Episode 0 - An Introduction To re:SEARCH…

SHOW NOTES:
In this show, I discuss the need for more disciplined search strategies when dealing with complex topics, and cover my three basic rules of internet searching.

Sites Referenced:

http://www.google.com
http://www.yahoo.com

Run Time: 3:10

Usage: Feel free to embed and share.

Thanks for watching!…

My first real experience with the power Moore’s law came when I upgraded from my old IBM PC with an Intel 8086 to the new PC AT with a 286 processor. I paid about the same as I did for my earlier computer, but found myself looking at an incredible boost in performance. The improvement wasn’t just just significant - it was transformational.

I could see creating programs for the new system that I never would have considered viable on the old. Several years later, this experience repeated itself with the introduction of the Intel 80386 - another incredible leap in speed and capability. We seemed to be on a incredible performance trajectory.

But then, something happened…

Software started to get more complex.

The ‘old guard’ programmers that grew up writing in assembly language on systems with 1K of memory began to fade away. With new, powerful - and lower cost - systems entering the marketplace, it became ‘bad form’ to focus on counting bits and cycles. This new wave of applications became more ambitious in their scope and functionality, and more accessible and creative in their interactivity and interface design. Anyone writing commercial or corporate applications started moving their development over to some version of ‘C++’, a language better suited than most to deal with the increasing demands being placed on software developers. DOS - the lightweight operating system that dominated the marketplace - found itself being replaced by Microsoft’s Windows 386, which offered a more robust framework for delivering graphically based applications. And with Windows came HAL - a hardware abstraction layer that hid the details of the machine a program was running on.

This marked the start of one of the most significant transition in technology history.

Software replacing hardware as the driving force for industry progress…

With software in the driver’s seat, computer based technology started to appeal to a much wider demographic, resulting in the arrival of new suites of applications. And with hardware prices continuing to drop at the rate predicted by Moore’s Law, the appeal of these newer applications broadened significantly. Devices that once required a corporate level budget (or serious geek commitment) now became accessible to a more mainstream, less technologically literate audience. This deflation in hardware prices created a virtuous loop that fed an explosion of new and more diverse applications which in turn resulted in increasingly pervasive market penetration.

The arrival of the internet in the mid-1990 only accelerated the process, moving software into what has come to be known as a “continual beta” state, and pushing harder for the eventual commoditization of PC’s - and hardware platforms in general.

That commoditization has become a two edge sword…

The upside is that the drop in hardware prices has made technology of all kinds almost universally accessible. We have gigabytes of storage in our phones and cameras, and processing power in our PDA’s that would have been enough to run an office 15 years ago.

The downside here is that hardware is now a dwindling component of any investment made in a technology based service or solution. It is no longer the main factor in what we pay for our technology. That distinction now rests with software.

And unfortunately, software doesn’t follow Moore’s Law at all…

Traditional software development continues to be an increasingly complex undertaking, and this complexity makes it resource and time intensive - and thus very expensive. There are two very distinct reasons for this increasing complexity. One reason falls in to the ‘Apple’ software camp - it isn’t easy to create exceptionally intuitive software to do relatively sophisticated tasks (examples are the iPhone and their iLife productivity suite). It requires a significant investment, innovative thinking, and iterative refinement. The other reason is commercial pressure. In most application genres, all of the basic functionality people need is already implemented in the software they own. To remain viable businesses, application developers are forced to create new ‘must have’ features that people will be willing to pay for - features that their competitors do not have. In effect, complexity is being added in a bid to escape commoditization. A good example of this is Microsoft’s Office 2007 productivity suite, a incredibly complex and expensive piece of software in what is essentially a twenty year old product category.

Their biggest competition is often the previous version of their software…

As technology consumers, we have become addicted to the historically declining pricing curve fueled by rapidly falling hardware prices. Getting more for less isn’t something we are willing to give up on, and that reticence is creating a real upheaval in the industry. Some recent software upgrades - most noticeably Microsoft’s Vista - have failed to gain any real consumer traction due to their cost and complexity. This marketplace backlash has called in to question the traditional way software has been developed and sold, and has many firms scrambling to reassess and refocus.

So how is the industry adjusting?…

Some firms see this as an opportunity, and are starting to extend their franchises with Software as a Service (SaaS) business models. Companies like Google and Yahoo are entering the application arena using web based services to replace traditional thick-client categories. These applications already offer many of the basic functions people expect from them, and are continuing to grow in sophistication. Being web based, they add a new social/collaborative dimensions not found in their traditional counterparts, but they also fall way short in disconnected use. If you aren’t online, their capabilities are often limited or non-existent. These services are largely ad supported, and offer consumers both free and subscription based options

Others like Amazon are providing rich platforms for new applications to develop against. These web service and infrastructure providers are looking to jumpstart the development of new applications and services by bringing efficiency and scale to the more commodity based capabilities most development projects depend on.

Traditional application vendors aren’t sitting like dinosaurs waiting to be hit by the meteor. Some like Microsoft and Adobe are experimenting with bringing their ‘franchise applications’ on to the web, while at the same time looking at ways to transition their traditional application base over to a ’software rental’ model. Their goal is to create a revenue annuity that no longer depends on continually pushing updates into the marketplace, though it is unlikely that they will be able to do that in a revenue neutral way

The wild card in all of this is open source. There are some fantastic applications in all genres coming out of the open source community. Most people are familiar with with Linux and Firefox, but there’s a whole range of tools and applications beyond that - Open Office, GIMP, Audacity, and VLC, Lucene, MySql, Miranda, Wordpress, PDFCreator and many more.

This model transition in the software industry is really just beginning and has a long way to go before things settle down again. New players will appear and ascend, and some of the big names today may diminish or disappear completely. Whatever the new equilibrium point for the industry ends up being, it will no doubt involve a combination of all of the initiatives discussed here. And I believe it will also reflect a more distributed approach to code craft and a more federated approach to service delivery.

As a result, the economics going forward will absolutely be different then what’s in place today.

They’ll probably operate a lot closer to Moore’s Law…

Enjoy!

The power of the ‘long tail’ is being felt in many aspects of our lives. We increasingly want things in our life to be ‘unbundled’ - broken into smaller bits that we can pick and choose from. We Tivo television to watch it on our own terms, and prefer iPods to radio stations. We’re far more inclined to donate to very specific causes than to general charitable organizations. We buy cars today that can be personalized in hundreds of detailed ways. We are becoming a society composed of an incredibly large number of incredibly small demographics.

Often times, a demographic of just one…

This desire to personalize the world around us touches every aspect of our lives - from the media we enjoy, to the news we follow, to the faith we embrace, to the causes we believe in, to the products we consume. And to the parties and politics we subscribe to.

But that’s only a part of the story…

In past elections, it was possible for candidates to “tune” a message for different demographics. When they stumped across the country for votes, their message, language, and tone would change as they moved from area to area. They always had some common themes, but based on the audience, some subjects would be ignored or glossed over, while others would be placed front and center. They could treat each of these stump speeches as local, targeted events.

But not anymore…

In a world where everything gets recorded either officially or unofficially, nothing is local - or even private. Unlike traditional media, bloggers will compare notes and cooperate to track down inconsistencies or fabrications. If a candidate changes positions, or says something controversial, or does something that’s plain dumb, someone - somewhere - will have a record of it. It may be a grainy cell phone video from someone in the audience, or even some archive news footage that someone digs up.

And it will be viral on YouTube before a campaign can spin it…

What we are starting to witness is the nexus of two significant trends - the increasing number of narrow, ‘issue-based’ voter demographic segments, and the rapid decline of effective narrow targeted messaging.

It’s the ‘Long Tail’ meets the ‘Global Village’…

We are starting to see these elements play a big role in the contest between Barack Obama and Hillary Clinton. Each side has been beaten down over seemingly contradictory stances they have taken on issues like NAFTA, immigration reform, taxes, campaign finance, or the war effort. They have been haunted by various videos from their past, almost blind to the fact that the same web tools they use to raise cash can be used to raise issues they would rather not face. Each ‘owns’ an extremely loyal core demographic, that may never embrace the other candidate if he or she wins. And party officials are becoming increasingly worried that these demographic fractures may never heal.

We see statistics after every primary contest about how a matrix of demographic combinations voted - religion, race, income, age education, martial status, and gender all come in to play. When you look at all of this in its totality, something becomes very clear.

There is no singular ‘Democratic Party’…

From looking at the conflicting and diverse interests and agendas of the various demographics that make up the party, it seems to be more of a loose affiliation of people that don’t identify themselves as Republicans rather than adherents to a broad, unifying Democratic platform. It’s not a single political body, but a small core of beliefs with many agendas in orbit around it.

And the exact same can be said about the Republican party…

At the ‘outer orbits’ of these political parties are what the media refers to as The Independents. These independents are becoming increasingly important. Neither party can win without attracting them in significant numbers. They are courted heavily by both parties and end up being the swing votes in just about every election.

And that fact isn’t lost on them…

It isn’t hard to imagine that this broad swath of voters could break off from both parties at some point if a credible political figure were to unify them into a true third party. If anything, it’s hard to understand why this hasn’t happened already. The current political parties are really just a facade masking a great deal of frustration and discontent on many issues.

They persist more by momentum than shared fundamental beliefs…

Like it has in every other aspect of society, the long tail will make itself know in the political arena. We are a diverse society confronting significant and complex issues. There is a growing consensus that our current political structure is failing us, and that the problems we face run deeper than simply the failings of one party or the other. The ideas and solutions that rise to the top of our political system are not the best our country has to offer. They are simply the ones that are least threatening to the status-quo. They are designed to sidestep any hard choices and to avoid forcing us to face unpleasant realities.

The process and outcome of this Democratic primary may force us to look more closely at these issues and decide where we will turn next for leadership. The political pundits have all said that this isn’t a campaign about experience.

It a campaign about change.

And they may have been more right than they realize…

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One of the biggest benefits anticipated by the wide adoption of a semantic based approach to content discovery is the ability to ask a basic question to a “search engine” and get back a specific answer.

Not a list of sites, but an actual specific answer.

While that ’search experience’ is very appealing on a conceptual level, it starts becoming somewhat muddled when it comes to delivering practical implementations. There are three aspects to this new world of search that present challenges and will require greater thought and discussion.

First - Many questions don’t have simple answers:

Factual information can have a deeper context that is difficult to express in a simple question/answer framework. Consider the question “What is the population in New York City?” You may end up with several different answers - and all of them could potentially be correct.

How?…

One site may quote numbers reported directly from the most recent census (e.g. - the ‘official’ numbers). Others may be more recent estimations of the same, and potentially more ‘accurate’. Others may include or exclude unofficial demographic segments - like the homeless or illegal immigrants - or estimate them using different formulae. They all contain a dimension of ‘truth’, and but you’d need to understand the context each came from to appreciate it.

But none of that subtly is easily express via a simple specific answer…

Second - It’s not clear what the correct answer is:

The fact that a source provides an answer to a specific question doesn’t mean that it is the best answer or even a correct answer (What? There’s inaccurate information on the web?!?) That means that these new “search engines” will need to choose - from potentially many different sources and many different answers - a ‘correct’ answer to return. Current methods for site ranking don’t translate well into ranking factual accuracy. They were designed to measure site relevance based on popularity, not accuracy - and there is at best a weak correlation between the two.

Another approach that could be suggested as a solution here is the application of a weighted model based on a ‘wisdom of crowds’ philosophy. This model would hold that the correct answer is likely to be the most repeated answer. While that may have some rational basis behind it in a more random selection of sources, it may not apply to analysis of content on the web. For a ‘crowd’ based model to work well, the individual sources should not be influenced by one another. They need to remain discrete contributing entities to the final answer, or you end up with “group think”. Unfortunately, the web is a giant echo chamber, and answers on one site -right or wrong - can propagate to hundreds or thousands of other sites. This will give that particular ‘answer’ a disproportionate influence in the aggregated determination of a response.

As I said before, ‘popular’ isn’t necessarily ‘accurate’…

Regardless of the general approach taken to discriminate between multiple potential answers, it will also need to be able to deal well with ‘disjunctive’ information sets. Disjunctive information is information that breaks from the past in some way. Any process that biases its selection exclusively using historical factors will ignore the dynamic nature of some content. The most current answers will - by definition - have the fewest historical references and links. Answers to questions like “What are the known side effects of…?” may have highly relevant updates that will be important to include in a response, but would be deemphasized using a purely backwards-look heuristic. Addressing this would be critical in domains with highly dynamic content flow.

Third - It breaks the current commercial foundations of the web:

The current commercial framework on the web is largely built on either a subscription model or an advertising/sponsorship model. Subscription models place content behind a firewall and require payment to access it. Advertising models are based on generating a meaningful and sustainable level of traffic to a specific site. Neither of these approaches fit comfortably in a search engine based ‘question/answer’ model.

Subscription based content isn’t broadly available for mining by search engines. People tend to view the sites they subscribe to as special sources, and will visit them uniquely to access specific types of information. The value search engines bring to subscription sites today is a link back to a login or sign up page based on fairly broad metatags. That wouldn’t work in a question/answer model.

Advertising based approaches depend on driving traffic to a site to generate revenue. Content is created to address a specific audience. They can discover it via search tools and visit the site - generating traffic. Sites can even buy specific search terms to improve their visibility in certain searches and hopefully see an up tick in visits.

Unfortunately, the ‘Question/Answer’ model takes the opposite approach. It attempts to deliver an answer directly to a user without requiring someone to actually visit the site it came from. In fact, if an answer is selected based on a statistical methodology, there may not even be a specific site responsible for providing the answer - it actually may come from ‘everyone’ in the tracked cloud.

Finding a way to share revenue in this model could be difficult. It could end up looking like the (thankfully) failed ‘piracy tax’ that was proposed on DAT tapes and blank CD’s. It would have added a fee to the sale of these recordable media that would then be distributed to specific artists using a vague allocation methodology. The lesson here is that any solution that diffuses the relationship between performance and compensation is inherently inequitable and ultimately unworkable.

Using web content in this way - essentially harvesting and repackaging information from millions or billions of web sites - raises significant copyright/IP issues as well. And these issues, like the web itself, exist on a global scale. Finding a solution will require moving beyond the parochial and politically deficient requirements of individual jurisdictions, and embracing a simpler global framework that is easy enough for everyone to use, but specific enough to address the genuine concerns of content creators. This could end up being a catalyst for the broad adoption of an enhanced version of the current Creative Commons framework - something long overdue in the online world.

—–

While the issues discussed here are not insignificant, there is enormous value in finding broadly acceptable models for working through them. These are foundational components of our next move forward on the web, and there is a great deal we will learn in the process. Determining how to address the ‘answer selection’ challenge will push the boundaries of social search and discovery methodologies, as well as accelerate progress in top down semantic analysis. Establishing a commercial and legal framework for dealing with content sharing at this granular level will create a surge of creativity and innovation in cooperative computing and social interaction that would easily dwarf the accomplishments of social pioneers like Facebook.

The innovation horizon on the web just keeps getting broader and broader…

This post is an expanded consideration of a subject I talked to in a comment on a previous post.

I have been part of the EBAY community for many years, both as a buyer and a seller. Over that time, I have had the opportunity to observe people’s bidding patterns, and have come to a pretty interesting conclusion.

Too many people on EBAY have no rational basis for the way they bid…

For those readers that don’t know how bidding works on EBAY, it’s actually pretty simple. You can enter the maximum amount you are willing to bid on an item, and EBAY will automatically raise your bid in fixed increments as other people bid against you. This is different from bidding in a live auction, where the amount you signal is actually placed as a bid. On EBAY, no matter what the maximum value was that you entered for your bid, you’ll only end up bidding the minimum you need to win an auction.

What I have found, however, is that when people are outbid, they will often come right back and adjust their “maximum” bid amount upward. I doesn’t matter that they might have had days to decide what their maximum bid should be. They suddenly want to bid higher when they see they are losing.

And within seconds they freely abandon reason…

Based on the general pattern of bidding behavior I have observed on EBAY, I would posit that there is only one truly rational bidding strategy that can be employed there.

Sniping…

“Sniping” is a typically pejorative term applied to the practice of placing bids on an auction item at the last possible moment before it ends. On an emotional level, other bidders tend to consider snipers something of a cross between a jerk and a thief. They become angry and indignant when a sniper sweeps in in the final seconds and “robs them of their victory”.

But emotions aside, the fallacy of bidding early is clear…

There is no first mover advantage in placing a bid. While it may appeal to a primal urge we have to “mark our territory”, early bidding does not offer any knowledge or control that can help the bidder create a more beneficial outcome for themselves.

In fact, the opposite tends to be true…

I see two key negative consequences from early bidding:

First, any bids placed before the final moments of an auction can stimulate an emotional competitive response in the market and drive the winning bid higher. In that case, these early bidders simply end up bidding against themselves. Second, auctions with existing bids tend to attract more interest than those without bids. And that increased interest will only work to the seller’s advantage - not to the buyers.

Bidding isn’t a personal competition. It’s a marketplace mechanism for determining the spot value of goods. Unfortunately, the social context of the bidding process can create “Bidding Bubbles” - emotional pockets that drive valuations above the rational worth of the items in question.

It happens with stock markets. It happens with housing markets.

And it happens on EBAY…

The process of bidding exploits our competitive nature to drive us to act against our broader self interest. It injects emotion into a situation best served by dispassion - turning interest into desire, and desire into desperation.

And it leads us to make irrational decisions…

Successful bidding on EBAY requires patience and discipline. You need to determine in advance the maximum amount you are willing to bid for an item. You need to wait to the very last moment, and place that maximum bid at a point in the auction when no one can react to it.

And you need to be willing to walk away without “winning”…

In preparation for a few planned changes to the site, I am upgrading The Digital Edge to the latest version of WordPress. I am not expecting to have any issues with this, but wanted to let everyone know on the off chance things don’t go smoothly.

I’ll let everyone know when it’s complete…

Though preproduction on re:SEARCH has taken a bit longer than originally planned, things are now moving along. Set construction should be finishing up in a couple of weeks (yes - even virtual sets have construction requirements), and we should start shooting episodes later this month.

I plan to cover a lot of ground in the series, weaving fundamental concepts with more advanced topics. It will combine underlying technical concepts with practical applications, and will highlight various sites and tools that can help in the process of search and discovery.

If there are specific search related topics you would like to see addressed in the show, just shoot me an email or leave a comment below. I want to make re:SEARCH as interesting and relevant to everyone as possible, so I welcome your suggestions.

I hope you’ll join me when it launches…

As counter intuitive as it may seem, there can be a downside to “perfect knowledge” – to having a completely transparent view to something. The fact is, we are creatures of chance. Avoiding knowledge, or acting in spheres where knowledge is limited, are very real components of how we operate as individuals and as a society. I would go so far as to posit that we need an element of uncertainty around what we do if we want to function optimally.

A good example of this is the enforcement of traffic speed limits.

Many drivers operate in the ‘gray area’ that lives at the edge of existing laws. Most will regularly go 5-10 MPH above the posted speed limit, and some will be willing to do a lot more than that. They do this because it “gives them an edge”, and the chances of “getting caught” – of being penalized for the violation – are small.

And law enforcement counts on this…

Most local and state police forces generate meaningful revenue from traffic violators. They depend on having people who are willing to ‘take a chance’ by speeding so they can keep this money flowing into their treasury. To encourage this behavior, police will often tolerate a certain level of non-compliance to maintain a steady stream of revenue producing violators that go beyond it. In effect, they create a loosely defined safe zone that extends beyond what the law proscribes – a safe zone that baits people into violating the law so they will continue to operate in this revenue producing area of chance.

And they know that having perfect knowledge would hurt them…

A zero tolerance policy for speeding would probably be very effective. It could even be implemented in practical ways. Many major toll roads track where you enter and exit the road, and charge you based (loosely) on distance traveled. They also track the time you entered the road and the time you left. It wouldn’t take much for them to combine these to calculate your average speed, and to use that to automatically generate fines for those that clearly broke the speed limit.

It’s possible that doing this could generate a near-term spike in fine based revenue, but once people knew that any speed violations would be detected and punished, they would simply stop speeding.

And the revenue would dry up completely…

This bigger model they count on just doesn’t work without chance. So instead, a sub-optimal enforcement model is chosen that attempts to balance the desire for revenue generation with optimized traffic flow and respect for the law. It’s a model that introduces chance into the mix by consciously limiting the information law enforcement chooses to collect. Thus, we end up having randomly positioned highway patrol officers with radar guns looking for violators instead of a more comprehensive and effective approach.

And this desire for imperfect information appears to be reciprocal…

Most people I’ve asked (admittedly a far from scientific sampling) seem to prefer the less deterministic approach to getting a speeding ticket. The thought of automatically getting a “ticket in the mail” if they crossed some specific speed threshold seemed almost draconian to them. They would lose the option to go faster than other drivers – even if it isn’t something they wouldn’t routinely do. This would force them to limit themselves to a certain speed, and become far more passive - something that goes against their inherently competitive nature.

So they prefer to take their chances instead.

What does all of this have to do with technology?…

This preference for chance is at the heart of the dilemma facing the record industry. The RIAA’s attempts to sue individual illegal file sharers is essentially the online equivalent of the hidden patrol car looking for speeders. It is simply too random to change broad user behavior. Just like speeders, illegal file sharers would change their behavior if they knew they would be caught.

But they know odds are in their favor - so they don’t…

What’s interesting is that the recording industry - unlike law enforcement - hasn’t figured out a way to generate revenue from this user behavior. In fact, they actully want to try and end it completely, even though it presents them with real opportunities for meaningful revenue. They simply can’t get beyond their own narrow definition of how their business can work. Despite the significant market dislocation a business model change would entail, the potential upside of making the change is certainly more compelling than the “death spiral” the record industry has fallen into from clinging to the status quo.

They just need to be willing to take a chance…

I’m not talking here about any corporate level misanthropic activities. I am focused on Apple’s seeming lack of interest in embracing social technologies and integrating them into the core foundation of their various product offerings. For a company that prides itself on thought leadership, creativity in this space seems to be completely lacking.

Apple’s embrace of the internet is strictly ‘Web 1.0′…

This is a hard one to figure out.

Apple has the foundation to build out an incredible social network. They have a footprint on 100’s of Millions of desktops called ‘iTunes’ - a footprint that includes credit card verified user identity for everyone that has purchased a download from the iTunes store. They have millions of iPhones in the market, again with credit card verified user identities. They have experience with providing centralized computing resources in both their iTunes store and .MAC service, and a close enough relationship with Google that they could get help scale that to whatever level they might need.

And most of all, they have some of the smartest, most innovative people in the technology world working for them.

But nothing they produce, as good as it is, seems to embrace the social web…

The iPhone has redefined the smartphone category, but it lacks even basic IM capabilities. The new Leopard version of OS X has created core services around audio and video processing, but lacks any core social foundation beyond support for LDAP like directories and UNIX permissions. iChat is strictly old-school IM with a video twist. (It doesn’t even seem to handle multiple concurrent conversations well.) The iLife suite does fare a little better - with RSS feeds of iPhoto albums and the ability to publish video to YouTube - but these capabilities are really just superficially integrated bolt-ons.

Even Apple’s Pro Application suite is strictly standalone. There isn’t a concept of identity or collaboration built into any of their pro applications, despite the naturally collaborative nature of the creative space they service.

So what gives?…

While there is no clear answer why, I do have a theory.

As a company, Apple is simply a manifestation of Steve Jobs’ vision and creativity. And that vision has a blind spot. I don’t believe that Steve Jobs ‘gets’ social computing, at least not in a foundational way. While most younger people - a big part of Apple’s customer base - both work and play as part of continuous social web, my guess is that Steve Jobs does not.

And therefore, Apple’s products don’t either…

I think this lack of focus on social computing is Apple’s biggest weak spot. While delivering some of the most incredibly well designed software interfaces seamlessly integrated with some of the most innovative hardware footprints in the market, Apple continues to focus on providing solutions that are fundamentally very traditional. To date, their design efforts have been about simplifying, in elegant and innovative ways, the user experience of existing platform definitions - not in creating or embracing new ones.

The risk Apple faces is that, over time, the capabilities they deliver will become less encompassing of the ways people want to work, play, and interact. While this probably won’t hurt them in the near term, that feature gap could become the chink in their “ecosystem armor” that new competitors will be able to exploit. History teaches us that corporate fortunes in the technology space can change very quickly.

Apple can’t afford to ignore this…

All that said, I’m optimistic about what Apple will ultimately do in the social web space.

There are many bright people at Apple that I’m sure understand this domain intimately, and recognize how embracing it can bring real value to what they offer. In addition, Steve Jobs has shown that he can change direction when the situation calls for it - even when it means doing a public about face. (The clearest example of this is that once derided Intel CPU’s now power Apple’s entire computer line).

The power of this brain trust, combined with a pragmatically flexible leader, bode well for where Apple may be headed here. I have no doubt that once Apple gets social computing into their corporate DNA, they will be able to package it in some incredible and ground-breaking ways.

I’d just love to see that happen sooner rather than later…

It was really all business. Steve Jobs opened the event, but beyond making introductions, he spent very little time on stage. This was a sales event. Features and capabilities were front and center here, and the folks that did the talking and demoing were the ones directly responsible for what we saw.

And we saw a lot…

Apple’s Phil Schiller demonstrated support for Microsoft’s ActiveSync, giving iPhones a dynamic, remote synchronization with the enterprise standard Exchange server.

The integration of ActiveSync allows calendar events and contacts to be sync’ed directly over the air without the need to dock. Apple is also delivering remote management of iPhones, allowing a corporate administrator to lock or erase the contents of an iPhone if it should be lost or stolen, or configure groups of iPhones centrally. And this went beyond just talk and slides.

Apple demoed each of these features and mentioned specific firms that were beta testing them.

They clearly wanted to impress on everyone that these capabilities are real, and that they would be shipping soon…

By delivering on these capabilities, Apple will have the chance prove it’s mettle in the enterprise world – a market that the current iPhone software fails to seriously address. And that means it will move into direct competition with the current corporate standard bearer - RIM.

RIM has had these types of synchronization capabilities for years, and - recent outages aside - has a proven track record of success. The iPhone, on the other hand, is still the new kid on the block. So what might motivate traditionally conservative enterprises to choose the iPhone over the safe and fully vetted RIM Blackberry?

In a word: Applications…

The announcement of support for ActiveSync was just the warmup act. The main act was the iPhone SDK.

And Apple didn’t disappoint…

The SDK available for the iPhone isn’t some deprecated mobile API with limited platform support. It is a full fledged API with access to every key hardware capability built into the iPhone, and an iSQL database for local data storage and retrieval.

It’s the real deal for real application development…

A rich GUI interface? – Got it.
Access to GPS data? – Got it.
A powerful structured database - Got it.
Details on device orientation and velocity? – Got it.
Full MultiTouch control? – Got it.
Access to contact information? – Got it.

The bottom line is that corporations will be able to build rich, full featured, intuitive applications that extend the user’s desktop into the mobile realm without requiring a laptop. And they’ll be able to do it without having to break the bank on user training and support, and without investing in a mobile strategy that forces users to ‘downgrade’ their expectations of simplicity, functionality, and usability. In fact, the mobile experience on an iPhone can actually equal – or even surpass – that of equivalent desktop applications.

And Apple wants to see more than just corporate IT building iPhone apps…

Apple also made it clear that they are looking to foster a robust 3rd party community around the development of iPhone applications. They showed off some impressive demo applications (from both the business and gaming genres) developed by major companies like Electronic Arts and Salesforce.com.

And in an even more significant move, Apple had venture capitalist John Doehr from Kleiner, Perkins, Caufield & Byers close the presentation by announcing the launch of a new $100M fund targeted solely at funding iPhone development.

Apple is banking that applications will be their edge in the enterprise market…

While widely referred to as the “iPhone SDK” event, my take away was that the SDK itself wasn’t really wasn’t the main point in what we saw last week. This event was really the launch of Apple’s enterprise strategy, and the SDK is simply one - albeit highly visible - aspect of that.

By combining Exchange support, rich mobile applications, and a breakthrough handheld device, Apple has all of the ingredients in place to be wildly successful in the corporate space.

So what could hold them back?…

Two things.

First, they are locked in with AT&T exclusively. RIM works with multiple carriers and can offer a solution to pretty much any corporation without requiring them to switch. There’s no easy solution to this except for Apple to sell in to those businesses that are already committed to AT&T, and wait out their agreement.

Second, the current iPhone has no 3G support, and AT&T’s Edge network can be painfully slow. While having strong WiFi support can help to mitigate this, it still limits the device in terms of offering a truly seamless mobile experience. Apple will be releasing the production version of this new software sometime in late June, and I believe they will introduce a 3G capable iPhone along with it.

So where does that leave things?…

The iPhone definitely has some strong momentum behind it, and Apple seems to be making all of the right moves to take it to the next level. That said, Apple is still somewhat new to the politics and internecine struggles that take place around corporate purchasing deals, and will need to come up to speed fast on that end of the business as well. They

It’s an exciting time to be an iPhone user…

Given the time it took to develop and deliver Vista - and the money spent marketing it - I am sure that Microsoft has been taken aback by the market’s tepid reaction to it (even after the first service pack prerelease everyone said they would wait for).

The way I see it, this shouldn’t really come as a big surprise to them. Many of Vista’s key platform level innovations - like WinFS - were dropped from the feature list, and many of the bells and whistles - like AERO - have shown themselves to be resource hogs. The delivery of Vista was plagued by poor design choices and compromises.

And it shows…

For all of it’s lofty aspirations, Vista has simply failed to deliver on it’s ‘next generation’ promise. The integration of the web still feels like an afterthought, and when it comes to core OS capabilities, Vista just doesn’t offer anything new and compelling. It is big and slow. It is way too intrusive. It feels like it is trying to police me, especially when it comes to using media files.

In short, Vista is everything Linux isn’t - and I mean that in a bad way…

To try and jump start things, Microsoft has announced price cuts of retail packages of Vista - in some markets by as much as 50%. I think this is just a fool’s errand. We have come to the end of the ‘Big OS’ phase of personal computing, and price cuts aren’t going to change that. People today may live in a few applications like Outlook or Word, but they are connected to the web through their browsers. The OS they run on is secondary, and few will directly leverage most of the capabilities it makes available to them.

This has created a dilemma for Microsoft with Vista…

Outside of security, Vista has little to offer beyond what people can get from XP. In fact incompatibilities with current hardware and applications has actually made it a ‘downgrade’ for some folks. And even Vista’s security has problems. It is implemented in such a rigid fashion that it almost becomes self defeating. It throws up so many needless dialog boxes that many people may opt to turn it off, or they’ll just habituate and simply click ‘OK’ without thinking.

These shortcomings are being reflected in marketplace apathy…

Corporations aren’t helping Microsoft this time around. By and large, they have decided to stay with XP. They’ve already learned how to deal with all it’s downsides, and Vista brings them no compelling business value to make it worth the cost of an upgrade. What they have today works.

Consumers aren’t rallying to it either. Many folks will simply buy a PC and use whatever OS comes with it. They aren’t buying a new computer system because of Vista - they are getting Vista because it comes with the new system they bought.

And that distinction is important…

Computing today doesn’t require that you have a Windows based system. If you need proof, just look around at how many more Mac’s you see these days. Despite the hype from many of the Apple faithful, this isn’t because OS X is better than Vista. They are buying Mac’s for different reasons: their ‘cool factor’, their excellent design, fewer virus concerns, or the overall simplicity of use. The bundled iLife suite that Mac’s come with is probably a more compelling draw for new Mac buyers than most of the critically praised OS level features. Apple understands this, and has bundled iLife in for free with every new Mac for quite some time.

Leopard just comes along for the ride…

The important take away here is that the operating system itself will start to matter less and less. The computing world going forward will continue the move to platform and OS independence. Mobile phones, laptops, desktops and speciality devices like Apple TV will all be peers in the computing marketplace. They will all coexist, connected through personal identity to various web services and user communities.

The next generating of ‘Operating Systems’ will be charged with tying all of these services and devices together in a secure, seamless way. They will be light-weight, distributed, and very efficient. They will be more about standards than code. They will be hidden behind the applications they connect and facilitate.

And there is a very good chance they will be open source…

What we see going on here is a tussle between the previous “PC” generation and the new “NET” generation. And like the evolutionary dead end of the Neanderthals, Vista is ultimately doomed to fade away - marginalized by smaller but more adaptable competitors that will define a new order in the computing world.

Anyone betting their business on the continued ascendancy of a PC centric computing paradigm is bound to fail.

And no price reduction will help to change that…

Toshiba announced last week that it’s throwing in the towel on HD-DVD. It will cease making players or promoting the standard, effectively ceding the high-definition media format war to it’s rival BluRay.

This didn’t really come as a surprise to anyone that was paying attention…

Things just started to pile up against the format. Warner Bros. dropped support for HD-DVD - a major blow on the content side. Both Blockbuster Video and NetFlix decided to back rentals of BluRay exclusively - killing the rental market opportunity for the standard. Both Best Buy and Walmart - probably the two biggest sales channels for media players and content - decided to opt for BluRay only. It was just a string of bad news that became overwhelming.

When Toshiba’s last ditch radical price cuts failed to stimulate sales, the only thing left to do was pull the plug and turn out the lights.

This left BluRay the winner by default.

So is it time for a BluRay victory lap?…

Not Quite.

All that BluRay has proven is that it was able to get more traction than HD DVD. Truth be told, that doesn’t mean a whole lot. There were probably less than 1.5 Million standalone HD players sold since the launch of both formats. There are probably an additional 9 million BluRay drives/players already in homes thanks to their inclusion in the PS3, but as of last month, less than 5 million total BluRay movies had been sold since the launch of the format!

To put that number in perspective, about 5 million copies of the movie 300 were sold in DVD format in it’s first week of release.

BluRay may be the big HD fish, but it’s still swimming in a tiny HD pond…

To be successful BluRay will need to become truly mainstream. And to do that, it will need to seriously compete on two significant fronts:

Front #1. The Status Quo:

The death of HD DVD has taken away any excuses the BluRay camp may have used in the past for slow adoption. BluRay is the only physical HD format in the marketplace. It will need to start demonstrating success in attracting buyers that are currently opting to buy upscaling DVD players (players that take standard definition video from a DVD and use signal processing to upconvert it into pseudo-high definition image.)

That is no small task. Good quality upscaling DVD players are available for less than $100 dollars - compared to a starting price of about $350 for a BluRay player. Compounding that marketplace challenge is the limited selection and high price of BluRay movies. There are only about 350 BluRay titles currently available, and each costs between one and a half to two times as much as it’s DVD version. Without a significant adjustment to both pricing and selection - for both movies and players - BluRay will continue to remain a niche format. Simply put, the longer a significant price gap remains, the slower mainstream adoption will be.

And the more likely BluRay will be challenged on a second front…

Front #2. HD Video Downloads:

First off, lets forget the ‘Quality will win out’ argument. If that were the case, we’d all be walking around with SACD players instead of iPods. Quality is important - especially when it comes to video - but we shouldn’t overstate the case for it. Does the HD video downloaded off of my Apple TV look as good as the same movie on BluRay? No, it doesn’t. But does look good? Yes - it is clearly better than DVD quality. Downloaded video today is true HD even if it is at a lower resolution and reduced bit rate compared to BluRay. It looks good now, and as bandwidth improves, the quality of these downloads will just keep getting better.


When it comes to convenience - especially for rentals - downloads rule. It won’t be long before Apple, Amazon, Microsoft, and every cable major company will be saturating the market with ‘on-demand’ HD content. If you combine that convenience with a basic level of HD quality that you can get today, BluRay may find itself struggling to define itself on this second front.

So what does this all mean?…

There is a limited window for BluRay to establish itself in the mainstream before it simply becomes yet another irrelevant format in the marketplace. It might have two years, maybe less, to gain widespread adoption before it gets discounted as yet another failed media format.

It has a long way to go before it can claim victory.

Beating HD DVD was probably the easy part…

Phil Lu over at Genoco put together this fantastic mockup of a mobile Starbucks “Quickorder” application for the iPhone. While I believe it was intended as a fanciful way to demonstrate Mr. Lu’s considerable design talents, it is really an excellent example of the direction mobile computing is going to take. It will become more personal and more focused. Mobile computing will be less about browsing and more about lifestyle efficiency.

I could easily see this type of application combined with GPS to place an order for my favorite drink at the nearest Starbucks from where I am. It could work equally well for scheduling transportation or lodging, ordering takeout, or other ‘on-the-fly’ type transactions. It would be most effective in cases where I could leverage favorites or preferences to effectively “bookmark” transactions that I could execute in a couple of swipes or touches (or a couple of key presses for the ‘old-school’ among us).

I embedded the flash application Mr. Lu developed here to give you a quick look. That said, I would strongly encourage you to see the entire design over at the Genoco site. It gives a more complete picture of what this type of lifestyle application could actually provide:

There is a lot of pent-up creativity out there surrounding mobile applications, some of which is appearing on ‘jailbroken’ iPhones. I can’t wait to see what types of applications appear once the official iPhone SDK is available and more mainstream interest appears.

If rumors are to be believed, it should be here in a couple of weeks…

The conference, hosted by O’Reily Media right here in New York, was focused on the convergence of Web 2.0 and Wall Street.

I took the opportunity to talk abstractly about the process of information discovery, and how it has changed since the arrival of the internet. It was probably a good audience for this type of talk, though I admit I had trouble fitting everything I wanted to cover into my 15 minute time window.

One of the topics I did touch on there was the changing meaning of scarcity as it relates to information.

Essentially, the value of a piece of information is greatly impacted by how scarce it is - the more people that have it, the less valuable it typically becomes. Pre-Internet, scarcity was all about controlling access. There were only a few sources of information available, and all of them locked up their content and charged people money to access it. Professionals that could afford the high monthly subscriptions got access - and everybody else was out of luck.

But the Internet changed that…

Now, there’s an endlessly growing number of information sources available on every imaginable topic. Most of what is produced today is both free and broadly available. Content has become ubiquitous to the point of being overwhelming - you have access to just about everything. The challenge - the new scarcity - is in discovering the specific content in this sea of information that’s valuable to you.

So how does this impact the marketplace?…

Pre-Internet, when people paid for access to a content source, they got it. There wasn’t a lot of content out there (by today’s standards), and with even the most basic of filtering, everyone that cared about a piece of information was able to discover it right away. That tended to limit how valuable a given piece of information could be, and the only way to gain an edge was to build a very efficient transactional mechanism behind it. Those that could convert the information they had into something actionable and execute on it quickly stood to gain the most.

But the story is different now…

Free or not, you can’t simply look at everything that’s being published anymore - there’s just too much of it. You need to invest more effort into filtering through it to discover information that can bring value to you.

And the value you can get from that information today is best described by this chart:

The green bar in this graph represents the time it takes for you to discover a relevant piece of information. The blue curve traces the value of that information as it becomes less scarce - as more and more other people discover it over time.

Whats obvious here is that the more efficient you are in the discovery process - the quicker you find things that matter to you - the more value you will be able to extract from them. And the maximum value a piece of information can deliver to the most efficient ‘discoverers’ can be significantly greater than it was back when everyone that paid for access got access to it at the same time. Unlike before, during that early discovery window the number of “people in the know” could actually be quite small. And in financial markets, that’s a good thing.

If you think about it, while access to content may have become completely democratic, the process of content discovery is now purely Darwinian.

I guess that’s what makes it such an exciting field to be working in…

Reuters is reporting that Microsoft has made a formal bid for Yahoo:

Technology giant Microsoft Corp said on Friday that it had offered to acquire Internet media company Yahoo Inc for $44.6 billion in cash and stock.

Microsoft said it had offered to buy Yahoo for $31 per share, which it said represented a 62 percent premium above the company’s closing stock price on Nasdaq on Thursday

The time is right for a deal like this…

Yahoo has been humbled over the last few quarters, and is trying to fight its way back into a sustainable and meaningful position in the market. It is currently in a bit of internal turmoil with layoffs pending and a significant reorganization in process. This time around, they may seriously consider a deal like this.

Over that same period, Microsoft has been working to get it’s act together, and has made some progress. They are looking for ways to accelerate growth and build up some momentum, and a combination with Yahoo could offer a lot to them. This may finally give Microsoft the desire to pursue a deal like this aggressively.

And of course, the raison d’être for a deal like this - Google - has finally lost a little momentum in the marketplace, falling short of many peoples growth expectations. This could create a bigger opening for more focused competition.

At a macro level, the uncertain economic conditions in this country will help to “right size” Yahoo’s expectations of what they can achieve on their