Subba’s Serendipitous moments

July 19, 2010

Google’s App Inventor – philosophically different, pragmatically questionable

Filed under: Business,Competition,Innovation,Perspective — Subbaraman Iyer @ 5:37 pm
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Like many things that come out of Google’s stable, the Android App Inventor is a radical departure from the conventional. It is philosophically aligned to the Google philosophy of open innovation, crowdsourcing and empowering the user. It is a new SDK for the Android platform where there is no programming involved. It is entirely visual in approach and any user can build any application that he wants. The intent is for the user to write an application without being a software developer of sorts.

Google has perhaps decided that it cannot compete with the iPhone’s App store which currently has over 200,000 applications and a complete new ecosystem. Hence it has taken a radically different approach.

One more step in the paradigm shifts between Google and Apple. The earlier ones are written about here.

Apple has created the perfect user experience and the walled garden approach which has it’s detractors. Google has conceded that it can’t create a better user experience. Hence rather than struggle, it has taken the diametrically opposite approach. Any user who creates his own experience by writing his own application is likely to love his own experience, rather than settle for the user experience created by a software developer seems to be the underlying premise. It is thus enabling people to be creative and hence promises to be a platform for the millions, rather than just a platform for the few software developers. Google this enables creativity at an individual level.

Hence it is a philosophically a compelling value proposition. Will it be pragmatic?

All of us know that while we would like to be creative and eat our own dog food, we are also consumers and want the right application with the best user experience. As a consumer it will be more easy to buy and use and not to create and use. The process of creation also involves a lot of trial and error and more importantly failures. How long would someone persevere with the creation process when they see their friend find the right and cool application and using it is also another big issue.

My current conclusion is that while I am all for Google enabling creativity, it may not be a successful strategy.

July 6, 2010

Google goes vertical to thwart Bing

 

In a very typical low key move Google acquired ITA Software, a 14-year-old company that makes software that organizes flight and pricing information, for $700 million in cash.

The significance of this acquisition is far reaching. With this, Google now becomes the critical intermediary between the provider of flight and pricing information and all their users including all the travel websites, airline websites and travel search engines. With this acquisition, Google now does not want to just send the search to another website, but also want to process the information for you in a meaningful and relevant way by organizing results (by giving flight options, price options etc.) As it goes into the “deeper search” and organizing information, it inevitably marginalizes the value being created by other travel web sites and travel search engines.

From here, Google could pursue 2 clear directions:

  1. It could become a travel portal itself, which is unlikely since it could attract regulatory action because ITA Software is being used by airlines and travel portals. It may not want to be seen as a “Big Bully”.
  2. It could add a new revenue stream to its well known advertising business – moving from cost per click (CPC) to cost per action (CPA) which definitely will be premium priced.

One thing is certain though: Bing (Microsoft’s search engine) which was headed in the area of vertical search will face more competition.

I believe that this acquisition is merely the beginning. Google can easily replicate the vertical search model in many areas including real estate, automobiles and other areas where the current Google search doesn’t give relevant results and where the potential for CPA exists.

Heard of Kin? Microsoft’s phone launch and quick withdrawal

Filed under: Business,Competition,Uncategorized — Subbaraman Iyer @ 9:48 am
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Has anyone heard about Kin? Microsoft launched 2 mobile phones Kin One and Kin Two in an uncharacteristic low key manner and before even the word got out, it quickly withdrew the product barely 6 weeks after launch.

In the 6 weeks that the product existed, it sold 500 phones. Has anyone seen Microsoft do this with any of their products? Never !

The Kin failure is yet again one additional piece of evidence that Microsoft just doesn’t get it when it comes to consumer products other than the XBox. At least with Vista and Zune, Microsoft made some marketing efforts, but Kin got a quick burial.The courier PC which has been in development didn’t even make it to the store stupefied by iPad’s success.

Kin has an interesting past: In 2008, Microsoft had acquired a startup Danger  who has built a mobile phone software business. Around the same time, Google also acquired another mobile phone startup called Android. Incidentally both Danger and Android was founded by the same founder – Andy Rubin. While Microsoft floundered, Google’s Android sells more than 130,000 units per day.

This should lead Microsoft to make do some deep soul searching.

It is time that Microsoft wakes up to a new era. It continues to comfortably extract rent from the Windows/office franchise. I think the successes of the past is proving to be the brimstone around its neck. It also seems to have lost the war for talent and developers.

April 22, 2010

Facebook wants to be the Internet

Filed under: Business,Competition,Leadership,Strategy — Subbaraman Iyer @ 12:01 pm
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Facebook’s f8 conference yesterday is a significant event. The Facebook juggernaut seems unstoppable. It will go down in history when Facebook revealed its intent to revolutionize not just the Internet, but act as the default Internet.

Facebook launched 3 major “features”, all of which may seem pretty much innocuous but that could have a dramatic and profound impact. Though I had referred to some of the implications in my talk on How Facebook will impact us and Why CIOs should meet the Facebook at the CIO conference in Singapore, I didn’t expect it would come to us so soon.

Becoming social is default: Facebook repackaged the Social graph as Open graph. With this it is not only possible to see social connections between people, but also connect people with the interests – be it books, movies, places, brands and the list is endless. As Mark Zuckerberg  said: “The web can can become a series of personally and semantically meaningful connections”. There’s nothing more sticky in the world than a Social graph.

This will surely accelerate the move to search becoming more social. I am quite sure that the “social search” phenomenon will be something that will gain preference over the normal search in many product categories. Businesses and brands will perhaps consider shifting marketing campaigns to leverage this in lieu of the traditional web page.

As a corollary, the Web which has been defined by hyperlinks (which Google exploited to its advantage), will gradually morph into social connections – with likes, dislikes, interests, behavioral patterns etc. that could become increasingly machine readable and all social interactions get assembled in a large database which Facebook can exploit.

Social plugins:The social plugins may be viewed as mere widgets, but again the impact is far reaching. The LIKE button offers not just “instant personalization” but enables to create a persistent and continuous relationship with the entity – be it a book, music album, food, almost anything. It feeds into the Open graph seamlessly. Any user who searches for the book will immediately bring it to the Open graph from Facebook’s search engine and with another click can take it to any book site.

Mark mentioned in his address that he expects to have 1 billion LIKES within 24 hours of the launch.  Quite possible given that Facebook now has over 30 major partners like CNN, ESPN, IMDb and others. With about 30 billion LIKES a month, in addition to over over 25 billion shares a month (without LIKES), Facebook will become the largest sharing site in the world.

The social plugins will be the much needed catalyst for viral marketing or buzz marketing. Nothing else comes close. It will take a while before marketers learn to exploit this, but the tools are already there.

There are other features targeted a t developers and its implications will become clearer soon.

Other interesting developments:

Growing numbers:Facebook is approaching 500 million subscribers and close to 100 million subscribers access this through the mobile. In fact my view is that the killer application for the smartphone is Facebook quite serendipitiously. The Facebook Connect itself has close to 100 million. With the social plugins and open graph, Facebook Connect has become unassailable.

Microsoft alliance:One clear application that may not strictly qualify as social plugin, could be Microsoft’s Docs.com which enables users to share, edit, view web based documents with their Facebook’s friends. Obviously this is a frontal attack on Google Docs.

The implications of Facebook’s initiatives promise both unparalleled benefit and great risk depending on one’s worldview. While on the one hand it will make sharing and connecting a snap, it will enable Facebook to own every activity on the Internet. If people were scared of Google’s power and influence, Facebook takes this fear to new heights – it will become the Web itself from the big glue that tied the Web itself.

In that role, Facebook will have to be the most trusted entity in the world. It is awesome but on second thoughts leaves me scared.

April 16, 2010

Android and Nexus One shows momentum

Filed under: Business,Competition,Innovation,Strategy — Subbaraman Iyer @ 11:29 am
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Contrary to perceptions that the Nexus One is a failed product, Google actually announced in its Q1 2010 earnings report that Nexus One is meeting expectations, if not exceeding them.

Google mentioned that “driving the business (the Nexus One)  to be a profitable business from the get go. and is happy with device uptake and impact it has had raising the bar showing what a Smartphone can do.”

Report from Mark Huber SVP of Engineering on Android:

Huber: We believe in open platforms.. Our efforts in mobile are a great example of this at work. Schmidt said Google is taking mobile first approach. Your Smartphone knows where you are, so this location launched near-me-now. Turns your location into the search query. New stars in search feature, you click star next to result to save it. Makes it easier to find later (from mobile device). Android and Chrome gaining lots of momentum.

Android powering 34 devices from 12 OEMs. Over 60,000 Android devices sold/activated a day. Our mantra with Android is “open”. The platform and Market. 38,000 Apps, up 70% quarter over quarter.

Now with such an apps surge, it is no surprise that Apple wants to make it difficult for developers to be in both camps – the Android camp and the iPhone camp. It is trying to rewrite history.

April 14, 2010

Is Apple rewriting history?

Filed under: Business,Competition,Model,Perspective,Strategy — Subbaraman Iyer @ 12:27 pm
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Recent moves by Apple clearly indicate that Apple seems intent on rewriting history. Time will tell whether this is a brilliant move or a move that is just more than a misstep!

First, the attempted lock in of developers into its walled garden. The garden may be beautiful, but it is walled; not open. So far Apple has defied the odds of making its  walled gardens innovative and “developer friendly”. Now it is offering a mixed bag.

The iPhone and iPad is becoming a closed system which Apple only can control. Its current rift with Adobe is well known. The fight with Adobe is not about Flash but Apple’s fundamental approach to developers . Apple is insisting that all apps be developed using Apple’s proprietary tools with its SDK and discouraging porting of apps developed on other platforms based on its most recent license agreement. It clearly is an affront to all developers alike. It is clearly a move to limit developers from building apps for other platforms (read: Android)

Second, as a sop to developers, than as a new line of business, Apple offered the iAds an advertising platform for developers and offered to share advertising revenues. Advertisers can place ads in apps and when clicked direct users to a web site without leaving the app. Apple would serve up the ads and offered to give developers 60% of the advertising revenue to developers.

Just another way to keep the developers of more than 180,000 apps happy and help them make some money in the process!

As much as the media portrays this as yet another battle between Apple and Google, I do not see this way! The entire market for mobile advertising is less than U.S. $ 500 million accounting for just 2% of the total U.S. online advertising market. The revenue stream for Apple is insignificant. It is clearly a battle for keeping the developers firmly in the Apple fold and trying to deprive Google to build the developer community for the Android platform.

So make no mistake: It is not Apple taking on Google for advertising dollars, it is about developers!

Will the walled garden work or will open systems succeed or will both co-exist? Time will tell!

February 10, 2010

Google puts Buzz in the Gmail

Filed under: Business,Competition,Strategy — Subbaraman Iyer @ 11:47 am
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Google woke up to the Facebook and the Twitter challenge. Finally.

Google Buzz is the latest product from the Google family and its best attempt to build a social network after the early attempts like Orkut and Open Social saw marginal success.

To me Google Buzz looks like FriendFeed 2.0 (Facebook acquired FriendFeed last year) with its stream of updates, pictures, links from one’s friends. The biggest advantage that Google has in launching Buzz is that this is built into the Gmail application which already has over 175 million users. And Buzz is available on the iPhone and the Android as well.

Google is giving a lot of granular controls but the default social graph is based on the Gmail settings (mail recipients and senders of mail). Whether they indeed are actually the desired social graph for someone is something that I am not sure. For me, it surely is not!

Will Google win against Twitter with the Buzz? Twitter is simple and the tweets go to all the people who follow the tweet sender. “Buzzing” is not. There is a public and private buzz and this could make it complicated.

At first glance Google Buzz has a few advantages: It combines the best from Twitter, FriendFeed, Facebook Connect, Flickr and a few others. It has nice email integration as they show up in the Inbox and as a tab within Gmail. It highlights items that friends like and share. You can read about the functionality here

The key challenge is how will Google square off against Facebook when Facebook introduces email. And whether Google Buzz will integrate with Facebook connect.

That will be interesting to watch!

SAP faces the moment of truth

Filed under: Business,Competition,Leadership — Subbaraman Iyer @ 10:58 am
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In a surprise move, SAP announced the resignation of Leo Apothekar as CEO of SAP and instituted a co-CEO model. In retrospect, the problems at SAP has been in the making for a number of years.

SAP’s financials fell in 2009, like many others but it was in a recovery mode. In the full fiscal year 2009, total revenue was down 8% to €10.67 billion ($15 billion) and net income was down 5% to €1.83 billion (€2.57 billion). Q4 revenue was down 9% to €3.19 billion or $4.8 billion. Net income decreased 12% to €727 million ($1.02 billion) or €0.63 per share.

Software revenue in Q4 declined 15% y-o-y to €1.12 billion but doubled from €525 million last quarter. Software and software-related service revenues were down 4% to €2.57 billion but up from €1.94 billion last quarter. For the full year, software revenues declined 28% to €2.61 billion. Software and software-related service revenues were down 3% to €8.20 billion.

In the SME segment, SAP has just  73,000 customers globally despite making multiple product offerings like Business ByDesign, SAP Business One and SAP All-in-one.  SAP defines SME as business with 100-500 employees and revenue of less than $500 million. This was a clear under-perform given that Oracle managed to penetrate this segment.

SAP failed to execute the SME strategy effectively, something that I clearly foresaw about which I commented here.

The moment of truth was not just the revenue decline, but the impact of the lack of strategy both internally and externally.

This can be attributed to SAP’s lack of commitment to the SaaS strategy despite making public announcements about its willingness to offer the SaaS model. SAP’s strategy that Business ByDesign would essentially serve as an ‘on-ramp’ to its on-premise customers rather than be a distinct separate offering is a flawed one. This created huge confusion in the minds of the customers (something I had told them in 2007). Further it seems that this confusion spread amongst the internal staff who never understood how to position the SAP’s offerings in the market place. Hence I am not surprised that 50% of the internal staff didn’t express confidence in the executive board.

SAP’s decision to increase maintenance fees in the midst of the economic slowdown didn’t win any friends amongst the customers. It has shaken customer confidence about SAP’s customer orientation.

Is the co-CEO model the solution to the leadership challenge amidst such strategic and operational challenges? I am not so sure. SAP has had several leadership challenges in recent times as listed here.

Hasso Plattner was his usual candid self when he said “ But to be profitable, we will have to be a happy company and our customers have to be happy as well”. .

So expect Hasso Plattner to be not just visible but with his hands firmly on the wheel.

October 21, 2009

The Apple juggernaut rolls on

Filed under: Business,Competition,Leadership,Strategy — Subbaraman Iyer @ 1:23 pm
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Apple’s juggernaut continues unabated going by the latest results. Thanks to the iPhone’s game changing play that’s elaborated here. A blow out quarter.

Record shipments:Apple sold 7.4 million iPhones this quarter (ending Sept 2009)which is a 7% growth from last year. It sold 3.05 million Macs in this quarter up 17% a year ago. Both of these are milestones in Apple’s history. Sales of iPod touch were up 100% year over year. iTunes store is now in 23 countries and has become the world’s largest retailer.

Cash: Apple has $34 billion in cash this quarter compared to $31 billion last quarter. There’s a hint that there could be a share buyback soon. No debt. And to put this in context, this cash hoard is greater than that of Microsoft and more than the market cap of Dell.

Profit: A quarterly profit of $1.67 billion on revenues of $9.87 billion. It is the most profitable quarter ever in Apple’s history.

Future outlook: The future outlook seems still better with iPhone making an entry in on of the largest markets in the world — China, followed by Korea and a few other additional countries.

New accounting rules: Apple can recognize revenues from its subscription devices immediately rather than spreading it over a 2 year period.

Competition: Apple’s competition is actually languishing. Nokia the largest mobile device vendor reported a $834 million loss — the first in a decade due to falling mobile sales. Its smart phone sales saw a huge decline in market share as well. Sony Ericsson also suffered losses.

I am wondering whether Nokia or Sony Ericsson will make a bid to acquire Palm.

October 16, 2009

Will India ever emulate Finland?

I moaned about the state of broadband in India here. Based on some more research I found that the performance of broadband even in metros are poor. Reliability is an issue, committed performance are not delivered, and getting premium performance to test high bandwidth applications is impossible.

Let’s see Finland which has a small population, but has always had a strong, liberal telecom sector.

Finland introduced laws which guarantee broadband to every resident living in the country. This is the first such guarantee anywhere in the world. Starting July 2010, every person in Finland will have the right to a one-megabit broadband connection as an intermediate step, says the Ministry of Transport and Communications. By the end of 2015, the legal right will be extended to an impressive 100 Mb broadband connection for everyone.

Will India ever introduce such a guarantee? It would be mind boggling to see what the innovative entrepreneurial Indians will do with powerful broadband access!

We could just catapult to world stage as Korea did in this decade and the way China is poised to do in the next decade. And honestly, I don’t understand what’s holding them back!

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