Microsoft, Google, Apple Part 2: The Question of Screensize.

Posted: January 8th, 2009 | Author: | Filed under: Kev's Thoughts On... | Tags: , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

In the last post, Part I, the idea of digital ecosystems was explored with a closing question about where we are headed with these three ever-growing empires.

I believe the answer lies in analyzing the issue of screensize.

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In the past year and particularly during the last few months, there has been great attention spent on Netbooks.  This new sub-category of computing devices fills the gap inbetween the cellular phone and the laptop.  Being larger than a cellphone with a fully functional keyboard, it allows a user experience much nearer to the laptop.  However being on average 50% – 75% smaller than a standard laptop means it offers even more mobility and is a better fit for those that demand constant computing capabilities that can keep up with their active lifestyles.

Indeed, some have begun to openly wonder whether the Netbook will eventually replace the Laptop.  The reason for the rise of the netbook now can be attributed to two primary developments: 1) Better microprocessors made specifically for mobile computing and 2) The coming of age for Solid State Memory.  With microprocessors such as Intel’s Atom, the priority is continued reduction in size, while maximizing energy efficiency while still offering a competent processing speed. The major reason for the viability of the Netbook is the rapid price reductions of Solid State Memory.  It has been falling in dollars/GB for several years now, but in the past 2 years has only just begun to break the thresholds of being affordable enough to be used in mass commercial products.  Apple’s MacBook Air was one of the first major mainstream computer products to set a vision for what SSDs can do, even if the price tag was (and still is) reserved for the rich and famous.  Netbooks are only the next iteration of SSD usage in mass computing.  While still more expensive than original Hard Disk Drives, SSD are far more durable to drops, extreme temperature, make no sound, and are more lightweight and compact.  A perfect combination for mobile computing.

The netbooks also have a much lower price tag than laptops and desktops too.  The reason is not because its significantly slower than the other two computing options, but because it has less memory capacity.  There are two drives for having less memory: 1) To lower price of the product to an attractive level that will make it a competing alternative to the laptop and 2) Because people are increasingly needing less and less memory on their computing devices.  Price is obvious, but people using less memory may be intriguing to some.

With Facebook, YouTube, Google Docs, iWork.com, Picasa, Flickr, LastFM and SalesForce.com to name a few, it is plain to see that storing things online is becoming the norm and not an anomaly.  When a person finds that their life is increasingly online and all their content is stored online, the computing device’s priorities shift to processing speed and connectivity.  In-device memory merely facilitates the uploading of information onto the net.

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With this in mind, and the commercial success of the netbook this year, it isn’t surprising to see Apple planning a large, 7 – 9 inch screen iPod touch.  And there you have it. The emergence of the mini tablet PC.  Each new generation of computer strives to be lighter, faster, more connectivity, thinner, convenient, and offers a superior user interface more efficiently translate your requests.

Essentially, the computer will evolve into a simple, light-weight access panel to the internet with primarily upload capabilities.

We’re already starting to see it happen with iPhone/iPod Touch, the mini tablet PC, the regular tablet PC, the new iMacs that have done away with computer towers, and large LCD and Plasma flat-screen TVs.

As more and more functionality and our lives moves online, the need for varied formats of the computer will decrease.  Eventually the only choice consumers will have to make is what size screen they’ll like.

It is a question of screensize.

Large screens for home, mid-sized screens for mobile work and when carrying a bag, small screens for ultra mobility when carrying a bag is not desired.

Going back to the three present digital ecosystems being offered by Microsoft, Google and Apple, which one will prevail if computers evolve the way its been described above? Microsoft’s present business model of selling installation-based software isn’t going to be compatible with an online, browser-based world that is more concerned with upload than download.  Google’s model of offering completely free access to its online products and charging advertisers for revenue seems to fit better with a world with thinner, lightweight computers.  We just witnessed an extraordinary event where two developers grafted Google’s Android platform onto one of the new Netbooks.  This could be the first steps of many Google may take in securing its leadership in the next generation of computers.  Apple’s closed-system software-hardware bundle still has a fair chance of succeeding if Apple can guarantee it continues to introduce the next must-have computing device that takes everyone one step closer to a thinner, more light-weight computing world.  I hear iWork.com, Apple’s answer to Google Docs will be subscription-based.  If Apple can keep its momentum it just might be able to lure enough people and lock them into Apple’s ecosystem to charge them all subscription fees.

It seems that if computers continue to get thinner and lighter, then for the longevity of this development (say the next 5-10 years), Google and Apple have very bright futures while Microsoft has a tough battle ahead.

But if we review the question of screensize again, an astute entrepreneur may take the idea of screensize one step further and ask: “why would we need to continue requiring consumers to carry a screen with them wherever they go? Why can’t we provide screens for them wherever they are. so they don’t have to carry screens anymore?”

Then the question no longer is about screensize, but about moving screens from 2D to 3D.  Enter surface computing.  All the surfaces, wherever you are, are screens for you to access your information, upload your information, and communicate.  The tables, walls, clothes, all surfaces will become computing access points for the digital ecosystem.

minority-reportIf thinner, more lightweight 2D computers/screens is the 5-10 year mid-term horizon, then surface computing is the 15-20 year long-term horizon.

And guess who’s been leading the way for surface computing?  Bill Gates and Microsoft.

See a video demo of Microsoft’s Surface Computing


Microsoft, Google, Apple Part 1: Digital Ecosystems

Posted: January 5th, 2009 | Author: | Filed under: Kev's Thoughts On... | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 3 Comments »

I think its fairly clear the direction we’re all headed. The movers & shakers of our generation, whether we love them or hate them, are busy at work creating competing information/media/communication ecosystems for us to live in.

Want to access the internet? Microsoft has IE running off Windows, Apple has Safari running off Mac OSX and Google has Chrome which, for now, is just running off Windows but will eventually run off of everything.

How about doing work? Google Docs are 24/7 networked up-time, Microsoft Office has a lot more bells and whistles but you pay a pretty penny for this stand-alone product.  And Apple’s iWork is just prettier.

Big on entertainment? Apple’s iTunes has cornered the music market and offers some of the best webcasts, games & apps in a sweet GUI.  Add to that Apple TV and all these goodies can be accessed not just on your computer but in your livingroom too. Microsoft’s Xbox attacks the entertainment question from the gaming angle, but with MMO and SecondLife-like Avatar capability now the norm, interactive communication is a readily available function available on your bigscreen tv.  Xbox’s next iteration will see Blu-Ray player capabilities, and its cooperation with Netflicks brings a mountain of new content.  Google has YouTube.  And as it inks more syndication agreements for YouTube content, it spreads its net wider.  Even now, record labels and broadcast networks are sweetening to the YouTube platform as ad revenues start coming in.  YouTube has become today what MTV was for the MTV generation.

Microsoft’s MSN Messenger vs. Apple’s iChat vs. Google’s Gtalk.

Microsoft’s Hotmail vs. Apple’s Mail vs. Google’s Gmail.

Microsoft’s MSN Live Spaces vs. Apple’s iLife vs. Google’s Blogger.

With Apple’s domination of mobile music with iPod and pioneering of mobile digital communications with iPhone, the digital ecosystem continues to extend.  Microsoft is fighting an increasingly uphill battle with the Windows Mobile Platform, and its Zune, while the first in its product segment to boast Wi-Fi capabilities, far trails Apple’s iPod.  Google has gotten into the mobile game in a paradigm-shifting way with the open source Android platform a year ago. Now with the T-Mobile G1 phone, or any of the other new Android phones coming out in 2009 from Huawei, Samsung, and Sony Ericsson, Google is on its way to being a household name for mobile devices.

So catering to your whole digital life, Microsoft, Google and Apple have each created separate digital ecosystems for you to inhabit.  Whether its on your desktop, laptop, in your livingroom with your big-screen TV or out-and-about with your mobile device, these three digital giants have some product to keep you linked into their domain.

These three are building their digital ecosystems in different ways though.  Microsoft, coming from a long heritage of selling installation-based software maintains the philosophy that the device doesn’t matter, but a digital ecosystem is all about a software ecosystem.  Albeit, Microsoft has made forays into devices with the Zune and Xbox, with fair success.  In part, Microsoft has seen the success of Apple’s approach.  Apple maintains the philosophy that a digital ecosystem is derived from the complete user experience in a hardware-software bundle.  As a closed system with high standards and high focus on the User Interface both virtual and real, Apple has produced hit after hit and everyone is taking notice.  The closed system also makes Apple’s ecosystem particularly sticky with things like DRM in addition to general design appeal.  Selling these hardware-software bundles at a premium price, you’re literally ‘buying into’ Apple’s ecosystem.  Finally, Google’s philosophy is similar to Microsoft’s, in that the digital ecosystem should be primarily software, and should be run/accessed from any device regardless who made it.  Where Google differs from Microsoft is that instead of selling installation-based software like Microsoft, Google’s ecosystem is web-based with little or no download/installation required and -even more shocking- Google is offering its ecosystem for FREE. Google’s ecosystem is powered by ad dollars.

Three digital ecosystems, one selling installation software, one selling hardware-software bundles, and one offering free use of software hosted online while making money from some other guy.

Which ecosystem will we eventually find ourselves in? Is there room for more than one?

Well, its a question of screen size.

Read it here in Part II.


Kev’s Thoughts On… Business Model Evolutions for the Ever-Changing Web Landscape

Posted: February 5th, 2008 | Author: | Filed under: Kev's Thoughts On... | Tags: , , , , , , , , , , , | No Comments »

As I dwell more on Web 2.0 and the numerous ways companies like Facebook, Google and News Corp try to monetize users’ actions on the internet, a recurring analogy keeps coming to my mind, one that gives me a real-world perspective and helps me better understand what is going on in the online landscape.
The Internet, in essence, is another dimension of real estate and the international property market.
There are many others who have described the same similarity, so it is nothing original, but I find it important in helping me think about the next directions Web 2.0 is going. Please excuse the crude simplicity of the analogy and my layman’s knowledge of the industry as I try to make my points.

A quick recap of the Web 1.0 world finds that the era was littered with Portals, Store-fronts, Exchanges and Personal pages. Portals like ol’ AOL are like universities requiring tuition or special paid-admission malls. A one-stop-shop for information, purchases and even socializing. This is the classic fee-based or subscription-based business model.
Store-fronts like Amazon, and Victoria Secret are similar to the real-world Wal-Mart; massive business vendors that see millions of customers walk through its doors everyday. Exchanges like Ebay can easily be compared to the NYSE. Both of these kinds of properties are transaction-based, whether it is real goods and services or information. This business model subsequently is still successful today.
The personal pages or simple business marketing websites that exist on the Internet are like mom & pop stores, or residential homes. More often than not, they are built out of necessity or social fascination, often not having a business-model in mind and usually do not make enough income to even pay for itself. There is nothing wrong with not having a business model, as many people start pages for social reasons. I just had to include it as an observation of another type of online property.

So in the Web 1.0 world we see littered around a handful of paid-admission malls, universities, Wal-Mart-like vendors, NYSE-like exchanges, mom & pop stores and residential homes.

I should add that Search-Engines also emerged during this time, and with the help of its poster-child, Google, propelled the Ad-Supported business model to preeminence. However, Search-Engines are merely another type of property as well, more like a very important highway that is surrounded by billboards.

Ads have since moved from static banner ads to relevant text-based click ads, and now experimenting with contextualized interactive video ads.

Now that we are in the Web 2.0 world, where user-generated content is all the rage, how have online ‘properties’ transformed? The new web stars such as Facebook, MySpace, YouTube and LinkedIn are much more like cities. These are properties that are built on the social community, the collective power of the many, and develop their own unique character and charm depending on their constituents. This is a far cry from malls, vendors and exchanges of the last era. Unlike a Wal-Mart or NYSE where visitors are attracted by the architecture and goods offered by the creator of the property, the cities of Web 2.0 attract inhabitants because of the organic ability to develop niches and community ‘flavors’. Think New York City’s SOHO or Tokyo’s Harajuku.

These online cities have begun to build their business model around what has worked best in the past, namely the Search Engine’s success with Ad-Supported revenue. The online ‘NYC’ helps pay for itself by having billboards in Times Square and the online ‘Tokyo’ has expensive advertising properties in Shibuya. So now Web 2.0 cities like Facebook and MySpace can breathe easy because it can monetize itself by placing user-specific, targeted ads in and around its site for the numerous citizens inhabiting their property.

It seems quite fine and dandy. So isn’t it a smart move to invest in building a massive social community since you know with those numbers you’ll be able to profit off the advertising revenues?
It may be, but it will cost you first. Online cities are just every-bit as much of an investment as building a real city. Just replace the construction cranes, zoning rights and subway systems with software developers, servers and bandwidth costs.
Even after all of that expenditure (in the Web 2.0 world most likely spent with VC money), it may all still be worthwhile if you’re sure you will be the next, say, Facebook.

Here lies the problem: Online properties are extremely transient.

In New York, Tokyo or anywhere else in the real world, inhabitants must either buy or rent property, and usually the payment for only one property is all anyone can afford. Not so online. A netizen who has been around long enough likely has a space in several social network properties simply because it is free to sign up and maintain. Those that love the online equivalent of NYC’s Upper East Side and Tokyo’s Akihabara can online, actually have a place in both communities, and another place in Shanghai, Dubai, London and Moscow for that matter. It’s almost like the ‘golden horde’ effect, coined by Thomas Friedman as he described the movement of global investment capital flows. Like so, netizens will quickly migrate to the next new and coolest community, because the financial costs are nil and the social drivers are everything. And while maintaining a space is free on most online properties, value is not derived by how many open accounts a Facebook or a MySpace has. A site’s value is instead derived from the share size it can grab of the only thing that is finite to a user: her time.
Can you imagine if one year Disney World was full during the summer vacation season, but the summer after it was completely deserted because everyone went to the new Universal Studios that opened across the street? Or going back to our analogy of NYC, if in the course of a few years all its millions of inhabitants migrated to San Francisco just because it became more interesting?
Online properties are extremely transient. It wasn’t so long ago that Friendster was the place to be, or Xanga. And for those that can remember just a few years earlier, Asian Avenue or Black Planet?
Suddenly the Facebook or MySpace or YouTube doesn’t seem like such valuable property anymore. The only reason why the real Times Square is one of the most expensive properties in the world is because people can guarantee it will be trafficked by millions day-in and day-out for many years to come. Even Google, arguably the most trafficked and valuable property online does not have the same level of entrenchment and therefore cannot stay still. Google’s value will immediately diminish if it misses the next revolution in search or even lets another start-up be the first in the arena. And that is a real possibility. Just look at Yahoo or MSN not even ten years ago. Whether its Semantic Web or something else, all the online properties in the Web 2.0 world must find ways of keeping user traffic in their sites. Only then will the ad-supported business model stay afloat.

Enter Widgets & Apps. Online social communities are continually allowing open APIs for third party developers to create interesting sociable programs for netizens to use within the online properties. These Web 2.0 cities encourage people to build interactive attractions within their property to make it all the more interesting for online inhabitants to stay. In my eyes, Widgets & Apps are like the Starbucks of the real world. People just can’t get enough of it, and there is one on every corner of every block. I believe we are entering an age where the Widget/App will gain more and more importance and influence in the online world. As more and more developers shift from trying to create their own social community to creating the next great App, more interesting, and powerful products will appear.
While this might be good news for online cities, since all of these Apps will exist within their domains and work to keep inhabitants from migrating, there is one fallacy. We have seen and heard of Google’s OpenSocial, an initiative attempting to standardize development protocols so Widget/App developers can easily make their software compatible with any number of participating online communities. The problem for the online cities like MySpace, LinkedIn and Ning is that pretty soon the Apps that are supposed to make their property unique and ‘sticky’ for the inhabitant will be available in every other online city, completely neutralizing any ‘social advantage’ one online property would have over the other. Just like how you can find a Starbucks or McDonalds on almost every corner in New York or Tokyo, so too will emergent App makers like Slide, iLike and Google Maps be found on every single social network in the world.
So while OpenSocial may have an adverse affect for Social Networks, it will at the same time be a catalyst for the App’s continued rise to stardom. These Widgets & Apps are still property mind you, even though they are at present still trying to figure out the right business model. As of now Apps are still compulsively obsessed with the ad-supported business model that both the Social Network and the Search Engine love so much. As a property you can think of ad-support Apps like a Starbucks on every corner giving away free coffee but hoping you’ll buy their recommended CD of the month. Or like McDonalds giving away Happy Meals hoping you’ll buy a toy.

We are now on our third generation of online properties who have survived and succeeded based on an Ad-supported business model. Will it change? Perhaps. But its hard to move an entire industry that are true believers that traffic = ad dollars. Widgets & Apps have a unique opportunity to play with their business models that social networks and search do not: These new programs are transient and user-perpetuated, almost viral in nature. They can go in and out of Social Networks, Blogs, and many other online properties of the both the Web 1.0 and 2.0 eras. And while social networks continue to shift and collide like tectonic plates, jockeying for a bigger piece of the user’s online presence, Apps will be in every one of the properties, becoming increasingly more interactive, and capturing more and more of what’s really important: the user’s attention.

As an entrepreneur what kind of property would you rather create? A New York City, or a Starbucks Corp?