Subba’s Serendipitous moments

October 26, 2010

Ray Ozzie’s new memo to Microsoft

Filed under: Business,Model,Strategy — Subbaraman Iyer @ 3:58 pm
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Ray Ozzie is a legend. Bill Gates rated him as one of the five best programmers in the world. Ray created Lotus Notes – the popular email and collaborative workspace solutions in the world. Ray succeeded Bill Gates as the Chief Software Architect when Bill decided to leave Microsoft. He is truly a visionary and I had found his earlier memo The Internet services disruption very interesting

Now as Ray prepares to leave Microsoft, he has penned a farewell memo titled Dawn of a new Day. It makes interested reading as he explains several new shifts about where the “post PC world” is headed.

When I read both the memos I get a feeling that despite the 5 years that he spent there and his exhortation for changing, he hasn’t been effective enough. After his routine praise of Microsoft, he makes a subtle but pointed criticism of Microsoft’s business model when he says:

Yet, for all our great progress, some of the opportunities I laid out in my memo five years ago remain elusive and are yet to be realized.

Certain of our competitors’ products and their rapid advancement & refinement of new usage scenarios have been quite noteworthy. Our early and clear vision notwithstanding, their execution has surpassed our own in mobile experiences, in the seamless fusion of hardware & software & services, and in social networking & myriad new forms of internet-centric social interaction.

There is also a veiled pointer to Microsoft’s seemingly glaring weakness of not being able to conceive the future when he says:

In our industry, if you can imagine something, you can build it.  We at Microsoft know from our common past – even the past five years – that if we know what needs to be done, and if we act decisively, any challenge can be transformed into a significant opportunity.  And so, the first step for each of us is to imagine fearlessly; to dream.

The one irrefutable truth is that in any large organization, any transformation that is to ‘stick’ must emerge from within.  Those on the outside can strongly influence, particularly with their wallets.  Those above are responsible for developing and articulating a compelling vision, eliminating obstacles, prioritizing resources, and generally setting the stage with a principled approach.

But the power and responsibility to truly effect transformation exists in no small part at the edge.  Within those who, led or inspired, feel personally and collectively motivated to make; to act; to do.

In taking the time to read this, most likely it’s you.

At times, it almost seems that he is endorsing Google’s strategy and technology approach.

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August 28, 2010

Will the future search be “social” or “action”?

Filed under: Business,Innovation,Perspective — Subbaraman Iyer @ 12:15 pm
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The world of search is clearly at an inflexion point. Google has dominated search for so long that it has become synonymous with search.

Yet the search world will be transformed in a radical way even before we realize it. Social search powered by Facebook will be a reality because of social plug-ins. I have absolutely no doubts on that account and wrote about its impact in my blog post here.

There is another aspect of vertical search which surprisingly was ushered in by Microsoft’s Bing. However Google seems to be muscling its way here with its recent acquisitions like ITA software. I think this will be a bigger market and it remains to be seen how Google will integrate the vertical search into its current offerings. This will be an interesting development to watch.

“Action” search will perhaps be a new phenomenon. Esther Dyson in a very thought provoking piece describes the need for action search. I was surprised to learn that “action search” was actually an idea that Bill Gates proposed when he said  “The future of search is verbs.” But he said it at a private dinner and it never spread. How did Microsoft miss this profound idea? This as Esther beautifully describes  represents the world more accurately. And that means better, more meaningful responses when we search.

August 17, 2010

Google wants to find the next winner in search – Maybe Search 2.0!

Over the weekend, the Wall Street Journal published an interesting interview with Eric Schmidt – CEO of Google and a great tech visionary. Disclosure: I am a great admirer of Eric Schmidt.

The interview comes at an interesting juncture when Android seems to be on a roll powering 200,000 devices a daily and slated to be the dominant operating system on the mobile platform. Yet, of late, the media has been critical of Google, probably taking the cue from a weak stock price. Add to that the mindshare belongs now to Facebook.

Notwithstanding the negative media reports on Google, Eric in this interview shares several new insights about where Google is headed. Some of his insights and quotes are interesting:

Asked to comment on Android being given free as compared to the fat margins made by Apple he says:

"You get a billion people doing something, there’s lots of ways to make money. Absolutely, trust me. We’ll get lots of money for it."

"In general in technology," he says, "if you own a platform that’s valuable, you can monetize it." Example: Google is obliged to share with Apple search revenue generated by iPhone users. On Android, Google gets to keep 100%.”

That difference alone, says Mr. Schmidt, is more than enough to foot the bill for Android’s continued development.

Google’s real challenge though it dominates the search business:

The real challenge is one not yet on most investors’ minds: how to preserve Google’s franchise in Web advertising, the source of almost all its profits, when "search" is outmoded.

The day is coming when the Google search box—and the activity known as Googling—no longer will be at the center of our online lives. Then what? "We’re trying to figure out what the future of search is."

Now that’s what being visionary is all about – not reacting to Wall Street but figuring out the future before Wall Street has had the chance to position you. Maybe he’s taking the cue from Andy Grove’s philosophy of Only the paranoid survive.

 Google’s intriguing aspect of Search 2.0 can be summed neatly as he says:

"We know roughly who you are, roughly what you care about, roughly who your friends are." Google also knows, to within a foot, where you are.

Mr. Schmidt leaves it to a listener to imagine the possibilities of this social search and what its implications could be. In fact, Google is acutely aware that we are on the cusp of a new phenomenon called “Social search” which may be powered by the Facebook phenomena.

Google the creator of targeted advertising believes that it will dominate the category raises the bar:

"The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them."

Finally, Eric presents the most intriguing and scary possibility of the future when he says:

"I don’t believe society understands what happens when everything is available, knowable and recorded by everyone all the time," he says. He predicts, apparently seriously, that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends’ social media sites.

"I mean we really have to think about these things as a society," he adds. "I’m not even talking about the really terrible stuff, terrorism and access to evil things."

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.

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.

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!

September 1, 2009

Microsoft Windows under siege.

Operating systems wars have been skirmishes. They haven’t produced any major upsets. Microsoft dominates the OS completely and despite the Linux aficionados, Microsoft’s strong hold remained unchallenged especially at the low to medium end servers and in desktops. It is a different story in the mobile space though.

But things are slowly changing and my sense is that in the next couple of years, Microsoft will face more heat compared to anything that it has ever faced on the server front.

Microsoft will have to increasingly contend with VMWare which has bolstered its arsenal with its acquisition of Springsource – maker of open-source software development tools which can analyze and optimize the application performance. This could allow VMWare to undermine the Windows operating system.

Despite all the talk about the huge growth of virtualization, the untapped market is still large. Currently virtualization has been done mostly at the data centers (which is where the complexity is and where the cost savings are) and even there the current estimate is that less than 25% of the servers are virtualized. This creates a big opportunity. It is no surprise that Cisco wants a piece of this market and it is targeting them with its Unified Computing system.

Well, there’s a desktop market and a notebook market and it will require a different approach to tackle this market. Currently the focus seems to be on the servers.

Microsoft cannot afford to ignore this market. In fact it announced Hyper V Virtual machine as part of its Windows Server 2008 and it is likely that it will offer several enhancements in time to come. Moreover, Microsoft can afford to give its Hyper V free. With other contenders like Citrix Xen, Virtual Iron remaining in the fringes, it is going to be a battle between Microsoft and VMWare. And again, this battle is not just one of functionality or product features, but increasingly fought on a business model.

In some way, it could very well resemble the browser wars of the nineties.

But from Microsoft’s standpoint the battle for the OS has another contender. Google with its web based software for office and productivity applications is also undermining the Windows operating system.

The early impact on Microsoft is here to see. However it is too early to announce the demise of Windows.

So, the skirmishes are over and the battle is being fought on many fronts.

August 11, 2009

Mobile phones serve as catalysts for social media.

The mobile data services market is on an unprecedented roll. For the first time, wireless data revenue in the U.S. passed $10 billion in Q1 2009. Wireless data revenue in the U.S. itself maybe $42 billion by 2009 as per the respected analyst — Chetan Sharma who has provided details in his market update. The U.S. is now is the largest mobile data market, ahead of Japan and China. Verizon’s data revenues are close to $4 billion, just shy of NTT DoCoMo’s. The top four U.S. carriers figure among the top 10 global operators by way of mobile data service revenues.

I was curious to find out what could have led to the phenomenal surge. While there could be a few factors, in my view the single largest contributor has been the growth of social media. Let me explain:

As more and more people sign on to social networking platforms like Facebook, there is a compelling desire to share and be part of the communication. This naturally implies that more people are signing up for the mobile data plans which are far more profitable for operators. The key catalyst that contributes both to the social media and to the operator’s profit pool happens to be the ubiquitous mobile phone.

A simple, easy to use browser and a good camera on the phone is all that is needed. When the smart phone was invented, I bet no one saw this as a potential application. The iPhone showed what is possible and soon a variety of devices has made access to social media quite easy.

Now, mobile operators for a long time have tried to offer a variety of applications, but barring a few none took off. This only goes to show that managing a network and managing a application portfolio calls for different competencies. And suddenly when one was least expecting, there’s a big surge in mobile data services.

INQ Mobile — owned by Hutchinson Whampoa has launched a Facebook phone. In Hong Kong, where the INQ1 launched back in March, nearly 50 percent of its owners regularly use data services on a level that is four times higher than the typical 3G user base. Facebook usage is also 3-4 times higher than the average on other 3G devices on the 3 Hong Kong network, the company said. Soon we may have a Twitter phone as well.

So, we are back to where it all started: Carriers have become dumb pipes and the innovation is happening around the ends of the pipes — at the device level and at the application level.

So, like I normally say about innovation, the unintended effects of an innovation caused by seemingly disparate tributaries often causes a flood in an area that we least expected to happen.

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