Monday, November 7, 2011

Pay as You Exit: FairPay Explores New Content Pricing Discovery Regimes

In my childhood, television didn't have much new and original programming, so local TV stations would recycle a lot of ancient movies, cartoons and serials from the early days of films - some silents, even. "Our Gang," also known as "The Little Rascals," was a regular comedy feature in those days for children's programs, featuring a motley crew of kids portraying the ups and downs of living in the Great Depression. One episode called "Pay as you Exit" saw the gang putting on a talent show with the novel idea of letting people come for free and then paying what they wanted to when they were exiting. Long story short, the show was an accidental success and the kids wound up with a hatful of money from their grateful patrons.

It seems strange in a way to think that such an idea might actually help to save today's premium content sellers from their often rigid pricing regimes that seem to hold back their growth potential, but Richard R. Reisman, President and founder of Teleshuttle Corporation, is betting on just such an idea having merit for today's electronic content markets. Richard's solution is a new system called FairPay, a pricing exploration management service that enables content sellers to enable buyers to name their own price for content, based on what they saw as its value after using it. The logic for FairPay's services is based in Reisman's interpretation of the now-famous Long Tail diagram popularized by media executive and author Chris Anderson.

Reisman sees in his version of a long-tail diagram that the green area represents the zone in which sales typically occur for fixed-price content - that is, where perceived value is matched by the offered price. To the top end of the curve the red zone represents a significant group of buyers for whom an offered price is actually too low, based on them seeing it being more valuable or affordable. The orange zone to the right on the "long tail" represents the revenue not captured from the large number of potential, but unrealized, buyers who are unwilling to pay for content at that fixed price, based on them having a lower perceived value for the content that doesn’t match their desire or ability to pay.

FairPay's concept is fairly simple, but intriguingly powerful. The idea is to enable some people to obtain premium content without paying ahead of time, then to offer them the ability to pay at a specific price of their choosing if they provide a reasonable explanation of why that price would be fair for them. The system offers both pre-defined reasons to simplify response processing as well as free-form explanation opportunities. Based on the seller's perception of the fairness of the reasons given for a specific buyer. the buyer may be able to receive future access to premium content at similar prices. As Reisman notes, "The trick to making FairPay work is that it gives the seller a new ability to selectively manage the offer process by framing the offer and using feedback effectively to incentivize most buyers to pay at a reasonable level, and to screen out those who do not. To the extent that is done, the new revenue from their previously non-addressable market can become a very large total."

Of course, this model has to be able to match the right buyers with the right users, which is also part of the FairPay process. By collecting data on the buyer that helps the seller to understand their user role, it's possible that they can develop pricing models that can anticipate likely perceived value based on a much more detailed understanding of very specific market segments. So, for example, perhaps a scientific researcher focused on laser physics may have to access "must have" journals in his or her main line of work, and be willing to pay a high price for them, but then be less willing to pay for larger quantities of research from fields that are beyond their usual area of expertise but required to research a broad arena of hit-or-miss new market opportunities. On the consumer side, it could be that a streaming movie that someone thought was a dog was just right for them - and wind up enabling the provider to define matching content that they and people like them may be more willing to pay for more handsomely.

In other words, "pay as you exit" could lead to a profile-defined offer model for content already consumed of a particular genre, in essence a controlled free trial in which the seller is ensured revenues on an ongoing basis from a client with a much higher likelihood of successes in matching prices without costly negotiations or even more costly lost sales opportunities when people don't get a chance to experience the value of the product. The key to all of this is the profile data, of course, which is where Reisman may have his finger on a very valuable idea. FairPay is in essence real-time market research tool, enabling media providers to get more sophisticated insights into real willingness to pay for specific content under specific circumstances. This is one of the hardest accurate indicators to get out of market research on a questionnaire basis; only the real selling environment is able to tell us what people are really willing to pay for.

While Anderson's "Long Tail" model got publishers excited and began to get them realizing how much online bookselling could help to expose their broad catalog of offerings via search engines and other facilities, little has changed in the arena of pricing long tail or "hits" content as the result of that model; for most producers, the price is the price, and the market is the market. There's little curiosity in most media circles and even in many enterprise content markets about having highly flexible pricing regimes that could get more people excited about more content at the price that hits their right value points. In an era in which media was defined by homogeneous mass markets served by mass produced content, that was an understandable stance.

But the Web has enabled people to zero in on specific content sets rapidly with amazing accuracy, making "one size fits all" pricing less reflective of what content products represent to highly contextual markets. It's not just a matter of knowing when to knock down prices for whom; it's also a matter of knowing when to mark them up, because one person's trash may have become another person's treasure. In such highly contextual markets, supply is perfectly matched with demand when the right content is available instantly at the right time. While it's very early days for the FairPay model, it could turn out to be a tool that content producers could use to experiment with pricing in new and exciting ways that could lead to higher margins and deeper market penetration for their content - two concepts that could lead to more happy endings on their bottom lines.

Hey, if it worked for Darla, Spanky and Stymie, it could work for you.

Monday, October 10, 2011

The Google Store: Is the Kindle Fire a Signal for a Barnes & Noble Strategy Shift?

There has been good news lately for Barnes & Noble, the big-store bookseller that managed to traverse its sales into the ebook era with its highly successful line of Nook ebook readers fueling online content sales. Its most recent financial report showed a 2 percent profit increase over the same period last year, while a 37 percent increase in online sales was enough to power $200 million in sales, about a fifth of B&N's overall revenue now. Online sales also helped to offset a 3 percent drop in storefront sales, as their retail outlets begin to take on an odd mix of Nook devices and paraphernalia backed by more traditional media.

How long this good news may last, though, is very much up for grabs in light of Amazon's launch of its new Kindle Fire ebook reader. The Fire is a 7-inch color touchscreen tablet which, like B&N's Nook Color, is also based on Google's Android operating system and features downloads for books, magazines, music, selected apps, videos and games tied to Amazon's powerful Web-based ecommerce services. The Kindle Fire also features Amazon's new Silk browsing technology, which enables highly efficient Web content delivery that passes each Web page request through Amazon's own Web infrastructure to optimize its delivery performance. Of course, each time this happens Amazon will learn a little bit more about what people are browsing for - creating new opportunities for recommending content and, perhaps, optimizing ads in a way that will challenge Google in mobile and online ad sales from a new angle.

Kindle Fire pre-launch sales are powerful by all indicators, meaning that unless there's a surprising second act to the Nook Color and B&N's other Nook units, the days of its renaissance via these popular units may be numbered. I wouldn't expect Nooks to disappear any time soon, but you can expect a softening of their growth that will not be likely to offset continuing dwindling of storefront sales. You can call the closing of B&N's enormous Lincoln Center store in New York City earlier this year a fluke due to an exorbitant rent increase, but its location across the street from the defunct flagship store for Tower Records is perhaps a sign of fundamental changes to media sales more than shifting real estate values in upper Manhattan.

The main problem is that Barnes & Noble has nowhere near the online infrastructure, global reach and cost structure that Amazon enjoys, enhanced by a wide array of merchants using Amazon's ecommerce portal who help Amazon to resemble an entire shopping center rather than just a media-centric portal. That's a profile that's just not in B&N's DNA, much less in its bank account. Nook has helped Barnes & Noble to develop a powerful online media presence, but it can't afford to expand it without making some fundamental choices about its future.

The answer to this dilemma may lie with B&N's technology partner Google. Google has its own fish to fry in conquering its markets, some of which overlap with B&N but others of which go far beyond Barnes & Noble's market profile. Most notably, Google is developing a profile in supporting local merchants with its mobile services and platforms, as well as in local education and government markets. At the same time, Google is flanked by Apple, with a long-established chain of elite retail outlets that have helped to spread the Apple mystique, as well as by Microsoft's widespread presence in retail and local tech support. Amazon also poses as many challenges to Google as opportunities, with Amazon's new Fire and Silk technologies posing direct threats to its long-term operations. While the Amazon Appstore features apps compatible with Google's Android operating system, there's nothing to stop Amazon from making a play for an operating system such as WebOS or QNX to fill in the back end of Fire's largely proprietary tablet interface software.

So, ponder this; what if Barnes & Noble were to ditch some of its retail stores as sole proprietor and sell or sublet them to Google, who could then rebrand them as Google Stores? B&N would get a nice cash infusion, which could be used to fuel online retail and platform expansion, and Google could get retail space already populated with its most popular tablet product to date. Of course, the profile of a Google Store would be far different from your typical B&N outlet. It could provide not only Nooks but any and all platforms using Google technologies, including, perhaps, even Kindle Fires. Since B&N has already invested in tech-savvy store staff to support in-store Nook sales, you would have the nucleus of staff to support a wider array of technology sales and demos. Add in mobile phones, Chromebooks, staff to support educating local merchants, educators and corporate I.T. staffs in "the Google way" and all of a sudden you would have a very useful local presence in many local markets that would propel the Google brand in valuable ways.

Now about those books and magazines. Might it even be possible to farm out the selection and merchandizing of those materials to a local bookseller rather than Barnes & Noble? One of the tricky aspects of such a move would be trying to position Google as a "white hat" partner for local booksellers. Perhaps if indies were to have a crack at demonstrating "best practices" for local bookselling, including enhanced print-on-demand services for Google Books and ebooks from other sources, Google could offer local bookstores a model for success that could be replicated elsewhere. Since it's likely that printed books would take up far less space in a Google Store than in your typical Barnes & Noble store, hopefully they'd represent less of a direct competition to their remaining retail units. Of course, those in-store coffee shops would also offer Google an opportunity to test-drive services like Google Wallet and Google Offers - just as Google offers its Nexus line of Android mobile phones to offer a "pure" experience of what Google intends to offer through them.

What to do with all of that retail space that's no longer used to sell board games, chocolates and oh, yes, books? Well, obviously a good chunk would to showcasing devices, including in-home experiences like Google TV and appliances powered by the Android Appliance Developers Tookit. The ADK has the promise of revolutionizing how people related to sensor-powered devices and vice versa, but they will need a "hands on" environment for the average consumer to "get" the potential for these devices in their lives. Unlike Apple Stores, which showcase a very limited range of media-centric devices, Google Stores could wind up being miniature world's fairs, showcasing not just media but demonstrations of how Google-powered technologies can change commerce, homes, lives and institutions.

It's pretty clear that Google needs to take some bold steps to broaden its branding as its search and ad revenues are being challenged by more entry points into creating and discovering Web-enabled content and services. A physical presence used to do things that are truly differentiated from its competitors - and, for that matter, probably from most any other storefront in town - could be a part of that equation, building cachet, trust and hands-on credibility for its brand and its products and services in an environment that invites experimentation, innovation and community interaction. In a world in which brands are trusted relationships, Google needs more flesh on its brands in addition to the trust that it builds through its online media properties - especially as it capabilities via Android appliances reach further into the physical world.

As to what happens to Barnes & Noble from that point on is debatable, but certainly an exit via Google is always a possibility in the long run, though in the short run retaining Barnes & Noble as an independent entity is probably best. B&N could yet make a strong go of it in online sales, and it may be best also to have it around to keep Amazon as a reasonably cooperative partner with Google. The alternative, of course, would be for Google to just grab its own retail spaces, but there are lots of things to be said for grabbing a retail footprint in which one of your core brands already resonates. I'll wager a download or two on a deal between Google and Barnes & Noble along these lines in the next twelve months or so, of not sooner. If not, well, at least it's an idea that might rent some space in your head.

Friday, August 19, 2011

Train Wreck: Pulling Apart A Titanic Week in Content Technologies

After a fairly snoozy few weeks in the content and technology business, the bits hit the fan. In search of mutual assured destruction in the evolving mobile tech patent wars and a better defensive position against aggressive patent shoppers, Google's move to acquire  Motorola Mobility was ultimately almost unavoidable, like a train barreling down on a pickup stuck at the crossing. As I mentioned in an earlier post on Google+, though, there are a lot of moving parts to this deal. Certainly defense for the patent wars was paramount, as Android device platforms were getting nervous and taking it on the chin with lawsuits from Microsoft, Apple and others. Ironically, even Motorola itself was feeling the heat and is due in court next week to launch its own Android defense.

But in the protection racket that has become patent law, Google's acquisition of Motorola was about more than just engineering a twenty-fold increase in its held and pending patents. With Motorola struggling to keep up with Samsung, HTC and others in the mobile wars, there was a real danger that Motorola would have fallen into the hands of a competitor like Microsoft. Microsoft may claim "we just do the software," but its strong position with Nokia and its continuing push to transform home markets via its Xbox game controllers and Kinect 3-D sensor controllers underscores a mixed hardware/software strategy for controlling its markets. Having Motorola as a Nokia-like partner for U.S-centric markets and Nokia for overseas markets would have been a strong plus for Microsoft, with patent suits a heavy stick to make the carrot of partnership look sweeter. So a Motorola Mobility acquisition will help Google to stall Microsoft on a number of fronts - including home entertainment.

Many analysts have glanced over Motorola Mobility's cable modem and home cordless phone businesses as important parts of this acquisition. It may not be the most important component in its holdings, but it shouldn't be overlooked. Google is about to go to war itself with its pending relaunch of Google TV, taking on in earnest both settop box suppliers and cable content distributors, as well as game console suppliers like Nintendo and Microsoft. Cable operators know that their last real line of defense against the Web is their control of the content access point. If a cable modem unit had Google TV loaded on it, including, say, Google Voice, Gtalk video and voice and Google+'s new Hangout group video service, then many cable operators' combo packages for TV content, phone service and Web service would have a new frenemy with which to contend.

I doubt that Google will confront cable operators via Motorola modem units in the short term, But don't be surprised if Google's pilot ultra-high-speed internet access projects broaden in scope and add "White-Fi" Web access components in rural areas via radio communications using the newly approved 802.22 WRAN standards for the former UHF TV frequencies that Google fought for a few years ago. At that point of inflection, having Motorola units available to take advantage of these types of Web-first services for Web, phone and video communications in homes and businesses might look a little more appealing.

Will Google's Android partners balk at the Motorola partnership and fall into forced love of Microsoft? Possibly, but then again, looking at the flop that was HP's launch of WebOS phones, a perfectly good mobile OS launched two years too late, would they want to bet the farm on an attractive but also-ran Windows Phone 7? It's more likely that Google eases the mobile phone portion of Motorola into a specialized role that allows them to keep pressure on its partners to enable Google's own innovations to get to market more quickly via Android on their phones. Android covers a very broad range of price points, including $80 smart phones now sold in Africa, so their overall strategy is far too broad to be accomplished with only Motorola in tow.

Speaking of HP, how's that restructuring grabbing you? Part two of this week's tech train wreck sees the remnants of Carly Fiorina's acquisition of Compaq computers finally hitting the wall, along with HP's more recent $1.2 acquisition of Palm mobile devices. Ostensibly it was the miserable flop of HP's TouchPad WebOS tablets - now being blown out at $99 a pop clearance prices - that triggered the company's management abandoning its enormous but challenged consumer PC and mobile business. No developers' support for WebOS apps, tepid hardware and a host of other problems could be blamed for this decision, but the larger problem is that WebOS didn't encompass HP's PCs. With a split-screen OS strategy, HP was  challenged to differentiate itself in an integrated way across a broad array of consumer computing platforms as Apple, Google and Microsoft can do.

So it's off to the dust bin for the consumer computer/mobile bits of HP, while they hope that a pending acquisition of Autonomy, a leading enterprise search and content harvesting platform, will complement their well-established line of enterprise server computers and support. It's a "Big Data" strategy that could work out pretty well in the long run, but right now it's not clear how much of a long run there is for enterprise computing. As more and more I.T. functions get trucked out to cloud computing services, the big question is what will remain inside the enterprise outside of very core information services. Big Data is about analysis more than it is about owning data, so the Autonomy acquisition could help HP to finesse the cloud transition.

But it's not clear that HP's existing enterprise infrastructure is enough to supercharge Autonomy sales, or vice versa. It's kind of a throwback strategy, like DEC's attempt to muscle its way into the search game with its relatively primitive Alta Vista riding on souped-up DEC server hardware. I'm not saying that it doesn't make sense - Google's cloud search services for the Web and enterprises run on their own "special sauce" hardware-software combos - but it will require extremely impressive performance to sell as either a cloud service or an installed enterprise service. That may take a while to cook up to truly competitive standards. In the meantime IBM, Microsoft, Oracle, EMC and many others will be setting their crosshairs on HP's enterprise I.T. ambitions. It might begin to make consumer computing look like a cakewalk.

What missing in the midst of both of these rather messy strategies is a core mission statement that people can grab on to. For Google, coming up with such a statement may be a little easier, since there were some immediate problems that needed to be addressed. But getting in to the hardware business is a huge step, one which requires levels of customer service that Google has never achieved on the software side. Google promises that it will run Motorola as a separate company, and for the sake of service issues it may have to.  Making all of these parts sing in an integrated strategy will be a challenge. S&P's downgrade of Google's stock is a reflection of a risky long-term strategy that has many strong components but which will require a good deal of selling to both the public and institutional investors.

For HP, the issue of a core mission is much broader and deeper. In the process of giving up an unglamourous cash cow PC business and a failed mobile business, HP is left with yet another round of demoralizing "what are we in business for, anyway?" question that it must answer for both its staff and its clients. HP has been victimized by a series of management regimes that featured CEOs with clear visions of what they wanted HP to do, but rather muddled visions of what HP actually stood for. Its key sources of innovation in printers aren't enough to power an innovation vision for the full breadth of its holdings. Its innovation in mobile came by way of its Palm acquisition. HP needs to answer definitely the specific purposes that makes them the "go-to" company for something. Anything. Otherwise, like many of today's major media companies, they're just a holding company for tired old bits of strategies that bean-counters push around for quarterly returns.

If this messy train wreck is the official beginning of the often-heralded Post-PC Era, then it's not an auspicious start for major U.S. tech companies. In spite of Google's presence as an increasingly viable alternative to Microsoft for enterprise and consumer devices, they have spurned taking chances and have thus fallen into the bumpy remains of Microsoft's old strategies and it efforts towards cloud computing reinvention. The net winner in all of this mess in the short run is Apple, which has a well-integrated line of products and services across a wide array of successful consumer platforms that are eating away at the edges of enterprise computing.

The conventional wisdom of the moment says that you need both hardware and software to succeed today in computing markets. I think that this meme is highly overblown, given the presence of Linux on most Web servers, Android's enormous success on mobile phones across the globe, and Chrome OS' promising growth.  But if you're not owning the stack, then you have to pick the most agile and innovative software and hardware partners. Many U.S. tech companies decided that armies of lawyers and M&A specialists were more important than innovation for too long, and now they're paying the price. IBM also comes out a winner, having spun off consumer PCs seven years ago to re-focus on enterprise solutions that span both all-software offerings and integrated software-hardware solutions. Put simply, companies that know who they are have a better chance of winning in the long run. Those that don't should think twice about confusing M&A train wrecks for the soul of  a new machine.

Monday, July 25, 2011

Thomson Reuters Challenges: Turning a Ship of the Line into Superfrigates

WSJ.com and others are covering the recent management shifts at Thomson Reuters, which have claimed Markets Division COO Devin Wenig. Man, I don't envy CEO Tom Glocer's situation. Thomson Reuters is about the only media company with fundamentally profitable financials, but their board seems to be yearning for its long-lost growth company potential. Quite a challenge, especially when investment banks, hedge fund and portfolio managers and others aren't staffing up with the headcounts of young people to fit in with some of their core strategies in finance. It's auto-trading or quants - trading and sales is becoming a shadow of its former self. The solution is not easy, because it involves making long-term investing interesting again to both securities underwriters and average investors. TR can't wave a wand and make that happen.

In the meantime, Bloomberg, LP has accepted this reality to some greater degree and is investing in applying the lessons of real-time information management to covering Washington and other political centers, where much of the access to capital lies right now. A risky strategy in the short run, but probably sound for the long run. Factset continues to chip away that the everyday portfolio manager, giving them the tools to get their job done, not always in a flashy way but they help them to get the numbers crunched. Given these competitive challenges, it's a small miracle that TR has done as well as it has.

Where to go from here? Well, that's what consultants are supposed to get paid to help figure out, but a few quick thoughts. First, revisit pricing models. The street doesn't like transaction-priced information services from vendors, or even from clearinghouses or crossing networks, for that matter, but if information vendors are partners in giving them enormous market advantages in low-latency trading, perhaps the structure and level of the pricing needs to be reconsidered. Beyond a certain point, the houses can't afford to do it themselves with enough entrepreneurial oomph to keep up with the requirements, even with - or, perhaps, especially with - a consortium. They know it. Call their bluff.

Secondly, perhaps focus a bit less on gee-whiz services for sales and trading and a bit more on services that help them to have a better product to sell. It may sound a little nutty, but why not buy a major ratings house, gut it, and do ratings right? Worth its weight in gold, and a sure cash cow in and of itself - the indirect benefit being that people would have more confidence in investments. Nobody trusts analysts anymore. That needs to change, and perhaps TR could make that change to shake up the game and steal a march, to mix metaphors. Investor confidence in fundamental investments will put butts in sales and trading chairs - maybe not like the old days, but moreso.

Finally, think a bit more like Bloomberg and think about the big picture of what your fundamental strengths are. Real-time on a global basis like none other. Access to credible players via your news organisation. A deep understanding of how people really use computer interfaces professionally. These are assets that have been won through centuries of dedication to being a leading service provider. But they don't have to be applied to the same-old, same-old. Be like companies in applied sciences that are trying to find blue oceans and adjacent markets for their growth. The whole world is becoming a real-time, transaction-driven economy; how do you want to play in it?

My best regards to my former colleagues at Thomson Reuters, it's been a few years, but the quality of the work that they put out still impresses. Perhaps its time to turn the ship of the line into a squadron of superfrigates, those fast, strong  and ultimately successful fighting ships that challenged both larger and smaller ships in the early 19th century. You've got it in you. I just hope that your board is prepared to be ready to get what they ask for, because being a growth company isn't easy.

Tuesday, July 5, 2011

Plus It All: Google Bets Its Brand on Pervasive Social Media

With a flick of some early invites to a small group of everyday people, tech enthusiasts and social media mavens that has mushroomed into a remarkable overnight sensation, Google+ is live and growing rapidly, changing the entire social media landscape as the Mountain View crew changes how people look at it and how it looks at the world.

A little over a year ago, Google decided to face an uncomfortable fact: the Web had gone social, and Google wasn't in the center of it any more, in spite of it's search engine's dominance. With Facebook and Twitter at the center of the emerging "social graph", the rich lode of content and metadata that everyday people were generating on the Web, was becoming the main tool that helped people to discover content -  and where they spent their time on the Web. Google's dominant, ultra-fast search technology was in danger of being eclipsed by its lack of access to Facebook pages, which Microsoft was gaining access to through a partnership that brought their Bing search engine to the Facebook portal. The open Web that had fed Google's revenues and its vision was fast becoming a stopoff point on the path to increasingly closed worlds of content.

Faced with this reality, Google made some hard decisions. It had to do something with its mish-mosh of social media initiatives that had failed, floundered or been just plain ignored. Google Wave,a brilliantly conceived real-time collaborative communications platform and protocol, had been rushed to wide exposure with hardly a thought as to how billions of people around the world would figure out how to use its innovative capabilities. Google Buzz, launched early last year, was a more mainstream social media tool that had great promise but suffered from sloppy attention to how people would manage privacy for their contacts information imported into it from Gmail, as well as a tight integration into Gmail that dimmed its new-hotness for a generation that grew up texting more than emailing. Google Latitude, a locaton-based mobile messaging tool, was a nifty feature with Foursquare-like location checkin tools, but, like many other Google tools without a real product plan, it languished in obscurity. Orkut? A niche product with almost no integration. Google Friend Connect? Hardly used. Google Sidewiki? Oh, yeah, that.

Rather than committing its brand to social media full-force, Google had carved out little side-pockets of projects that had moderate commitment from its senior management at best, in spite of some prominent guest appearances at launches. The mojo-makers at Google were committing Google's brand to search, ads, mobile phones, video, books, music, tablets, photos and other initiatives that seemed to have grabbed the laurels while a few small teams of tech geniuses toiled away in relative obscurity on social media projects. But none of the Google suffixes growing out of these initiatives - AdWords, Android, Chrome, YouTube - would make much of a difference if the Web on which they relied for revenues was disappearing behind closed walls and becoming indecipherable to Google search technologies.

In other words, it wasn't just that Google was losing social. Google was at risk of losing its core brand value. With hundreds of millions of people saying "Facebook me" as instinctively as they used to say "Google me," there had to be a game-changing frame of mind at Google. If the Web had gone fundamentally social, every product at Google had to become fundamentally social.

Thus was born the 100-day Google project named Emerald Sea, which was characterized by Bradley Horowitz, one of the project's leaders, as being like a moon shot. The scale of Emerald Sea would span almost every Google platform, would become embedded in every key page of Google services, and would realign fundamentally the relationship that it had with its billions of users. Like the U.S race to the moon, though, tight deadlines would mean that this would have to be a project that built on the work of previous efforts, focusing existing work as much as inventing new work. The result: Google Buzz, the maligned social media platform that did many things right in the wrong context, and Google Profiles, which incorporated streams of posts from people's Buzz accounts, would become the core product elements for a new central platform for sharing messages, photos, videos, links, and locations.

But this new project, now called Google+,  would be more than putting Buzz-like infrastructure to broader use. For example, Buzz already had the ability for people to share content to limited groups of people, based on groups of contacts in Gmail. It was an awkward system to use, in part because it required wrestling with Gmail's features and in part because it wasn't very easy to filter people's sharing by groups. Enter Andy Hertzfeld, a software design maven who worked on the look and feel of Apple's breakthrough graphic interface design on its original Macintosh computers. Gone was any semblance of Gmail's old-school contacts interface, in its place a fun interface that enables people to drag and drop contacts into groupings called Circles.

The Google+ posting interface makes is very easy to choose a circle with which to choose some content and to find posts of messages, photos, videos and other content from just those people. These circles include both default groupings, such as family, friends and acquaintances, circles that you can define yourself, and a Public circle that allows content that you post to Google+ to be seen on your Google Profiles page by anyone and searched on the Web. There's also the ability to share content with "extended circles," people who are in the circles of people with whom you share a circle relationship. Content sent to people via extended circles and other unsolicited content goes to an "Incoming" filter on Google+, where you can sort through who's content might be worth following - a concept seen earlier in Google Wave. This concept of targeted messaging and filtering plus extended social networks comes from the social research of Paul Allen, who now works for Facebook.

The net result of this core functionality of Google+ is that it's still easy to follow lots of people to get an overall feel for what's happening in Google+ but also very easy to follow, share and re-share content with very specific and potentially overlapping groups of people. An easily tuned notifications window enables you to see when new posts, comments, reshares, photo face tags and circles are available. You can choose to edit your Profile page to display different types of information for people in specific circles. And each post, comment and other content element includes Google's new "+1" content voting feature. The core functionality certainly resembles Facebook at a first glance, but the design, ease of use and the ability to organize, edit and share information in ways that Facebook can't - or won't is immediately apparent.

If this redesign of core elements of Google Buzz stopped there, you could say that Google had done a pretty good job with trying to catch up with Facebook. But this is just where Google+ starts. Photo sharing comes into its own in Google+ via a redesign of its Picasaweb photo and video sharing service, which is well integrated into the Google+ experience. While it's still possible to share videos from YouTube, the concept seems to be to move more short, personal video content into Picasaweb, which is now labeled Photos on Google Profiles pages and navigation. The photo gallery viewing feature in Google+ is slick, and includes a comments feature that enables you to see comments while you're viewing a photo gallery or when you're viewing its posting.

Google has also sweetened the pot by offering unlimited storage on Picasaweb/Photos. Also on the Web version of Google + are Hangout, a videoconferencing feature that enables up to ten people to share a video "party line," and Sparks, a specially tuned version of Google news that selects filtered articles and blog posts from Google News to "spark" conversations in Google+. The main toolbar that appears at the top of all of Google's main pages such as Gmail and its Web search page, now includes status notifications for Google+ and a small, Twitter-like box for sharing messages on Google+.

The real kicker for Google+, though, is that in many ways it's designed first as a mobile app on Android devices. Status notifications, photos, circles and profiles are all accessed easily from its native app, and messages with links can shared with phones using SMS texting. You can check in to GPS-located places, share messages on a Google map, or use Huddle, a group messaging service similar to Beluga, to carry on text conversations with one or more circles on a topic. Photo, video and text sharing is very easy via its Buzz-like "widget" tool that provides quick access to these features. Notifications for mobile devices can be tuned quite precisely to ensure that you get whatever amount of update notifications makes sense for you on the go. And as usual there are APIs to facilitate developers offering browser and in-app extensions and other functionality.

Will this all fly? The initial impression I get is that Google+ has a strong chance of succeeding. The design is very slick, completely unlike the awkward, utilitarian designs of many of Google's core products. Google prides itself on efficient designs that enable it to serve up Web pages and services rapidly, but if the content that's served up isn't engaging and fun to use, then they won't stick around. Google+ couples a wide complement of social media features with a lean and fun design that's both efficient and elegant looking. A widely distributed image on Google+ compares Facebook as TV reality show star "Snookie" versus Google+ as Audrey Hepburn. That's probably an exaggeration, but given people's attraction to the retro elegance of TV's "Mad Men" series, perhaps it's a telling one.

Certainly Google+ has captured the attention of many notables. Tech media mavens such as Jeff Jarvis and Leo LaPorte, who had grown gun-shy at the thought of Google social media initiatives, appeared to be very impressed - and triggered a flood of interest from other tech notables using the service. Google's own senior management, including CEO Larry Page, have been contributing prominently on Google+'s public streams, posting not just dry little corporate speak items but also photo streams, comments, location checkins and even hosting a few Hangout video chats with whoever showed up. Google has bet it all on succeeding with Google+, and they are willing to show the world that they are able to use it convincingly and confidently. The initial invites for this "sneak preview" circulated rapidly and enabled people to invite any number of contacts. Within a matter of hours the initial membership grew so quickly that invites were turned off, now metered out more slowly behind the scenes. Helping along the rapid growth of Google+ has been the existing base of Google Buzz users, who constitute no more than about ten percent of Facebook's following, but are already familiar with most of Google+'s features in their earlier form and have been pumping out content and filling up their circles with contacts rapidly.

And this is just the beginning. Still to be added to Google+ are its search feature, profiles for businesses and Shared Circles, which will allow people to join common circles. Feedback is being incorporated rapidly into the product, which will remain in its "project" phase indefinitely, but it will probably be the worst kept secret on the Web. This is in part because while only a limited group of people are using Google+ so far, unlike Facebook much of their content is going into public channels. You can search and share public Google+ content, which means that statuses and links can appear easily in services like Twitter - much as I have been doing with my own headlines and commentary on Google Buzz for the past year and a half.

The Web as a whole and social media mavens in particular are still struggling to adjust to just what Google+ means for them. For those who have focused on making social media mass media, Google+ offers a new opportunity to continue that - but not just that. The Circles function of Google+ makes it far easier for people to work on many different levels of public and private interchange through text, photos, live video and mobile sharing, combining the intimacy of sharing and friends and family on Facebook in a more private environment with the ability to shout to the world on demand. In a sense, the legal backlash against Google's gaffes with privacy management have served them well, forcing them to come up with a way to balance public and private personas that puts the social back in social media.

Of course, Facebook and Twitter aren't going away any time soon. regardless of what Snookie vs. Hepburn comparisons might imply, no more than the Ford Motor Company disappeared once General Motors burst on the scene with a new way to market automobiles. Although Twitter results were turned off recently in Google search results due to the expiration of their contract agreement, it's likely that Google will continue to "play Switzerland" for promoting real-time content from Twitter as well as breaking content from Google+ and other providers. Google's primary aim is to decipher the social graph to the point where its search, ad and marketing tools can adapt more effectively to a much more contextual world of mobile and online content. In the meantime, Facebook is readying new features that will likely position its capabilities against Google+ more effectively.

As with most Google initiatives, if Google+ enables the Web to be more open and accessible to these services, then it will have served their purpose, regardless of whether Google+ dominates all other social media providers. This is one of the reasons why Google is now promoting its "Data Liberation Front," which enables anyone with content and data in a Google product to move it in and out of that product. This is a direct challenge to Twitter and Facebook, products which enable content to be generated by its users but which in essence own that content forever and make it difficult to take it with you when you leave their services. This is both good policy and clever marketing by Google, giving it "white hat" status on both privacy and ownership issues that many other social media players have been reluctant to embrace. Yet again, it's the Web that Google wants to win, and for the Web to win, Google's users have to be winners on it and feel safe on it. Wherever their data goes, chances are pretty good that Google's searches and ads will benefit from it..

So as much as Google+ is designed to address virtually every imaginable feature that a social media platform could offer and every issue that a person could have with using those features, it's really about the future of the Web itself. Without the open Web, the Google brand is nothing. And without Google succeeding on mobile platforms with social media, the center of the emerging world of Web-first mobile communications, the Google brand will miss out on its greatest opportunities for growth for years to come. Google+ has entered the scene at a time at which Google needed to address one of its key weaknesses if it wanted to keep from losing its foundations. To that end, Google+ will serve it well. Beyond that end, if it serves the Web well, then we all should breathe a sigh of relief.

Saturday, June 25, 2011

Chromebook-Mania: A Sell-Out Debut for Google's New Web-Only Laptop

If you follow me at all on Twitter, Buzz, LinkedIn or Facebook, you'll know that there's a new addition to our offices at Shore. Yes, it's that Chromebook thing, the "Why do you bother with this stuff, John?" machine from Samsung running Google's new Chrome OS operating system that frankly just rocks my socks. Light, great screen and keyboard, fast to start using and stays fast all day long, even with lots of Chrome browser tabs open, and a battery that lasts longer than I do on any given day. Its pilot program predecessor, the Cr--48 notebook, is now firmly in the hands of my son instead of being "borrowed" by dad at every little moment. I won't bore you with the details, here, instead, like the proud new owner of anything that excites you more than it's likely to excite others, I'll just stick mostly with links to more in-depth cool content.
The key point is that I am not alone in my Chromebook fever. As of this writing, it is the number one selling notebook PC on Amazon.com, and, at least temporarily, out of stock there after just a couple of weeks of pre-launch and post-launch sales (it appears to be still available on Best Buy and Amazon's UK site, but for how long, it's not clear). Put simply, this is a hot unit, in spite of mostly tepid reviews from major tech journalists and bloggers. Their main kvetch; it's not a PC or a Mac, its, just a Web browser with a webcam, headset jack and an SD card bay. Well, yes, I think that we've caught on to that. 

So putting this together, the "experts" say we should be concerned with a machine that doesn't do things the "old fashioned" way, while the people who use the Web, both for professional and personal use, seem to be voting for the Web via Chromebooks. Two weeks does not a major trend make, but given the strategy that's gone into this unit - and the many pieces of the strategy yet to unfold, such as being able to use Chrome for offline use of Google Web apps like Docs and Gmail - my guess is that Google will have many additional inflection points ahead to keep the Chromebook momentum going. In the meantime, I pick up this little gizmo to be productive and entertained whenever I can. Sayonara, buggy software, backups, anti-virus, registry rebuilds and wimpy batteries, I have better things to do.

What Happened to "Vertical-Itis?" The Quiet Finishes of Google Health and Google Power Meter

A few years back, everyone I heard a lot at conferences about "vertical search" and other ideas for the generic power of Web services like search engines to become more relevant to specific market sectors. Several years later, most of those cries have died out. It turns out that companies with a general focus are generally good at general things, and companies with a sector-specific focus do best with their own focus. That's not to say that technologies haven't broken down cross-sector barriers, but the likes of Google Health, Revolution Health and Google's Power Meter project wound up getting the mix of general capabilities and specific appeal all wrong.


Google Health was one of many efforts to try to capture people's medical information. Here we are, give your personal data to us, and we'll take care of it and help you to do good things with it. Well, that didn't work, even though it was a little better designed than Microsoft Health. It was a horse-before-the-cart concept. It looks great on a data flow diagram, but the personal value wasn't established to make those flows happen.

People don't give data for data's own sake - they give data to accomplish something that's personally valuable to them. For example, LinkedIn is the main repository for people's professional profiles because online because people know that they'll get something out of it - jobs and sales leads, market intelligence and so on. Hence, I'd probably never bother to store my blood pressure for its own sake, but when I am running and I am wearing a Bluetooth-enabled heart monitoring device, then it's relevant, easy and fun to give someone my health data. So today we have all sorts of health services that can collect this data, and services specific to the health industry that can make money with it. Ads for Google Health records was probably never going to be much of a winning concept, so concept-wise it would have been a stretch for their culture to make it work.

On the other side of the spectrum, the Google Power Meter was ahead of its time, a single-purpose, one-way data display service that enabled you to get information from your home's power meter. Well, not many power companies wound up deploying them - who wants to sell less electricity, after all - and let's face it, watching your power consumption is kind of a low-impact sport. In the meantime we have mobile apps that can both monitor and interact with our home appliances through new Web technologies, so a passive, purpose-specific approach to power monitoring is kind of outdated. Chop that one.

Did Google give up too easily on its Health initiative? Well, you can't say that they didn't give it enough time. But at the end of the day, with so much of our information going into and through Google already on a daily basis, getting stuck in the very sticky world of health information privacy was probably not the best thing for a company that's already in many people's anti-trust line of fire. Google is doing a good job of enabling health services and technologies indirectly via Android mobile appliances and the devices that attach to them and generate and consume Web data. This may yet define a second act for something like Google Health, but probably not any time soon. For those users and partners who feel burned by this failure, well, when you're on the cutting edge you're going to get some nicks sometimes. That's the deal. For those who are heavily invested in a new wave of health and energy-aware information services that are encouraging people to share information in new and productive ways, congratulations - it turns out that not everything in the world will be Googled.

Friday, June 3, 2011

Plus What? Google's New +1 Feature Increments Its Social Media Value Gradually

The old saying goes "To a fellow with a hammer, every problem looks like a nail." You might say along those lines that for Google, every problem looks like an opportunity to make search more valuable. Now, just like the fellow with a hammer, there are things to be said for having a focus. Nails build houses, hold up pictures and do all sorts of useful things. But you'd be pretty sorry to try to mistake a screw for a nail. With that in mind, I wonder whether Google's newly launched "+1" content recommendation feature is really a social media feature, or just a hook to get Web sites more affiliated with Google searches, or in fact the first step in getting a much more complex strategy in place.

It's safe to say that Google's key brand strength remains its search prowess, even as it has been building up enormous brand equity via its Android mobile operating system and other key online and enterprise initiatives. But it's also safe to say that Google is a highly tainted brand when it comes to social media. Missteps and gaffes in its Google Wave and Buzz launches left many media pundits wagging their tongues at Google's ineptitude in understanding social media and also left far fewer people using them and integrating them into their Web sites. At the same time, social media services like Facebook and Twitter have their badges for content sharing plastered all over Web sites, not to mention magazine ads, billboards and just about every other media imaginable. As much as social media is a battle for content, it's also a battle for co-branding.

So Google has to solve three related but distinct problems; improve search result relevance, find a re-launch point for their social media efforts and get into the Web site social media badging battle with an edge. Keeping their search results, the key to their branding, relevant in an era in which many people rely on social recommendations to discover online content and services has had some particular urgency at Google since Facebook has upped its alliance with Microsoft's Bing search engine to enhance their search results with Facebook-related content and recommendations. The combination of Facebook and Bing is probably the first serious threat that Google has faced to its near-monopoly on people's search mindshare. So priority number one from Google's perspective has to be getting social hooks into search.

The result of these priorities so far is the +1 button. The initial "experiment" launch of +1 several weeks back as a button embedded in Google search results pages was not a strong start. Why would someone recommend a Web page, app or other search-embedded content that they hadn't reviewed yet? That seemed to be a no-starter, an almost Jello-like soft launch to expose the concept to partners and to shake out the plumbing. The social motivation of Google-style +1s also seemed to be rather weak. So, you're telling me I get to recommend content to people but those people have to wait to get my recommendation until they decide to do a search for the types of thing that I just found? It's nice when I find those kinds of recommendations, but it seems a bit like trying to hit a pitched baseball with a paperclip; the chances of getting a Google +1 recommendation in a search result would seem to be rather small, since you tend to search for things that you don't know about, which by definition takes you a bit out of your usual circle of interests, and, most likely, your circle of friends.

The potential counter to this social gap is the "+1" tab in Google Profiles. This tab of saved +1 link bookmarks is separate from the tab that displays Google Buzz links and comments, which in turn has its own "like" sub-tab that shows which Buzz posts a Google Profile owner liked. In the +1 tab, though, the profile owner can't add comments, tagging or anything; it's just a list of links. How, when or why anyone would ever visit this list to find out serendipitously what their friends were +1ing is very unclear, since there's no real opportunity to interact with +1s and no aggregated view of +1s other than in Google search results. So, the +1 tab in Google Profiles is a nice idea, perhaps, but it offers even fewer features than Google Bookmarks or Google Reader for sharing these little nuggets of likable content.

So, if +1 is such a weak social media tool for sharing content, why is it leading the way in Google's enhanced social initiatives? The answer is more clear when you look at the +1 buttons for Web site embedding that were launched this week.  The buttons are bone-simple; click it, and you're done. As you click it, a box next to the button increments a count of people who have +1ed that page of content. Click it again, you can un-+1 it. In other words, +1's primary value is as a content badging system that allows people to endorse content in the style of Facebook "likes" or Digg-ing up content. The buttons are very unobtrusive, and notably non-branded except for the use of Google's familiar primary color scheme.

Why so low-profile? Well, take a look at this example from a +1 badge on a page for Namco's Flight Central, a popular game in Google's Android Market. In addition to the Flight Central brand itself, you see a "tweet" button for Twitter users right under the +1 button. Google wants Web site owners to jump at the search enhancement opportunities of Google's +1 feature without having to force users to choose between Google and other popular social media services - though, notably, favoring Twitter on their own sites. If Facebook is the enemy and Twitter has the other large dollop of mindshare, better to use Twitter for serenipity sharing and use +1 for improving search results - for now.

In taking this low-key, low-branding approach, Google can leverage the strong brand value of its search - everyone Googles, and everyone wants to be found in Google searches - to get webmasters eager for better and more relevant search results placements to spread +1 buttons all over the Web as quickly as possible. The fact that there's no real social media component at this point other than badge increments is great for the Web site owner, in theory, since it provides a clear and simple function that people will get familiar with while not forcing them to choose a new social networking service to do anything more- yet. This leaves the door open for partnerships and acquisitions, but also for a repositioning of other Google social media features once people have a positive feeling about the +1 button. So, for example, in time you could see commenting using Google Buzz infrastructure pop up once the button is in place. Or, it could be configured to allow people to choose which social media service they'd like to use to post or share a comment or link, using the list of social media services that they maintain in their Google Profile. Or, it could have an additional visual cue that would reveal a stream of social media relating to that page in a side window similar to that used today in Google's rather forgotten Sidewiki service. And so on.

Given Google's general approach to social media so far, I am leaning towards this kind of evolutionary approach to linking +1s to social media as Google's core approach, allowing the power of the marketplace to allow Google users to choose where they comment and aggregating their comments via the +1 feature in a way that provides more meaningful search results. Over time, this may give Google Buzz a new entry point for facilitating comments and "lifestreaming" more effectively. Buzz is already a super-aggregator of social media content, enabling people to direct their various social media streams into Buzz for sharing and commenting, though the most active users tend to use Buzz directly. As people become more accustomed to using Google Profiles for adjusting their +1s, they may decide to tune it to display their aggregated social media streams in its Buzz tab, providing more of a one-stop shop for helping their friends to keep in touch with them on either a private or public basis.

This "boil the frog in water slowly so it doesn't jump out" method is not the most exciting approach to doing
better in social media, but with the field so crowded and Google needing to keep feeding its key market advantages in search and mobile platforms, it has little choice but to take this approach for now. But by bit we can expect to see pieces that hook up to +1 buttons more elegantly, each piece eminently "gettable" by the people towards whom they're aimed, each one adding value in unique ways that will help people to change their habits gradually. You can see this incrementalism working already to some degree in Google Buzz. Although far from Facebook's level of total usage, many sites that use Buzz sharing badges show Buzzing at about ten to twenty percent of Facebook likes. That's hardly something for Google to crow about at this point, but it's a decent base from which to work towards a more solid capture of commenting traffic. And since +1 works independent of Buzz, it's not reliant on people using Buzz to get search engine value.

This is a carefully crafted strategy, one which leverages Google's most defensible properties and bases of brand value to build up over time a different way of looking at both Google and at social media. While it's not clear that people will "get" using +1s very quickly, its inobtrusive look should accelerate the willingness of webmasters to implement it and audiences to see it adding value through its use on popular Web sites and, over time, in Google search results and marketplaces. Having bobbled, blown and blasted away many of its attempts at big social media launches thus far, this incremental approach seems to suit Google's culture and brand more effectively, even as its slow pace may madden people expecting flashier things in response to Google's major competitors. The truth is that there are many powerful pieces that Google needs to draw together to make its social media strategy unfold completely. Not easily done, and it may never get done completely, but it's interesting to watch it unfold for now. Given the strength of those other pieces, time may yet be on Google's side.

Monday, May 16, 2011

On The Second Web - Everything is Hackable: Google Android's Open Accessory Tools Open Up the Web to Machines and Sensors

What happens when the world can address a light bulb and a light bulb can address the world?

What happens is The Second Web on steroids, a world in which innovation powered by the Web will reach not just computers and information systems but also just about anything and everything that can get within signal range of the ever-present networks that connect to the Web.

More on The Second Web...

Wednesday, May 11, 2011

Microsoft and Skype: Reaching for the Clouds, Holding on to Software

Microsoft has a fundamental problem. It's revenues are tied largely to software that's good at creating printable documents and that can store and create stuff on PCs. Yet in computers and networking, most technologies and services are moving away from these core Microsoft strengths. It isn't just that people are not printing things out as much as they used to; they're not even getting to the point of creating things that need to be printed in many of their communications. Be it social media, texting, videos or mobile communications, we're far more able to make decisions and become productive today well before anyone even thinks about creating something that gets stored on a PC or a server as a document.

This fundamental problem is the rationale behind Microsoft's $8.5 billion acquisition of Skype, the popular communications service that delivers voice, video and text chat for millions of people worldwide. Though a good $3 billion of Skype's acquisition costs go to paying down its debt service and it's barely at break-even in its financials, Skype is a universal tool for people in business and personal settings, a "good enough" method for person-to-person and group communications that is in fact much better than good enough more often than not. With the Microsoft imprimatur, Skype is likely to get more official blessing by enterprises that they service today with their software and emerging cloud infrastructure, which is certain to lead to more positive cash flow for Skype, albeit at a level that makes it hard in the short run to justify the acquisition.

But the "easter egg" in this acquisition may be more subtle than some have realized. Unlike services like Google Talk, which work within a Web browser without installed software components, Skype functions via software that's installed on a user's PC, mobile phone or tablet. Especially for PCs, this is a key factor. Although it's doubtful that Google's emerging Chrome OS laptops are going to push Windows-based PCs out of many major enterprises any time soon, new installations of Windows are crawling forward at best, now. Even as Microsoft pushes its cloud-based Office 365 productivity services, it has positioned those services to support the licensing of existing Microsoft software for PCs and enterprise servers. So although in many ways Skype's strengths are about the cloud, in fact at its essence it's a network service that relies on installed software - in other words, one more reason to hang on to your PC. Score one for new ways that Microsoft can prop up the value of its legacy products and services.

Beyond keeping its legacy products shored up, though, the Skype acquisition offers Microsoft a number of interesting and powerful strengths in areas where they have little or nothing to show for their efforts so far:

  • A global network of valuable user IDs. One of the most annoying things about using Microsoft's Office 365 service is that I was forced to use yet another login ID that means nothing to me and most certainly means nothing to anyone else. With millions of people already used to saying "Skype me" who are equipped with easy-to-share user IDs, Microsoft just acquired one of the last large and independent sources of social media logins. It may not be Facebook, but that's nothing to sneeze at - and could form the core of Microsoft's social and mobile identity for many of its products and services. With cloud-based services like Salesforce.com's Chatter messagging beginning to challenge in enterprise social media and communications, those IDs can help Microsoft on both enterprise and consumer fronts.
  • A telecommunications platform to bypass the carriers. It's no secret that Microsoft is struggling to have any sort of impact in mobile communications, in spite of having launched a much-improved Windows Phone 7 operating system. If Microsoft is going to lag in mobile platforms, it cannot afford to lag in mobile software, with or without WP7. Skype gives Microsoft a social communications presence that will be found on virtually every smart phone around. In the not-so-long run, it may also give Microsoft a new way of approaching mobile communications services for its customers. While it's looking at Google over one shoulder, HP's recent alliance with U.S. mobile carrier Sprint, which promises to deliver enterprise-grade mobile services to its customers, looms over the other shoulder. Skype can give Microsoft a lever through which to compete with HP and others for cloud-first mobile communications services that leave the telephone paradigm in the dust. It's another point of inflection which argues for more mobile carrier services becoming raw pipelines for integrated services from companies like Microsoft, HP and Google. It's one more factor that's likely to kill traditional mobile voice services sooner rather than later.
  • A way back into home communications. Sure, you could use your Kinect device attached to your kid's Xbox 360 for video calling today, but who's going to do that? Not many, apparently. With a Skype ID attached to Xbox, there's yet another reason to use this controller, which, in anticipation of the PC's waning influence in family rooms, is becoming increasingly the focus of Microsoft's in-home experience hopes. Kinect is a powerful technology, but as shown at the recent Google I/O conference, Google has its own motion-detection services for Android that are coming soon. Microsoft has a limited window of opportunity to "wow" developers with the potential combination of Xbox and Skype, but it could be a strong combination for some. 
On the whole, you have to rate this a very strong acquisition for Microsoft. The financials of the deal don't stand up on their own merits, but when you look at the range of issues that Microsoft had to address to keep itself from falling off the tech radar in many key  arenas, this was certainly a move that both shored up revenues from existing platforms while opening up major opportunities in mobile, social, enterprise and in-home communications. The primary problem that Microsoft continues to have, though, is that while companies like Apple and Google are pushing new operating systems and platforms for their initiatives with relatively little legacy product to hold them back, Microsoft doesn't have a single platform on which it can pin its hopes for the future in a completely competitive way. Skype can give them the glue for the right services on those platforms, but the underlying bricks of Microsoft won't stand on their own as the result of this acquisition. But there are more chapters to come in this story; for now, the opening paragraphs are promising.

Shore's Peter Propp and I also discussed this deal recently on our 10-Minute Strategy video series:

Life with the Hamster: Chrome OS Delivers as Promised

My son is delighted with his new Chrome Cr-48 laptop, which dad manages to "borrow" a bit whilst awaiting the Samsung version of a Chrome OS machine. It's not much skin off his nose, of course, because with Chrome OS your presence is a login: when I get another unit I will simply power it up and all of my configuration will be there, and when he logs in there will be no noticeable trace of my diddling with it. But in the meantime, it gave me an opportunity to prepare for today's Chrome OS-oriented events at Google I/O2011 using one of 10,000 Cr-48s built for the Chrome OS pilot programme and to consider further where this shift in laptop systems is taking us.

First off, the machine delivers as promised - which is to say, Chrome OS does everything that one would expect it to quite elegantly, though the Cr-48 hardware is a bit challenged to act as a full-replacement unit for people watching high-definition videos and other functions that require more graphics and processing oomph. That aside, this is a unit that is enormously appealing in its deceiving simplicity and starkness, as alluded to in the mirthful graphics on its box, which feature a diagram for a mythical hamster-wheel-powered jet engine. An apt analogy - it's a lightweight machine that's easy to operate and packs a surprising punch. It's like a stealth PC, matte finish all around, no markings, ports for a VGA monitor, an SD card, a USB device, a headphone jack, a webcam, a keyboard and a touchpad - that's it. It powers up in easily under eight seconds to login prompt, making it faster than any of my current Web-aware appliances, including my smart phone, and is ready to work recovering from a sleep mode almost as quickly as you can raise the screen.

Configuration is a breeze, though at first the simplicity of the touchpad hides the fact that you can click on the bottom edge of it to get left-mouse-click functionality. You can configure the unit easily to respond to single taps on the touchpad as a click also. A right-click is a tap with two fingers and scrolling can be dragging two fingers up or down. I found the scrolling gesture to be a bit finicky at times, leading to using the alt-down keys sometimes, but not a great hardship for a day-one technology. The keyboard is abbreviated in comparison to PC layouts, but except for trying to highlight a line of text for copying or deleting, I was able to figure out most functions in a trice (I figured out the copy/delete function eventually).

Being a Chrome browser user already, moving in was easy, thanks to Chrome's syncing ability that enables even your PC-based browser to share settings with the Cr-48. In a few minutes I had my usual Chrome extensions installed and my favorite Web apps, while guiding my son to some apps that he can use in his config. There is the beginnings of an "advanced file system" that will enable Chrome OS to read and write files on its SD card reader drive and inserted USB drives, but for the moment production users will have to wait for the launch of the newly announced Samsung and Acer units to do anything with this feature; right now it just lists files on those drives but will not be able to read or write them. That may be an option that some enterprises would prefer, perhaps.

Other reminders that there's almost nothing on this machine beyond a Chrome OS browser with caching are minimal. There's a timestamp, a signal meter and a battery meter in the upper-right corner of the tabs level of the browser, which allow you to control the related functions. Setup on Verizon's broadband wireless service via this utility was simple, though at 100MB of monthly free access it's not quite the bargain that I had hoped. Still, for those times when you're punting into the city for a meeting, carrying a lighter machine may make this worth it. Worst case, I can use my Nexus S for a tethered signal.

In the browser itself it's essentially like any other Chrome browser experience, with few reminders that there's anything unusual about it. On a unit like this Google's Cloud Print comes in handy, and works great - it all happens in the cloud literally in this instance, since as far as I can tell there's no data transfer of the page from the Cr-48 itself involved. Except for video performance, I found no content that wouldn't run due to performance issues on the CR-48, though The Wilderness Downtown, an HTML 5 experimental multimedia show, didn't have an optimal look given how Chrome OS manages pop-up HTML windows. Of course there are situations like Microsoft's Office 365, their cloud-oriented productivity suite, that are intentionally not optimized for Chrome, but that aside it's a good-to-go unit for the Web in all respects.

Am I ready to go all-cloud? Almost, but not quite. Being in a company that services major enterprises and major conferences, we're stuck with having to produce Powerpoint presentations and other artifacts of the PC era still, so Microsoft still has some hooks into our plans. But having just completed a lengthy migration of software and files on my PC from Windows XP to Windows 7, except for Office and some high-end media production tools there's little that would stop me from going all-cloud. There are some reasonable substitutes in the cloud for these services, so in a pinch I can mange "as is" with Chrome OS. In the meantime, with Chrome OS I can leave my laptop on home for most trips and stay productive with Chrome OS for 95 percent of the work that I do on a daily basis, picking up in the cloud where I left off in the cloud seamlessly. And for the short trip to the sofa in the evening, Chrome OS can keep me connected to the Web more efficiently for many things with just a few seconds required to get there.

So now the hamster, as we've nicknamed the Cr-48, goes off to my son, who will figure out how to migrate our bookkeeping to the cloud, an important goal for us. I wonder whether we'll see a point when the Chrome OS engine gets merged with Google's Android OS. My guess is that we will on some level next year, if security and performance issues can be managed. Given the wide array of accessory and autonomous devices that will be integrated into the Ice Cream Sandwich release of Android, it would seem to make sense to enable Chrome OS to "talk" to that hardware more easily - and to make it more easy for people to access their favorite Android apps while in laptop mode. But my guess is that Android/Chrome integration will happen mostly in the cloud, perhaps with a browser extension that will enable an Android virtual machine of sorts for apps.

In the meantime, I think that the intentionally low-cost profile of Chrome OS is going to be a hit with major enterprises, students and others who are needing to be more productive than tablets can keep them. It could also, potentially, power units that accelerate Web literacy in less developed nations, a OLPC substitute that's fully Web-literate. With rumors floating around of a $20/month cloud service plan for Chrome OS units, the concept of a free unit isn't unthinkable. Welcome to our home, hamster, we're glad to have you.

Thursday, April 28, 2011

Great New Features from Factiva. But Do They Really Change Anything?

A journalist called me recently for comment on Dow Jones Factiva's latest new features, which include a much more clean and intuitive interface, really nice graphic analysis tools, trend analysis tools for companies and people, a new iPad app and lots of other really great hooks. It's great stuff, making the Factiva interface far less nerdish and much more friendly to enterprise content users used to more slick online publications. I expect that this update will be greeted warmly by its enterprise users; it may even help Factiva to pick up a few more subscription seats here and  there.

But are these changes really enough to modify the fundamental economics of a general-purpose subscription news service like Factiva? Sadly, I think not. Factiva does a lot of things with business news and information very well, and their design team has really picked up the pace to make it a more appealing media service. At the same time their APIs and taxonomy services make it easier than ever to integrate Factiva content with enterprise portals and applications, as well as with selected sources of Web content. All of this is positive, no doubt. But at its core, Factiva's cost structure and, as a result, its fundamental ROI structure is not likely to change because of enhancements like these.

This is not Factiva's fault, ultimately. Like other major subscription news services such as ProQuest and more general business databases such as InfoGroup's OneSource, much of the cost of a Factiva subscription goes right out the back door to news publishers to pay for the licensing of their content. There's a certain amount of productivity gain to be had in supporting professional journalists, but when much of today's general news content can be had online for cheap or on an ad-supported basis, how much does one gain from a Factiva database of thousands of fee-based sources? Today, to be frank, it's fairly small compared to the wealth of other information sources that make today's enterprise users productive.

And by this I don't mean to focus just on the vast amount of general news available online. Time and again, when companies like ours or other companies conduct research into business information users, inevitably they say that their first and most important sources of business information are trusted peers. Some of those peers may be accessed on the phone or by shouting over the cubicles, some may be bloggers or other people accessed via services such as LinkedIn or even Facebook or Twitter. Professional journalists are talented and often knowledgeable people, but they're mostly miners of other people's expertise. Today there are just too many other ways to harvest the expertise of people who journalists access that business people have at their disposal to make the licensing fees for most general news information sources realistic on the basis of real or perceived enterprise productivity gains.

That doesn't leave a lot of wiggle room for services like Factiva. They and their customers are essentially providing welfare payments to support the current revenue expectations of major news media companies. In earlier days those licensing fees, while hardly small, were small enough in proportion to ad and individual subscription revenues to be called "ancillary revenues" by many publishers. Today, with those traditional sources of news revenues dwindling, content licensing fees paid by database services like Factiva loom much larger in the overall revenue picture for struggling news media companies. Since line-item budgets for corporate libraries are pretty much locked in for access to these licensed sources of information, it's a can't-lose proposition for many news publishers.

But in the meantime the ROI advantages for services like Factiva gets skewed terribly. If you had to spend equally on one service that had non-subscription information services that gained you a certain amount of productivity and another that did not contain subscription information services but near-equivalents or even more effective sources, which would you pay for? Increasingly, enterprises are opting to place their productivity bets beyond subscription news content sources. This doesn't mean that they're giving up on premium content altogether, just purchasing it more strategically for those sources and tools that provide the most value to specific audiences in their organizations.

There's no easy solution to this problem for companies like Factiva. As long as much of their revenue goes right out the back door to general news providers whose pricing is inflated in relation to its true productivity value in today's market, it will be harder for general news aggregators to compete with both pure Web news sources and with enterprise productivity software providers. To move beyond this equation, news aggregators need to look more seriously at what are their core assets. Increasingly this will mean capturing metadata and other forms of content from its audiences and the Web that are unique, timely and which can add more value than their own limited resources can provide. Services such as Zoominfo, based largely on harvesting information from the Web and its clients, are in this space already and driving value and information quality for their clients cost-effectively. Within these emerging services, news organizations will be challenged to justify the cost of their royalties based on the comparative productivity gains from these other services.

In the meantime, Factiva continues to look more slick, more digestible and more valuable as an insight tool. If only they could make the price for commoditized news go down in enterprise budgets more easily, they'd be in a very good position. As it is, these features are great, but they will help Factiva to claw its way into limited revenue and and margin growth.

Friday, March 18, 2011

EPIC 2011: The New York Times Launches Its Premium Paywall

In 2004, a rogue group of futurists produced EPIC 2014, an online video about the future of online content. Like many futurist visions, time has proven its predictions to be a mixture of misfires and close shots. One that rings chillingly close today in light of  The New York Times introducing its subscription paywall this week was that by 2014 The New York Times would go offline and become a print-only subscription newsletter for the rich and elderly.

Well, it's not 2014 yet, and the NYT seems committed more strongly than ever to online publishing, but the way that it has implemented its paywall strategy does leave some doubt as to what the future holds for traditional news organizations. The good news for publishers seems to be that online paywall strategies are probably going to help major news media companies meet their goals. The greater question, though, is what end those goals are really serving.

The outlines of the NY Times' announced plan are easy enough to grasp: anyone online can access up to 20 of their articles a month without any payment barrier. After that, you have an option of a $15 or $35 a month subscription package, depending on how much content you want. That's roughly the cost of their typical print subscription plans, making it heftier than The Wall Street Journal's online subscription package but roughly in the ballpark of the Financial Times' paywall payments. So if you're currently a print NYT subscriber, it's situation normal, for the most part; little will change as you continue to get both online and print editions of your content.

And that's roughly the point of this package. It's trying to cut a careful line between maintaining an online brand with a readership used to unrestricted access to ad-supported online news and being able to support its current print-scaled revenue stream as long as the presses keep rolling. It's likely that anyone who clicks into more than 20 online NYT articles is already a print subscriber anyway, a "heavy user" to borrow a term from the fast food industry. People who click into less than 20 articles are not likely to pony up for a "just because" premium online package, especially when they can still view their headlines on their Web and mobile home pages for free under the new plan and learn about events that they can search for from free sources anyway. The 20+ click crowd are likely brand loyalists who may opt for the print edition anyway as a leanback time luxury or status symbol.

No doubt the NYT has done its math and expects to get some upside to its online revenues through this plan. Looking at the FT's introduction of pay access constructed along similar lines, their Managing Director of FT.com claims in a recent article that they have grown online revenues 50 percent in the past year, presumably helped by its 210,000 online subscribers. That's probably a bit more than ten percent of its online monthly unique visitors, which is in line with most expectations today for paywall-based readership, but only about half of its print circulation.

The likely ratio for NYT's online subscription plan is a little harder to divine based on these ratios. With about 13-15 million monthly online unique visitors, applying the ten percent rule would put the likely online NYT subscription pool at 1.4 million readers. But that's roughly their current Sunday edition print circulation, according to late 2010 statistics. I don't think that it's likely that you're going to see all of those readers picking up online editions. So it's quite possible that paid online subscriptions for NYT content will fall short of the typical ten percent goal. I'll throw a dart at it and say that if they manage 400,000 subscribers accessing their content online in the next year at these new rates they will have done quite well.

More significantly, none of this may have a positive impact on long-term readership trends or newspaper profitability. Looking at recent Compete.com statistics, FT.com's monthly uniques have fallen more than 38 percent in the last year, while the NYT's online readership has fallen about 13 percent. WSJ.com's long-established paywall site fared none too well either, dropping about 32 percent of its monthly unique visitors. So the news site without a significant paywall component until yesterday did twice as well as subscription sites in retaining their audiences. Yet none of these operations are yet ready to turn off their printing presses, so they have little choice but to subsidize them from online revenues as their most loyal readers ease over from print to electronic-only access, hoping to pick up some small portion of new recruits in the process.

In other words, online subscription revenues have become the lifeboat strategy for enabling print news operations to remain viable for some period of time, after which they will have to make an EPIC 2014-style choice: turn off or scale back drastically either their online operations or their dedicated print operations in order to remain profitable. Whichever way they choose, the net result will be close to EPIC 2014's prediction of subscription newspapers surviving as much smaller entities written for rich people and for marketers trying to reach rich people. Since most high-end marketers have not yet cracked how to translate their traditional advertising into online venues with the same impact as print editions, it's likely to take a few years before newspapers like The New York Times will have the courage to turn off or shrink the presses.

But pretty soon, say by 2014, it's likely that the marketers will have caught up with making online channels work to the point that the presses could go dark and online subscription content for the carriage trade could sustain some portion of NYT operations. In the meantime, of course, print is not likely to go dark altogether. By 2014 we're likely to see technologies like Instapaper leveraging printing presses to create custom-packaged leanback print content assembled from multiple editorial sources. Some magazines will also continue to soldier on for highly targeted markets, though increasingly it will be the marketers themselves producing them.

Whatever the ultimate outcome, this year's big push for online subscription revenues will help to define opportunities for marketing to elite audiences for those publications that can define them well, but until their print operations can be dumped these new revenues are not likely to contribute to operating margins significantly for these publishers. We won't likely see GoogleZon in 2014 as predicted by EPIC 2014 seven years ago, but my guess is that their prediction for The New York Times will ring far more true than many in the media industry may wish to admit today.