet users in 2002. The trend may seem predictable, but it also means that there's still plenty of room for Google and its competitors to grow.

The demographics of your typical search engine user are like those of many Internet-based services. Those who search on a daily basis tend to either have a college degree or have completed some college, come from households with an income higher than $50,000 per year, and have broadband at home. The numbers are weighted slightly more toward men (53 percent versus 45 percent women) and toward the younger crowd, although the numbers for those over 50 are not tiny. After all, where would our parents and grandparents be without "The Google?" "

Read it all here.

CNET: Note to privacy advocates: good luck

2008-08-07T01:27:06Z

Google is back in the news as another privacy group gets hot and bothered about their eye in the sky.

No one wants a satellite snooping, but the privacy group actually posted Street View directions to a Google exec's home online. Speaking as one who has seen firebombing near the UCSC campus this week to protest the research work done by various professors, I think the group went too far. Read on...

"There are plenty of legitimate concerns about the privacy intrusions of Google Maps' Street View, but one privacy group went a bit overboard with an attack on the search giant's all-seeing eye.

"Google's hypocrisy is breathtaking," accused Ken Boehm, chairman of the National Legal and Policy Center, in a statement last week. Perhaps, but he would have been better to pick stronger grounds for his conclusion.

The center provided two recent quotations from Google as evidence. First was "privacy does not exist," from Google's May 28 rebuttal to an April invasion-of-privacy suit related to Street View. Second was "Google takes privacy very seriously," from Google's response to a request that California's attorney general scrutinize privacy implications of Google's ad partnership with Yahoo.

The National Legal and Policy Center took a jab at Google by posting Street View directions to a top Google executive's house.

Those two statements indeed appear contradictory. The trouble is that the center significantly distorted the first, which actually was the much milder assertion, "Today's satellite-image technology means that...complete privacy does not exist." "

Read the rest here.

The Wall Street Journal: Web Piracy: The Enemy Within?

2008-08-04T23:07:15Z

While this Wall Street Journal story is about the entertainment industry, all of us involved in software would do well to take a look. Piracy of all kinds costs our industry billions every year, representing profits lost for shareholders. Some companies look the other way, others see it as a clandestine marketing tool.

Maybe it's time we rethink our strategy. Dollars lost also mean jobs lost - not something anyone wants to see given the current economic situation. Kudos to Ethan Smith and Sarah McBride for a thought-provoking piece.

"In a situation that highlights the challenges faced by entertainment companies and artists in the digital age, a case of alleged Internet piracy is now coming under scrutiny as a possible promotional stunt by a band's own handlers.

When a track from a forthcoming album by hard-rock band Buckcherry leaked onto the Internet a few weeks ago, the Los Angeles quintet was quick to complain in a blog and a press release from their label, Warner Music Group Corp.'s Atlantic Records. Nonetheless, the band quickly released a music video for the song, "Too Drunk. . ."; radio stations around the U.S. began playing it, and within weeks the song entered the top 40 of two rock charts published by Billboard magazine."

See the rest here.

Wall Street Journal: Former Google Engineers Launch Search Engine

2008-07-28T20:33:24Z

Former Googleites are in the news everywhere today regarding their launch of a search engine. Cuil, as you'll find out from the excerpt of a story written by Jessica E. Vascellaro, is supposed to deliver better results.

It's great that Cuil searches more than Google. I encountered problems with a simple search such as the additional of thumbnail illustrations that have no relationship to the search topic. In addition, many of the results just didn't relate to what I was searching. Cuil also took much longer than Google to give me those results.

The Cuil privacy policy is attractive. The company won't collect personal information about users.

As Vascellaro notes, the company has secured $33M in funding - which makes it all the more surprising that the engineers working on the company didn't feel accuracy was important.

Here's an excerpt from Vascellaro's story:

"A startup founded by engineers from Google Inc. and other tech giants is launching a search engine that claims to cover three times as many Web pages as Google.

The startup, Cuil Inc., plans to launch its product (www.cuil.com) Monday and aims to deliver better results than other major search engines by searching across more Web pages and studying them more accurately. The site's results page resembles an online magazine -- a different look and feel from search juggernaut Google's.

"You can't be an alternative search engine and smaller," said Anna Patterson, Cuil co-founder and president, and one of the engineers who helped build Google's search index. "You have to be an alternative and bigger.""

Read the rest here.

Ars Technica - Don Reisinger on Amazon's Kindle

2008-07-22T13:00:00Z

Don Reisinger wrote a very comprehensive opinion piece on Ars Technica yesterday.

He has quite a wish list for the next version. But even though he covered its sales, a still too-high price, its ability to let you read more than just books, a possibly enhanced screen, tons of content available, a potential move into textbooks (big bucks), and e-Ink technology improvements, Don missed the one deal-breaker that will forever keep me from buying a Kindle.

Design.

With all the great design houses available, I can't believe Amazon got this device so wrong. The mere sight of a Kindle is enough to start my gag reflex.

I don't care what its technical attributes are - I'm not shelling out any amount of money for a device that looks like someone left a piece of beige plastic and a calculator on a radiator overnight.

There's no excuse for selling good technology in a Frankenstein package - I'd hoped for so much more, Amazon!

Nicholas Carr's Rough Type: BusinessWeek's Sarah Lacy Gets SaaS

2008-07-18T21:13:15Z

In today's Rough Type, Nicholas Carr comments about Sarah Lacy's latest Businessweek article on SaaS. Turns out, as we see from Microsoft's inability to turn a profit in this area, the frenzy of SaaS activity may be lemmings to the sea. Here's an excerpt:

Anyone who thinks the software-as-a-service business is a gold mine for vendors is wrong. The economics are fundamentally different from those of the traditional software business - and not in a good way.

As Lacy writes, the Web is "just as good at displacing revenue as it is in generating sources of it. Just ask the music industry or, ahem, print media. Think Robin Hood, taking riches from the elite and distributing them to everyone else, including the customers who get to keep more of their money and the upstarts that can more easily build competing alternatives."

Web apps remain a hard sell when it comes to big, conservative enterprises, and the capital and marketing costs are daunting, particularly if you're running your own data centers. This revolution in business software will play out slowly and, for most suppliers, painfully.

Read the whole piece here.

Come on Now Social Networking - You're Losing Gas

2008-06-14T00:54:51Z

Om Malik has a juicy article about social networking on Giga Om.

Google CEO Eric Schmidt never misses an opportunity to dis the social networking sector, typically by pointing out how hard it is to monetize social media inventory. Which could just be his way of trying to excuse his company's inking of an exclusive $900 million deal to serve up advertising on News Corp.-owned properties including MySpace.

But Schmidt's motivation notwithstanding, what he says is true: In a recent report, eMarketer, a N.Y.-based market research agency, lowered its 2008 advertising estimates for U.S. social networks to $1.43 billion from $1.6 billion. They expect Facebook will take in $265 million and MySpace will bring in $755 million, down from earlier projections of $305 million and $850 million, respectively.

Interruptus Horribilus? Maybe not...

2008-06-11T17:50:51Z

In Ars Technica, John Timmer has an interesting piece on effectiveness and work interruption. Turns out that having huge uninterrupted time to complete a task isn't the holy grail after all - and interruptions aren't the awful derailer that we thought they were.

A new study published in the Journal of Computer-Mediated Communication suggests that, contrary to expectations, the user of an Instant Messaging (IM) client actually has the opposite effect, allowing workers to manage their interruptions more efficiently.

Catherine Morris on Rubicon Consulting

2008-05-29T21:15:47Z

We've been writing some
haiku. Nilofer's exec
assistant wrote these:

Trusted advisors.
Go-To-Market Solutions.
Simply Rubicon.

Soothing yellow walls.
Support to succeed always.
Happy Hound lunch daze.

Ballmer to Yang: I Just Can't Quit You

2008-05-19T08:58:00Z

Two NYT journalists see Microsoft 'needing a franchise' as the software giant puts the moves on Yahoo all over again.

Two weeks after walking away from takeover talks with Yahoo, Microsoft made clear on Sunday that it still needed to create an Internet powerhouse that could rival Google — and that its interest in Yahoo had not waned.

Microsoft said on Sunday that it had approached Yahoo, this time with an ostensibly narrower aim: a collaboration on Internet advertising. But it hinted that it could still seek a takeover down the road.

Read it...

Will Europe Let Google Out of the Penalty Box?

2008-03-06T18:51:14Z

Saul Hansell of the New York Times feels that Google's year in the penalty box may be over.

Reuters and Bloomberg report that the European Union is preparing to approve Google's pending acquisition of DoubleClick, the advertising technology firm. The deal, which was announced last April, has been delayed mainly because of protests by Microsoft that Google would gain monopoly power in the online advertising business.

The acquisition was approved in the United States in December, but European regulators have been looking at it more closely. The deadline for action in Europe is April 2, but Bloomberg reports that action could be taken as soon as next week.

Now that Microsoft wants to buy Yahoo, tripling its share of the search ad share and vaulting to the top of the online display ad business, maybe it doesn’t look like such an injured party.

1,000 True Fans

2008-03-05T23:08:07Z

Kevin Kelly's latest entry from 'The Technium' continues his take on the long tail.

The long tail is famously good news for two classes of people; a few lucky aggregators, such as Amazon and Netflix, and 6 billion consumers. Of those two, I think consumers earn the greater reward from the wealth hidden in infinite niches.

But the long tail is a decidedly mixed blessing for creators. Individual artists, producers, inventors and makers are overlooked in the equation. The long tail does not raise the sales of creators much, but it does add massive competition and endless downward pressure on prices. Unless artists become a large aggregator of other artist's works, the long tail offers no path out of the quiet doldrums of minuscule sales.

Google's JotSpot Wiki Reborn As Google Sites

2008-02-28T20:48:55Z

Google Sites offers simple tools for collaborative Web site creation.

Thomas Claburn of InformationWeek writes about Google's plans for Google Sites - an outgrowth of the Google Apps suite. Users get simple, intuitive tools for collaborative Web site creation. It's based on the wiki technology developed by JotSpot, which Google acquired in October, 2006.