broadstuff

Apple has released a new social network around music, called Ping! This post is not to bury it, nor even to praise it, but to understand why they have launched Yet Another Social Network, especially into the crowded space of Music and the resounding cries of "where is Last.fm now" et al....

Giga Om says that Ping! is The Future of Social Commerce:

My belief has only been affirmed by growth in the amount of data available. With 12 million songs and 250,000 apps, the best way for Apple to enhance the iTunes store – aka its shopping experience — is through the use of social. Back in 2007, I argued that social networking was merely a feature that had to be embedded into applications to enhance their value. Apple has done a great job of that, but it’s also gone one step further, not only by adding a social networking layer to iTunes, but by meshing it with its commerce engine, the iTunes Store. And it’s made this experience available on both the desktop and its devices.

Apple received much of this social capability with the acquisition of Lala, an online music service, which as a standalone company used sharing of social objects to drive folks towards paid music downloads. Now Apple is only closing the loop by further sharing what users bought. I wouldn’t be least bit surprised if sales of music on the iTunes store rocket upwards, thanks to social discovery.

Our review of Lala strategy is over here by the way

From MySpace onwards "Social" music has failed to deliver the goods, for a whole host of reasons but primarily its not a big enough "Social Object" to capture enough attention for a full grown sustainable Social Net. Music is a subset of why and how we interact with people, not a reason (in fact, based on some of my friends' musical tastes its probably a reason to drop people....).

Now, GigaOm is sounding Ping's praises from the rafters, but whether they were paid to do it or not, I ain't buying it as the Future of Social Commerce. My hypothesis is that "Social" and "Commerce" are uneasy bedfellows at best.

But Apple are no fools, they will know all this. In fact, I would hypothesize that Apple does not need this to be a sustainable social network. All it needs is for a sufficiently large crew of volunteers to add sufficient folksonomic aggregation data around iTunes to ramp up its purchasing attractiveness some more.

No, the real play here is harnessing this to the iTunes store - this is all about selling more songs, not about being sociable. It's about getting a Folksonomy going - Folks do the heavy lifting (recommendations etc), Apple gets the economic benefit (aka the loot in extre spending). I await with eager anticipation the use of kickbacks to "influential" super-users.

Think Social Recommendation Engine, not Social Network.

And of course, getting some more behavioural data about YOU never hurts in the Social Network game...

Intel bought McAfee fo 60% over share price today - GigaOm:

Intel CEO Paul Otellini said in a statement: “In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.” The price Intel agreed to pay for McAfee — which had revenue of $2 billion in 2009 and has gross profit margins in the 80-percent range — is a 60-percent premium to its trading price prior to the announcement.

Quite - its all about The Cloud - but McAfee? And a 60% premium - $7.7bn for the thing, in cash - at exactly the time when many newer, cheaper (and dare I say better) security software companies are popping out the woodwork? Elsewhere its been justified as a deal "about mobile" but I don't get that either for the same reason as above.

I rather liked a comment on TechCrunch:

It’s simple really. McAfee’s software slows down your computer enough that you need a faster Intel CPU. Intel now has direct influence over the main driving factor behind people purchasing new PCs…

That is about the only way this makes any sort of sense to me at the moment. To be watched.....

Chris Anderson, Wired Magazine's editor, dreams up a new schtick with which to beat us every few years. First the Long Tail, then FreeConomics, the pattern is the same - lots of sturm und drang on the Wired platform, mo' PR off it, and then a book is out before the people who know it doesn't quite hang together can get a blog post in edgeways.

Anyway, with the Long Tail disproved and FreeConomics debunked and diluted to Freemium (or Paymiium, in the case of the book), there is a need for a new schtick to beat the Wired horse with. This is (possibly) that - "The Web is Dead - Long Live the Internet".. (To be fair, I understand that in the printed article* John Battelle and Tim O'Reilly give their ripostes).

[Update - the riposte is now online - styled as a Debate though i think Linkbate is more appropriate ]


Anway, the gist of the argument is that:

You wake up and check your email on your bedside iPad — that’s one app. During breakfast you browse Facebook, Twitter, and The New York Times — three more apps. On the way to the office, you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service.

You’ve spent the day on the Internet — but not on the Web. And you are not alone.

Now this is really going to shock the young 'uns, but this is not so much a Brave New Thing as The Way Its Always Been:

(i) There was a time the internet existed before the Web

(ii) We have been using the Internet without the Web all this time - think email, VoIP, Adobe Air, online gameworlds etc etc.

(iii) This will continue, and in fact its not impossible to imagine that the Web is a temporary phase.

In other words the correct response to this thesis is "We know. And"?

(OK, the 'And' is that some very succesful Today Web companies will wither and some new Tomorrow App companies will prosper. But that was ever thus)

Now the reason for all this excitement is Video and Mobile Apps

Video is exciting not because it Loses a Lot of Money (or more accurately uses a lot of high quality bandwidth that no one right now pays for) but because it puts a lot of traffic on the web, and that must be a sign that all is well, right?

Mobile Apps (or Programs That Run On Your Own Device, as Apps used to be called in old money) are going to replace the Web in the way we access functionality (Better tell Google - after all, Microsoft Office is just an App, albeit quite a big one). Yes, gentle reader, the digerati of today have effectively re-branded the Olde Client/Server tradeoff debate to now be the Apps/Cloud debate.

The reason for Apps is not because Smartphones are smart, but because they are still dumb. If they were smarter, with bigger screens, and better UI like Laptops are we would use the Web much more on them. Its just that smartphones are smarter than dumbphones which could only use very small Programs That Run On Your Own Device, which are called Widgets. And the reason everyone is so excited about Smartphone Apps is because they think they will make tons of money from them. Like they thought with Widgets. Except they won't. Like they didn't with Widgets.

Now to be fair, Wired have worked out that all these new App environments are not quite as open as the Web (part of the reason they will not do as well as expected, but more on that later) but that too is hardly New news. Still, it tells you something about the Wired (Print) Edition's reader base. Not quite the Digerati as they once were, methinks?

Anyway, it will take about 12 months for the market to realise there is very little money in Smartphone Apps, so I calculate a Book by next spring should get in nicely before the Apps hype cycle rollercoasters on down

Update - as Gawker delights in pointing out, this whole thing is even sillier than at first glance:

- Irony 1: Wired released its cover story package first to the Web, on Wired.com. You won't find it in Wired's iPad edition, and it's not out in print yet. The death of the web might be the "inevitable course of capitalism," but it apparently pays better to deliver that news via a dying medium.

- Irony 2: Revenue is up at Wired's profitable website this year, despite a fairly severe reduction in staff last year. Yet Anderson, who has no control over Wired.com, writes that most Web publishers haven't been able to "reverse the hollowing-out trend of analog dollars turning into digital pennies... and by the looks of it there's no light at the end of that tunnel ." That tunnel being the one Wired, itself, is not in, apparently.

- Irony 3: At the same time, circulation — and thus revenue, almost surely — are down for Wired's iPad edition, which was approaching (and possibly even surpassing) 100,000 copies for the debut issue but has since fallen off — to less than a fourth of what it was, one source claims. However large or small the decline, it could certainly be corrected; dropping off from a big bang launch is common enough in print and online media alike.

But Wired's iPad tumble does raise the possibility that Anderson is speaking as much from his hopes as from his analysis when he writes, "We are choosing a new form of Quality of Service: custom applications that just work." The iPad team belongs to Anderson, after all (unlike, again, the web team).

- Irony 4: Isn't this the guy who wrote a book called Free and noted, "You know this freaky land of free as the Web. A decade and a half into the great online experiment, the last debates over free versus pay online are ending?" Eh, maybe not so much; Anderson today writes, "Much as we love freedom and choice, we also love things that just work, reliably and seamlessly. And if we have to pay for what we love, well, that increasingly seems OK."

Even funnier, apparently Wired predicted the End Of the Browser in 1997 as well

There is Linkbait, and there is plain looking dumb...........

*I haven't bought the Wired print edition for years....

Reading the ongoing Net Neutrality debate, here are a few comments on some of what is going on:

Firstly, Google has defended its jumping the fence and says its still a Good Guy, but no one is buying it. You can fool some of the people etc etc.....

Secondly, Facebook and all the other "Aggregators Without a Stake In Networks" lambast Google - well they would, wouldn't they - the last thing they want is the Distributors (Telcos and ISPs) cranking up the rents on their (currently) underpriced rides and Google hops over the fence.

Fred Wilson weighs in with a view on Net Neutrality, when he says:

I don't want to see the Internet regulated. I don't want rules that require oversight and adjudication. But given that we now have an on ramp that is tightly controlled by a small set of access providers with almost identical interests, I would like to have one basic rule that is so simple that everyone understands what it means and we can simply follow it.

Our firm are fans of the work of Barbara Van Schewick, Professor of Law at Stanford, who argues for the following simple rule:

A non-discrimination rule that bans all application-specific discrimination, but allows all application-agnostic discrimination. Discrimination is application-specific if the discrimination is based on the specific application or content (e.g. Skype is treated differently from Vonage), or based on classes of applications or content (e.g. Internet telephony is treated differently from e-mail).

That is all we need. Nothing more, nothing less. That is net neutrality. A policy that maintains the way the Internet works today. That has brought us Google, Amazon, eBay, Yahoo!, Facebook, Twitter, and many many more innovative web services.

Now this is fine as far as it goes, but what it forgets is those great services - Google, Amazon, Facebook etc - grew up on an economically unsustainable transport network, ie the ISPs have spent most of the last 10 years massively underpricing their pipes and that is coming to an end as video starts to fill them up. And its that underpriced ride that is filling the key issue now, and what is behind the Net Neutrality gerfuffle.

If I may step back to the beginning (about 10 years ago or so......) and tell a little story of how we all got here.

Once upon a time, long long ago in the 1990's, there was a deregulation of old national Telcos, and a resultant speculative boom in "New Telcos". Many miles of cable were laid, acres of hosting space was built, and Sun handed over many months' production of its tins on credit to the Application Service Providers (an ancient term for Cloud Service providers). This whole panjandrum than went spectacularly bust in about 2001 - leaving all these assets at firesale prices, and they were picked up by the big survivors (the Telcos and ISPs of today).

"Net Neutrality" at this time was the argument about "equal access" - ie that the large oligopoly of surviving Telcos and ISP Ogres should not give their own services priority in the quality of service stakes. All bits were to be treated equally from ingress to egress.

Move onwards to about 2005, and Broadband is growing like topsy. The Telcos realise its a race for consumers so price it at ludicrously low to grab market share from each other. Ths allows all the aggregators (Google, the Social Networks et al) to get a near "Free Ride" over the pipes - which they immediiately priced into their long term business models and then persuaded all their VCs and other backers that the fairy tale that was "FreeConomics" ruled for ever and ever.

At the same time, another thing was happening - the arrival of internet Video meant the Pipes were filling up far faster than predicted, and the Telcos/ISPS started to look at the prospect of having to either (i) invest billions in new infrastructure or (ii) start to throttle traffic on existing capacity. Given the under-recovery due to low pricing, (i) was economically impossible unless some form of subsidy or long term guarantee was given, or unless they started to charge the upstream providers (mainly the content aggregators who had the money) more for access to the pipes.

It was at this point that the Aggregators and their proxies started to conflate the original Net Neutrality debate with the "Equality of Assets" argument - ie the Telcos didn't really own their pipes, they were common goods and thus everybody's pipes, so everyone needed access (at the same price, and preferably a price of $0) regardless of whether they were shunting a few emails or megastreams of videos. This refrain was picked up avidly by what I term the "Net Hippies" who believed in free love, free services, and most of all - free access to big bandwidth for free content. A typical expression of this view was Cory Doctorow:

I say, it's our dirt, so we make the rules. If they don't like those rules, let them get their goddamned wires out of our dirt, off our streets, out of our basements. Let's give them 60 days, and if they haven't pulled up their wires by then, we'll buy them for the scrappage price of the copper.

Now, whether the "Net Hippies" were put up to all this by the Aggregators, or whether the aggregators just joined in (which is what I suspect is more likely) is unclear - but this view was in their interests so they enhusiastically promoted it.

(By the way, I don't disagree with the Net Hippie's view that internet infrastructure is a common good - in fact I think we are not going to get big pipes in any "free" market unless regulation or government intervention occurs - see below! I just disagree with any solution that says "shaft the Distributors and let the Aggregators get free reign)

Fast forward to about 2008 and you see two things happening:

Firstly, the smart aggregators (eg Google, Amazon) are building out their own infrastructure to reduce their dependence and costs in distributing their wares. While enthusiastically promoting Net Neutrality they are busy building their own distribution infrastructures. Others are not and some, like latecomers Facebook, Twitter etc, are still emergent and can't afford to. All of them keep on paying and playing for the Conflated Net Neutrality argument, but - as we predicted at the time - the smart aggregators were doing it to buy time as they bought infrastructure.

Secondly, the Telcos and ISPs were in a bind as their pipes filled up and they weren't charging enough to build out the serious infrastructure that video needs (market hypercompetition isn't helping either), and started to actively think about how to make enough money to pay for the next generation of pipes. The more planned digital economies (Japan, South Korea, Scandinavia, and later - after experimenting a bit with free markets - France) had seen this one coming and have effectively legislated for big pipes, giving the national Telcos sufficient incentives to build them out. In countries where "the market" is the solution the average broadband pipe speeds started to fall behind. It starts to dawn on all the Telcos and ISPs that they need to start forcing a 2-sided or multi sided business model, which - however you look at it - requires charging the upstream aggregators more for big volumes of higher quality of service traffic.

This, of course, the Upstream aggregators want like a hole in the head, so an enormous amount of smoke, mirrors, storm, drang, lobbying, etc etc is generated by them.

And now we are in 2010.

Google's massive foray into Mobile IP has forced its hand, it has to move into the distribution game or be strangled by the existing ISPS and Telcos. It can build hosting centres and peer at Tier 1 for backbone, bt it needs mobile distibution at preferential rates - hence tie up with Verizon.

The Telcos and ISPs know that they are damned if they do, damned if they don't - but if they don't they will be unable to invest in fat new pipes and they will wither on the vine.

The Aggregators Without Infrastructure know that if they can't continue getting a near vree ride then they can't offere near-free services to users anymore, and - worse still - some Aggregator/Distributor competitors like Google will pay less than them for higher quality distribution.

So what is the likely outcome?

Firstly, back to the original point Fred made - to my mind there is "White Hat" net neutrality, ie Equality of Access - that there should be no discrimination on access for any application (so Skype is treated the same as Vonage) is a no brainer and should be regulated.

However, if you look at "Black hat" Net Neutrality - Equality of Assets - ie the argument, that a video bit that needs to be streamed fast in sequence alongside all the other billions of video bits. is the same as an email bit, then I think that is far less fruitful ground. The eventual endgame of utilities is that they are eventually charged for by quantity of usage and quality of service (granted there is often a fixed price or even free "minimum deal") and thus as broadband becomes a utility - nay, a human right even - then this will increasingly become the case.

The other thing - pure and simple - is that unless the distributors can earn enough money to build the next generation of pipes and capture a return on investment, they won't do it. To this end, "Free markets" have (so far) failed to deliver the necessary security of investment. Thus, if the endgame of the current Net Neutrality spat does not, in some way, yield the cash and secure enough investment conditions to build more bigger pipes, then Net Neutrality will devolve to beggars fighting over access to dirt roads while private high speed networks are built for those rich enough to afford them.

Thus, my parting shot in this fairy tale to the "Black Hat" Net Neutrality defenders is "be careful what you wish for". Not all Ogres are always mean, and not all fairytales end happily ever after

McKinsey on "10 Top Tech Trends" to watch - my take on them (in the form of a precis of their argument and my response plus scoring in italics):

1. Distributed cocreation moves into the mainstream

In the past few years, the ability to organize communities of Web participants to develop, market, and support products and services has moved from the margins of business practice to the mainstream. Wikipedia and a handful of open-source software developers were the pioneers. But in signs of the steady march forward, 70 percent of the executives we recently surveyed said that their companies regularly created value through Web communities. Similarly, more than 68 million bloggers post reviews and recommendations about products and services.

This form of loose confederation seldom copes with periods of real pressure well, especially where hard execution to deadline is required. A lot of the corporate "value creation" is better described as what Nick Carr calls "Digital Sharecropping" - ie people working for free in spreading the corporate load. It's fickle (people drift off or find the new new shiny) and also tends to get messy when IP distribution raises its head. And as for 68 million bloggers reviewing products and services, often the vessels making the most noise are the "paid" blogs trying to whip up an echo chamber.

Rating: Its a popular and comforting concept that the Digital Hippies love, so it will continue to resonate, but fails in delivery when the chips are down. Best used in one-off project based environments. Read the blogs by all means, but check out the quality press too. Caveat Emptor 4/10


2. Making the network the organization

In earlier research, we noted that the Web was starting to force open the boundaries of organizations, allowing nonemployees to offer their expertise in novel ways. We called this phenomenon “tapping into a world of talent.” Now many companies are pushing substantially beyond that starting point, building and managing flexible networks that extend across internal and often even external borders. The recession underscored the value of such flexibility in managing volatility. We believe that the more porous, networked organizations of the future will need to organize work around critical tasks rather than molding it to constraints imposed by corporate structures.

Today's networks are great for "weak link" tasks, but - as with point 1 above - tend to come apart at the seams when under any pressure to deliver something hard to a hard stop. In addition, Coasian theory has yet to really become practice, as the transaction costs of capital formation, branding and market making are still very high. Nonetheless for SME companies this structure is a godsend so they will continue to push it - the pushback is the (largely poor) deal that the networked agents get - low rewards and security.

Rating: Companies will push for it and the technology will continue to aid it, but it will be limited by inability to deliver predictably and reliability when chips are down. Also, watch out if you are one of the drones in the network without a value add of your own (see point below) 6/10

3. Collaboration at scale

Across many economies, the number of people who undertake knowledge work has grown much more quickly than the number of production or transactions workers. Knowledge workers typically are paid more than others, so increasing their productivity is critical. As a result, there is broad interest in collaboration technologies that promise to improve these workers’ efficiency and effectiveness. While the body of knowledge around the best use of such technologies is still developing, a number of companies have conducted experiments, as we see in the rapid growth rates of video and Web conferencing, expected to top 20 percent annually during the next few years.

The Taylorisation of knowledge work no less, moving it from a craft to a commodity. This will reduce the per capita value of the individual and remove the surplus to the organisation that commands their labour (sorry, invaluable creativity). It was ever thus. The replacement of physical comms with electronic ones is probably an irrestable force for lower value transactions.

Rating: Will increase, as the economic forces are irresistable, but - as with the point above - try to ensure you're not one of the drones in the knowledge assembly lines. 8/10


4. The growing ‘Internet of Things’

The adoption of RFID (radio-frequency identification) and related technologies was the basis of a trend we first recognized as “expanding the frontiers of automation.” But these methods are rudimentary compared with what emerges when assets themselves become elements of an information system, with the ability to capture, compute, communicate, and collaborate around information—something that has come to be known as the “Internet of Things.” Embedded with sensors, actuators, and communications capabilities, such objects will soon be able to absorb and transmit information on a massive scale and, in some cases, to adapt and react to changes in the environment automatically. These “smart” assets can make processes more efficient, give products new capabilities, and spark novel business models.

As the devices get cheaper and easier to integrate the IOT will become more pervasive, due to the efficiencies it can bring across a value chain. Forces against will emerge if this is used for widespread privacy abuse, or to gouge customers in any way. One can imagine all sorts of things akin to "region imprinting" on DVDs (means you can't play music you bought in country X on your media player in country Y) will be tried. Also, "location" based IOT services that hand away too much privacy will rapidly wane once a few scare stories circulate.

Rating: No brainer 10/10 but beware the backlash if gouging or inappropriate usage occurs

5. Experimentation and big data

Could the enterprise become a full-time laboratory? What if you could analyze every transaction, capture insights from every customer interaction, and didn’t have to wait for months to get data from the field? What if . . . ? Data are flooding in at rates never seen before—doubling every 18 months—as a result of greater access to customer data from public, proprietary, and purchased sources, as well as new information gathered from Web communities and newly deployed smart assets. These trends are broadly known as “big data.” Technology for capturing and analyzing information is widely available at ever-lower price points. But many companies are taking data use to new levels, using IT to support rigorous, constant business experimentation that guides decisions and to test new products, business models, and innovations in customer experience. In some cases, the new approaches help companies make decisions in real time. This trend has the potential to drive a radical transformation in research, innovation, and marketing.

We (humans) are still largely structured for a world of data scarcity so dealing with data over-abundance is a new thing. Handling it well is critical, but there are 3 key requirements for this to become a trusted and deployable technology:

(i) Trustable filtering - filters that get a high level of choices right, without too many false negatives and positives.
(ii) Moderation of "black hat" datamining - which, if Google and Facebook are anything to go by, will be quite an ask. Probably needs regulation
(iii) The power cannot be too asymmetric, if users feel it is astacked against hem and used for gouging they will walk away. Already movements like VRM are looking at ways to make the power more equal, this will increase too

Rating: Fairly inevitable, should be largely beneficial, but beware the backlash if there is too much "black hat" datamining 9/10

6. Wiring for a sustainable world

Even as regulatory frameworks continue to evolve, environmental stewardship and sustainability clearly are C-level agenda topics. What’s more, sustainability is fast becoming an important corporate-performance metric—one that stakeholders, outside influencers, and even financial markets have begun to track. Information technology plays a dual role in this debate: it is both a significant source of environmental emissions and a key enabler of many strategies to mitigate environmental damage. At present, information technology’s share of the world’s environmental footprint is growing because of the ever-increasing demand for IT capacity and services. Electricity produced to power the world’s data centers generates greenhouse gases on the scale of countries such as Argentina or the Netherlands, and these emissions could increase fourfold by 2020. McKinsey research has shown, however, that the use of IT in areas such as smart power grids, efficient buildings, and better logistics planning could eliminate five times the carbon emissions that the IT industry produces.

The environmental impact of the ICT industry is a large and growing probem that it will have to take on board, but ultimately nearly every country will opt for digital dark satanic mills that drive economic progress over bucolic underachievement. And the technology to solve these issues will emerge where the costs are seen to justify it.

Rating: Overhyped - over time technology will reduce energy usage where it is economcally useful to do so, with or without any Green agenda - it's best option is to deploy subsidies in the areas that drive maximum sustainability. Sustainability PR will be the major industry here as companies compete to look Greener Than Thou. I would give it a lower mark than 6, except there will be subsidies so it will look more attractive than it actually is 6/10.

7. Imagining anything as a service

Technology now enables companies to monitor, measure, customize, and bill for asset use at a much more fine-grained level than ever before. Asset owners can therefore create services around what have traditionally been sold as products. Business-to-business (B2B) customers like these service offerings because they allow companies to purchase units of a service and to account for them as a variable cost rather than undertake large capital investments. Consumers also like this “paying only for what you use” model, which helps them avoid large expenditures, as well as the hassles of buying and maintaining a product.

Asset owners like to rent them out, users like to control the assets themselves until they are absolute commodities. Cloud based ICT assets are no yet simple, reliable or fungible enough to be consumed like water or electricity, and won't be for quite a few years yet.

Rating: It will come, but with lower penetration, will take longer and cost more than xAAS and Cloud enthusiasts believe (I say that with 10 years of close experience of the server-side of the industry, which renames itself every 2 years as the last "big hype" push crumples). Grid yesterday, Cloud today, what tomorrow? 7/10


8. The age of the multisided business model

Multisided business models create value through interactions among multiple players rather than traditional one-on-one transactions or information exchanges. In the media industry, advertising is a classic example of how these models work. Newspapers, magazines, and television stations offer content to their audiences while generating a significant portion of their revenues from third parties: advertisers. Other revenue, often through subscriptions, comes directly from consumers. More recently, this advertising-supported model has proliferated on the Internet, underwriting Web content sites, as well as services such as search and e-mail (see trend number seven, “Imagining anything as a service,” earlier in this article). It is now spreading to new markets, such as enterprise software: Spiceworks offers IT-management applications to 950,000 users at no cost, while it collects advertising from B2B companies that want access to IT professionals.

Having worked on multisided business models in IP Telcos 10 years ago and done some work with the Telco 2.0 Initiative and their 2 sided business mdel, my take on this is that:

(i) The concept is very seductive, the execution is very much harder
(ii) There is a limit to the industries it can be applied to in ICT (or anywhere in fact) as you have to be in the middleof a supply chain that has revenue opportunity on 2+ sides
(iii) Complexity and transaction costs are higher than simpler models, which increases risk. My observation is that this solution largely seems to arise in "duck and weave" markets under pressure, so I suspect it is evidence of a transitional phase in any market evolution

Rating: A few companies will be able to use this very well, some will get a small benefit, but many will find it impossible to manage as they are in flux 5/10

9. Innovating from the bottom of the pyramid

The adoption of technology is a global phenomenon, and the intensity of its usage is particularly impressive in emerging markets. Our research has shown that disruptive business models arise when technology combines with extreme market conditions, such as customer demand for very low price points, poor infrastructure, hard-to-access suppliers, and low cost curves for talent. With an economic recovery beginning to take hold in some parts of the world, high rates of growth have resumed in many developing nations, and we’re seeing companies built around the new models emerging as global players. Many multinationals, meanwhile, are only starting to think about developing markets as wellsprings of technology-enabled innovation rather than as traditional manufacturing hubs.

Necessity is the mother of invention, and developing economies' necessities are more urgent than rich economies - ergo higher innovation. It is also our view in fact that too much of what the OECD calIs it's "Innovation" is better described as "Continuous Improvement that doesn't rock the status quo". There is thus no doubt that a huge amount of potentially disruptive innovation is going on in the developing world, I've been watching mobile and payment services in Africa an Asia for example.

But I also know that there are 3 barriers:

(i) "Not invented here" syndrome
(ii) Most rich countries erect barriers to keep developing country "low cost" technologies from queering the pitches of their (lobbying) champions
(iii) Just because an X is extremely relevant in Africa, does not mean it will tranfer to America

Rating: Not as big or as quick as the enthusiats think, but there will be some real home runs 7/10

10. Producing public good on the grid

The role of governments in shaping global economic policy will expand in coming years. Technology will be an important factor in this evolution by facilitating the creation of new types of public goods while helping to manage them more effectively. This last trend is broad in scope and draws upon many of the other trends described above.

Its hard to argue with this as it is so broad, it is inevitable that governments will try and manage national assets better and there is a whole Government 2.0 movement going on. The difficulties will be all the ancillary efforts required to make it happen (eg making the water grid more efficient requires massive investment in new meters), and what to do about the 25% or so of any population who will be "digitally excluded" and cannot use the new services, thus removing a large swathe of the possible benefits

Rating: 10/10 for likelihood something will be done, but its a trend in the same sense as "I grow older every year" is a trend. Likely to take longer in many cases owing to upfront investment costs required, so 7/10 overall.

These things are always thought provoking though.

Been catching up this afternoon with what Eric Schmidt said at Actvate 2010 yesterday, its been reported in the Torygraph, Grauniad and El Reg (I am ignoring the twitterstream from now on - here's why). If you are interested in what will happen in the next 2 - 3 years then its worth catching up n as there are Googlefingers in so many pies, and the guy is no fool - maybe Evil, but no fool.

Schmidt said there were 3 big trends - the growth of mobile internet connectivity, the growth of cloud computing, and networking. To me those are two big trends - mobile and cloud - the other is an underlying architecture. I also think he is trying a 3 pot shuffle - to me, the three things that look like the 3 Big Trends in the Googleverse are Mobile, Cloud - and slipping past the Privacy/Trust issue in datamining. So, in reverse order:


Trusssst in Meeee

(From the Torygraph)

Schmidt says this enables them to deliver better-targeted ads - more lucrative for Google, more relevant and less annoying for you. However, it raises privacy issues, something for which Google has been criticised.

"I think the criticism is fine. I think criticism informs us, it makes us better. It doesn't bother me at all,” Schmidt says. However, he acknowledges the problem but says it’s a broader issue. "Those concerns are real - I'm not trying to move away from them. The fact of the matter is that if you're online all the time, computers are generating a lot of information about you. This is not a Google decision, this is a societal decision. In Britain, you all allow yourselves to be photographed on every street corner. Where are the riots?”

Google, Schmidt says, is kept in check by its customers and by the competition: “All of our testing indicates that the vast majority of people are perfectly happy with our policy. And this message is the message that nobody wants to hear so let me say it again: the reality is we make decisions based on what the average user tells us and we do check. And the reason that you should trust us is that if we were to violate that trust people would move immediately to someone else. We're very non-sticky so we have a very high interest in maintaining the trust of those users."

In other words trust the Wisdom Of The Crowds to know what is good for them. In that way you can fool most of the dumb b*star....er, People most of the time...... Sadly for Google, that does not apear to be the ay it is working - too many people who can't be fooled are taking too close an interest.


Mobile Internet

(From the Grauniad)

"Mobile is the hottest area of computer technology," Schmidt said. "The smartest developers now are writing apps for mobile before they write for Windows or Apple Mac desktop operating systems. Part of that is because these devices are hugely personal to us when we use them."

Asked what he thought of the future of newspapers, Schmidt said: "What does the newsreading experience look like many years from now? I think it's delivered to a digital device, which has text, obviously, but also colour, and video, and the ability to dig very deeply into what you are supplied with. At the moment we have readers, but it's not intelligent enough; newspapers often tell me what I already know. We'll have advertising products that are much more media-centric. The most important thing is that it will be more personalised."

They will beat Apple by suing the Microsoft Gambit

"We don't have a plan to beat Apple, that's not how we operate," Schmidt says. "We're trying to do something different than Apple and the good news is that Apple is making that very easy."

"The difference between the Apple model and the Google model is easy to understand - they're completely different. The Google model is completely open. You can basically take the software - it's free - you can modify whatever you want, you can add any kind of app, you can build any kind of business model on top of it and you can add any kind of hardware. The Apple model is the inverse."

Except that when Microsoft played Apple they had all the App developers, and a good hardware distribution network - two things Google/Android is struggling with - as El Reg notes:

Google CEO Eric Schmidt has convinced himself that the company killed its sold-direct-to-netizen Nexus One phone after less than six months because it was "so successful."

"The idea a year and a half ago was to do the Nexus One to try to move the phone platform hardware business forward. It clearly did," Schmidt told The Telegraph, demonstrating just how far removed from reality his mind has become.

Microsoft never did direct sales. A lesson for Google there methinks. It is possible for them to win the "Microsoft" position in the mobile smart device market, but to do so - if Microsoft's lesson is anything to go buy - you have to have a large scale 3rd party distribution system (IBM, anyone?) and the lions share of the developers on your platform.



The Cloud

(From the ToryGraph)

This is about more than just selling people a new product, it’s about shaping a social change. Within three-to-five years, Schmidt says, we’ll be consuming almost all of our information online. We’ll do it, he adds, “on devices that are live not static. The characteristics of these devices are that they know who you are, they know where you are, they can play video and they carry memory."

To get a sense of the likely rate of change of the next three-to-five years, think back over the same period. Google has bought YouTube, launched Google Docs, taken leaps forward in mapping and expanded into mobile operating systems with Android and desktop operating systems with Chrome OS.

The Cloud is upon us! And yet, and yet...... every 10 years or so some company pops up with the (rather self serving) nostrum that The Cloud will rule. And all the Kings horses and all the Kings men spend PR money like water, but it dies down again as reality intrudes. Mr Schmidts says that:

"The internet is the most disruptive technology in history, even more than something like electricity, because it replaces scarcity with abundance, so that any business built on scarcity is completely upturned as it arrives there," Schmidt said. "You have to plan your corporate strategy around what the internet does."

Leaving aside whether or not the Internet is " the most disruptive technology in history", a lot of people think IP will be like electricity and other commodities, but consider the differences:

- There are no similar "economies of scale" for production infrastructure to justify massive centralised plants vs local production. This is seen in the (reluctant) admission by Cloudists that its benefit is not cost saving.

- The variabiity required in the end product is far higher (for now anyway), so the benefits of end product commoditisation are not as high and the complexity costs of its mass delivery are worse.

- Those who win from mass centralisation (Cloucd Co's) are not those who own the Transport infrastructure - objectives are not aligned. Witness the 'Net Neutrality bunfight.

- "There is no Plan B" if a Cloud based infrastructure goes down, at least in the forseeable future. Nobody with any form of risk will thus put all their eggs in its basket.

- There is not as much fungibility in the supply chain. Apple locks you in one way, Facebook another, etc etc. Imagine if your dishwasher would only work off one companies' electricity and your TV off anothers.

In other words, The Cloud ain't going to take over anytime soon. But then, Google knows that, which is why its not putting a lot of its resources into it - the main Googlegame is to try and wreck Microsoft's economics by giving it away for free. Which is, of course, why Microsoft has gone into Search with Bing.....

One University has ended its evaluation of Gmail as the official e-mail program for its 30,000 faculty and staff members— Information Week.

In a joint letter last week to employees, University of California-Davis CIO Peter Siegel, Academic Senate IT chair Niels Jensen, and Campus Council IT chair Joe Kiskis said the school decided to end its Gmail pilot, which could have led to campus-wide deployment, because faculty members doubted Google's ability to keep their correspondences private.

Many faculty "expressed concerns that our campus’s commitment to protecting the privacy of their communications is not demonstrated by Google and that the appropriate safeguards are neither in place at this time nor planned for in the near future,” the letter said.

Google officials, for their part, insisted that their privacy controls are adequate

We disagree - we believe that Google's "Free to Consumer" cloud model does not meet the standards that any enterprise larger than a SOHO (Small Office / Home Office) sort of operation would find acceptable (and even a SOHO has near free and more secure options)

One of the main reasons why a hedge fund will always beat the Small Man is that up till now they have had the big computers and Maths PhD's and you have not. This may change - Reuters:

Backed by private equity, or armed with bonuses earned at banks, traders have been encouraged by an 80 percent or greater fall in the cost of setting up lightning-fast systems over the past five years, trading software provider Portware said.

"The numbers of these firms has exploded," Richard Balarkas, chief executive of broker Instinet Europe, said at the Reuters Global Exchanges and Trading Summit last week.

"I hear venture capitalists are giving money to guys coming straight out of MIT (Massachusetts Institute of Technology) and setting up desks," he said.

...................

Europe could see the biggest rise in high-frequency trading, being a less mature market. Ultra-fast trading accounts for 30-50 percent of equity market volumes, against 60-70 percent in the United States, the UK Financial Services Authority said.

I've always felt that a lot of what "the Cloud" is supposed to do so far - like knock off Microsoft Office and stick it on Google - is pretty small beer when you think of where most of people's wealth goes. And where the money counts, up till now, the Small Man gets screwed because they just don't have access to the heavy duty technology.

Most consumer fund managers underperform the market, and even if they overperform they have to do spectacularly well to cancel out the fund fees etc. (It has been statistically true since dotcom times that if you managed your own money by random selection you would, on average, out perform the average fund due to fee saving alone)

One of the big switched about a decade ago was the "tracker" fund, which used the automation of the last decade to allow you to buy into a fund that tracked the market anfd the fees were far lower. This is the "2.0" step. (3.0 is an AI that does what bankers do, but without $million bonuses - surely the economic case for that is worth a startup or two too!)

I've been interested in taking these sort of big iron resources and putting them "in the Cloud" as it were for quite a while. And as with VRM, which seeks to turn CRM around and put the buyer in control of their data, giving the average Joe access to trading supercomputers must be a Good Thing

This could all get very, very interesting in the next few years. Definitely a trend to watch

There have been many guides to business strategy that have (mis)used some sage or hero of the past (or future) - Attila the Hun, Shaka the Zulu, Caesar the Roman, Sun Tzu of China, Yoda the ..... - you name it. And today I thought that a group famous for their simple wisdom, that have not been given a chance to elucidate their strategy, were being called on. Yes, I saw the TechCrunch headline:

Apple's Secret Cloud Strategy And Why Lala Is Critical

At last! Someone is putting Teletubby wisdom into our wonderful web world, I thought, though I was a bit worried that Dipsy, Tinky Winky and Po were being ignored. But it turns out that its not the Teletubbies, no, there really is a thing called LaLa, and it is in fact critical to Apple's Secret Cloud strategy:

What is of value is the personal music storage service which was an often overlooked component of Lala’s business. As Apple did with the original iPods, Lala realized that any music solution must include music already possessed by the user. The Lala setup process provides software to store a personal music library online and then play it from any web browser alongside web songs they vend. This technology plus the engineering and management team is the true value of Lala to Apple.

Which is all very interesting, especially as its Secret - except that if they are going to store that music the user possesses online, or even point to it for re-use, it may be an issue if it is - ahem - not paid for. Now, the TechCrunch reader base, smart fellows that they are had already listed all the Things That May Go wrong, chief one of course is that its very likely to be deemed illegal.

But on to the real purpose of this post, which is to outline how to use Teletubby strategy for these sorts of situations, to wit to invent secret strategies for high buzz count companies for improbable services in nonexistent markets, based of course in The Cloud.

There are Five Core Assumptions of Teletubby Cloud Strategy Model:

1. The business climate portrayed shall always be sunny and pleasant save for occasional inclement moments, and a bit of snow at Christmas time. There are no dark clouds in Teletubby Strategy

2. All users are already fully wired and carry their own personal signal receiver and an iPad screen (Teletubby 2.0) in their tummies to receive whatever messages you send 'em, wherever they are

3. All users will continually, constantly and comprehensively collaborate in this closed world

4. There will always be an automated system to clean up the mess when things go wrong, freeing users to carry on playing with their stuff.

5. When times are getting tough, The Cloud will send a Calliope with rocking horses, and a man who tap dances with a cane down from The Clouds to amaze the users. .... interestingly, no other Cloud based social network system has thought of these applications yet.

And Lo, today we read about the failings of other players vis a vis Apple:

There ought to be some soul searching going on right now among Apple's competitors. For this is not the first time the company has picked up a discredited idea and created not just a successful product, but a whole new industry. There were MP3 players before the iPod. There were smartphones before the iPhone. And there were plenty of tablet computers before the iPad, even if they did run Windows.

It is clearly Time for a Teletubby Cloud Strategy - Po, TinkyWinky and Dipsy are still free..........

Today we read with some amusement that Google is stating that the desktop is dead (again):

Google believes that in three or so years desktops will give way to mobile as the primary screen from which most people will consume information and entertainment. That’s according to Google Europe boss John Herlihy who said that smart phones enhance Google’s mission to make information universal.

Speaking at the Digital Landscapes conference at UCD, Herlihy said that the cloud-computing opportunity will make sure that every mobile device will be capable of doing rapid-scale applications.

“In three years time, desktops will be irrelevant. In Japan, most research is done today on smart phones, not PCs,” Herlihy told a baffled audience, echoing comments by Google CEO Eric Schmidt at the recent GSM Association Mobile World Congress 2010 that everything the company will do going forward will be via a mobile lens, centring on the cloud, computing and connectivity.

This of course was predictable, as the above chart shows. The "Network is the PC" meme comes around regularly every 10 years. Its one of the best examples of a perpetually reccurring hype cycle that we know of. To recap:

The IBM Network PC wave

In 1988 or so and to regain its position (and play to its overall strengths) IBM brought out the Network PC, essentially a dumbed down device that would serve its client faithfully on these new fangled Client-Server Local Area Networks. It failed of course, as (i) The network wasn't reliable enough, (ii) the users liked the standalone capability and control and (iii) the kit wasn't good enough to replace the desktop at that point

The Sun "Network is the Computer" Wave

Cometh the Internet, and Sun has a problem - its tins are in the server farms but not on the desktops. Clearly, the world needs to move towards this new fangled Internet thingy, and put all its data in the (I forget, I think it was called The Cloud at that time too). It failed of course, as (i) The network wasn't reliable enough, (ii) the users liked the standalone capability and control and (iii) the kit wasn't good enough to replace the desktop at that point

The Google "It will be in the Cloud" Cycle

Cometh Big Broadband, and Google has a problem - too many customers are irresponsibly sticking to their desktops rather than sticking all their data into the big GoogleMine. Hence the call for The Cloud rings out clarion like across the Valley. It will fail of course, as......

Why Ten Years? Our hypothesis is that that is the time it takes the Corporate Memory to wane to a level where the Bright New Things can haul the Network PC punt out again without some grizzled and wise old hand reminding them of the phenomenal waste of time and money the last cycle had been. Its also interesting that Eric Schmidt's company (Sun, now Google) has been the major proponent of these last two cycles.

What's interesting about the Googleshot is that this is almost a double top, in that they've tried the "netbook data in the cloud" gambit - which hasn't crossed the chasm - and now its a smartphone gambit. A sign of desperation surely, as if the netbook didn't work its a lot less clear that todays' (even less capable) smartphones will - which is why we think its a sign that this cycle is already on the wane.

Here, as they say, endeth the lesson.

Update - well, not quite endeth - as my learned commentators have pointed out:

(i) There has always been a (shifting) balance between client side and server side, its juts that companies (and bloggers) always push the edges for their own ends

(ii) Each wave does result in a new layer of cloud service usage - networked data, web services etc.

But we suspect static services will be around for a long, long time as (i) people are largely static and (ii) they too improve over time. Th high power workstation with 2 large screens has attractions all of its own.