On predictions

It’s that time of year, here’s mine:

1. Kiva will break $100m in loans
2. Microsoft will buy Facebook
3. Google will buy Delicious
4. Microsoft will buy what’s left of Yahoo
5. Jerry Yang will leave Yahoo for good
6. Steve Jobs will step down as Apple CEO
7. Social networking will crack its business model
8. Google’s share of online advertising dollars will fall

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On Yahoo dying

I haven’t written about Yahoo for a while because there is nothing to write about. Yahoo is dying.

Mike Arrington reported the latest stock drop, it now stands at $13 after turning down $31 from Microsoft. With the markets in turmoil everything is down good and bad. But while most tech stocks will come back stronger Yahoo will not make it.

The basic problem is management. As CEO the buck stops with Jerry Yang. He is not a leader and it shows. He is constantly looking over his shoulder and conducting reviews. In this position a leader should know what needs to be done, have a plan and get on with it.

You can get away with muddled management in a truly great company. I don’t have that much more faith in Eric Schmidt, the money machine was in place when he got on board and he has done not much except ride it. Google has such a great business that it doesn’t matter that the rest of their plans go off half cock. You can’t get away with it in a company that is in trouble. Great leaders can turn around ailing companies. Look at Steve Jobs, Apple was on the floor when he went back, arguably in a worse position than Yahoo was in when Yang took back the reins, and it skyrocketed after he went back. Say what you like about him but Steve Jobs knows where he is going, when he went back to Apple he didn’t need 100 days to sort it out. He knew what to do before he arrived.

On HP

The dam starts to crack. Rumours around HP suggest they are building their own OS. Perosnally I wouldn’t bother doing it myself if I was HP. On occasions like these you go to the specialists and in that case it means Canonical. They have years of experience building a consumer friendly version of Linux. In fact I don’t think hardware manufacturers building operating systems is a good idea.

At this stage everyone cites the example of Apple but the fact is their refusal to license any Mac OS contributed to Microsoft’s dominance in the first place. Hardware and software are two different things and I think having companies focused on one or the other is the best way. Some may argue that this is not the case with mobile and give Android’s difficulties as the prime example. The counterargument is Symbian and it’s a pretty good one.

Apple seem to have set their stall out as a niche manufacturer come what may. This is not a criticism, someone has to be the Mercedes of the tech world and someone else the Toyota. I am always skeptikal about one company trying to control all aspects of a system and I think it is better for the consumers when different companies establish common standards and promote competition between application developers. This also allows companies building operating systems to focus on what they are good at.

Microsoft is getting in to trouble now because it is too cumbersome to lead in any of the emerging markets. It is compounding the problem by trying to add even more weight when it should be trying to shed it and trying to get into markets it has no hope of cracking like search.

Pic: fattytuna

On Chrome

Another bloody browser, this time from Google. It’s a crowded field and Google’s efforts outside search have a mixed track record. Gmail is excellent but Knol is terrible. I installed Chrome and it’s nothing special. On the plus side it has a nice simple UI, on the minus side it’s not very intuitive. For my money Opera is still the best and I won’t be switching any time soon.

What’s more interesting is where Google is going with this. I think Arrington is right. Google is preparing to enter the OS market and Chrome is the first shot. Microsoft have foolishly left this avenue open first by allowing Linux to creep up on them in the UMPC market and then by not addressing the sector properly and leaving it to XP. Now I have nothing against XP, it’s a good OS. I’m just surprised MS hasn’t put out a purpose built UMPC operating system. W7 may have something along these lines but I don’t think MS can afford to hang around here. They may wake up in 2010 with their core business gone if they are not more careful.

Back to Goog. To keep denying they are working on an OS when they have already begun the Android project is clearly ridiculous. They basically admit as much in the Chrome announcement:

At Google, we spend much of our time working inside a browser. Like all of you, we search, shop, bank, read news and keep in touch with friends – all using a browser. People are spending an increasing amount of time online, and they’re doing things never imagined when the web first appeared about 15 years ago.

They are right here. These days all I use my OS for is to drive my browser. This minimises the importance of the operating system if all it has to do is run a browser and the associated plugins. My next machine will probably be a Dell E running Linux. This will be plenty to browse the web and send emails which is all I really need. The days of everyone having heavy operating systems are gone. Some people will still need dedicated desktop apps but I expect this small market to be dominated by Apple and high end macs.

The era of MS dominance is at an end. So on the Google browser I say no thanks but on the OS yes please. The more competition the better.

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On remotes and messages

The most interesting iPhone app I have seen so far is one that turns it into a remote for Apple TV. Judging by the activity from Apple and MS in this area both agree that integrating currently separate devices is they way forward. And what better way than to control your TV with your phone. I always wondered why I ended up with six different remotes.

The added benefit is that you can use the expanded functionality of a phone to integrate currently separate services. Euro 2008 has just finished, as England were not involved I watched a lot of the games at home alongside my laptop. I would watch the game and discuss it with my friends online and using texts. What struck me was that it would be much easier to have these comments streamed down the side of my TV screen rather than relegated to separate devices.

Mainstream twitter

And this is where the iPhone/Blackberry type remote comes in. It would allow me to add my comments quickly using the remote if it was designed like this. I think it favours a fixed keyboard rather than a touchscreen but it is Apple which has got there first. Admittedly there is no integrated Twitter like service for sports games at the moment but this is the most likely way for Twitter or an equivalent service to go mainstream.

The fact is that most people don’t want to let everyone know what they are doing all the time. There will be specific events like sports events or conferences where people want to use it but most of the time they won’t. Microblogging will change as its users change. In the early days the twitterholics twitter about everything but later adopters won’t do this. Watercooler moments will still happen, they’ll just be liberated from the watercooler.

Pic: Vincent Brown

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On Steve Jobs

When an unusually gaunt Steve Jobs unveiled the 3g iPhone last month speculation about his heath started again. In response to a recent query Apple released a statement saying that Jobs’ health was a private matter. Some think otherwise and argue that since Apple’s performance is so tightly bound up with Jobs that he is public property as much as his company.

I disagree. Jobs is a private individual and the state of his health is a matter for him. It is common knowledge that he had pancreatic cancer which was successfully operated on in 2003. If Apple shareholders were sufficiently concerned about his health then they could have sold when that procedure became public knowledge and no doubt many did. Those who held on can have no complaints. They know Jobs’ history of illness and they know Apple is a secretive company. If they don’t like it they can sell their shares. Some complain this means selling at a loss but anyone buying shares in a company knows they can go down, if they do not they should not be trading stocks. If you want steady, risk free rises stick to Treasury Bills.

Jobs was responsible for a remarkable turnaround in Apple’s fortune and has made its shareholders very rich. When Jobs took over in 1997 Apple’s share price hovered under $5, at their recent peak in Jan 2008 Apple shares touched $200. Apple’s share price cannot keep climbing at this rate. The company hit a grand slam with the iPod and it will not repeat that success with the iPhone and Apple TV, the problem Apple shareholders have is that the assumption it will is already priced into Apple stock.

Right place, right time

The iPhone will be a success in its niche – high end mobile devices – but it won’t break out the same way the iPod did. The iPod rode the convergence of a number of factors; the emergence of filesharing, the expansion of broadband internet which facilitated the massive transfer of small files and mp3 compression which allowed music files to be shrunken to a tenth of their size. All that was required to complete the revolution was a small, cool, easy to use music player with equally beautiful software. These were Apple’s strengths, Jobs spotted the trend, bet the company and won. This will never happen again. At least not to Apple. The stock is already too high, swollen by the expectation that Apple will reign supreme.

All CEOs are human, Steve Jobs has his strengths and weaknesses and people who invest in Apple know what they are. If they are nervous about the future the answer is simple: sell.

Pic: Danny Novo

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On TownSquare

Hot on the heels of facebook’s announcement of an enterprise version Microsoft is releasing its own ‘facebook for business’ called TownSquare. I am very enthusiastic about the potential of enterprise networks which is why I continuously boost Connectbeam and Trampoline Systems. Start-ups invariably brick themselves when a big company moves into their territory but they shouldn’t. I get the impression from SharePoint and now TownSquare that MS is just tiddling around with this. They have never been an Internet company and all their web products display a profound lack of understanding of the web.

I am sure there are a great many employees at the company who do understand it perfectly but none has sufficient clout to make any changes. All the top people have grown up around software and that is where their focus remains. This is not unique to MS, Apple has a similar problem but their excellent devices tend to distract attention from the fact that their web offerings are non-existent. This includes iTunes which seems like a big deal until it’s set against p2p which is where most iPod owners get their music. In this context iTunes is just a good way of getting songs from BitTorrent to their music player.

Focus on users

I expect that one of the enterprise network start-ups will really get traction as they are totally focused on getting that product right. They are also more responsive to the user who can ask for extra features to be included. Integrating with existing systems should be less of a problem because (a) enterprise networks are delivered through the browser and (b) many people are already familiar with social networks so the jump to using an enterprise network in the office won’t be too great.

The start-up which wins will be the one which can respond quickest to their customers’ needs. Large company products which are a sideshow to the large company will never succeed in this environment. MS cannot abandon Office because they have too much invested in it. Here’s a clue – when nobody prints documents out any more nobody needs a word processor. It’s so 80s. What people really want is simple web authoring and networking tools which is why MySpace et al took off a few years ago. The same will happen in business, you read it here first.

Read more:
On trampolines
On facebook enterprise

Pic: Computerworld

On a greener Linux

More trouble for Microsoft as it emerges that Linux servers take 12% less energy than Windows Server 2008. This is another straw in the wind for Microsoft. With energy prices as high as there are any company which can take 12% off your costs is an attractive alternative. MS is being assaulted by different competitors, large and small, from all sides in all its core businesses. It’s response? Buy an ailing Yahoo. Not good.

Microsoft isn’t dead (yet)

When Paul Graham mooted the death of Microsoft the impressively named Don Dodge replied with a post pointing out that MS revenues grew by $4bn to 2007. I looked at the MS earning releases which place a lot of emphasis for future success on Windows Server 2008 and the entertainment and devices division. No mention of Vista which is looking increasingly like a bust. Whilst revenues have been growing MS is sailing into a world which for the first time looks like they will face serious competition in all of their core products.

Microsoft’s historic strength was operating in markets with almost no competition. For years nobody produced a serious alternative PC OS or enterprise suite but both of those games are changing rapidly. And as these products will be increasingly browser based MS won’t be able to pull the trick which doomed the competition for Office. Of course they could fiddle with IE to make the MS alternative work better but with Firefox and Opera out there this strategy would more likely result in companies ditching MS altogether. MS brass realise this even if Dodge doesn’t which is why they launched the Xbox and it is also behind their move for Yahoo. MS thinks if it can diversify and get some of that sweet cherry pie of advertising all will be well. Comforting but wrong.

Dodge cites the Apple/MS desktop stats to claim MS has a good position in search. This is a total canard. Apple has 6% of the desktop market but they are doing something innovative and different with that 6%. MS has 10% of the search market with a me too product. He also cites Windows mobile, which is awful and faces serious competition from a number of different competitors, not least Google’s Android. On balance I’m closer to Graham on this one.

Skate to where the puck is going to be

When Steve Jobs talks about Apple strategy he quotes Wayne Gretsky: skate to where the puck is going to be. MS skates to where the puck was 15 years ago then persuades itself that’s where the puck is. The emergence of the Internet spooked them and they didn’t respond well. First was the laughable attempt to usurp the Web with MSN, then there was Netscape.

Ironically, going after Netscape was the worst move MS ever made. Netscape was always vulnerable because they never cracked a reliable business model. They were built on sand whereas Google is built on rock solid revenues. Looking back, by destroying Netscape MS harmed itself. It may have removed a short term competitor but by crushing a company with huge natural vulnerabilities it lulled itself into a false sense of security and tied itself up with regulators for the next ten years.

While I don’t agree with Graham that MS is dead, I think it is in a downward spiral and getting out of it in its current state looks less likely by the day.

On iPhone

Well, Apple finally released the 3G iPhone. For my money this is the real thing. Apple made some money by releasing an over-priced, under-featured test version to rinse the Apple fans then released this one for everyone else. When I saw the original specs I thought at minimum I would need 3G and 16Gb storage to even think about buying. Now I have decided I also need a better camera. In the end I waited for the fifth gen iPod, in the meantime my Nokia 1208 rules – fifteen quid, no contract.

They also relinquished their revenue sharing deal with AT&T which suggests they will be network agnostic from now on. This is a good move from Apple. they make 65% profit on the units so if network providers want to sub them down to $199 to increase sales Apple benefits far more than they would from a rev share with a single network. Again this adds to my suspicion that the old iPhone was a test version.

The new iPhone is good but they are still missing some opportunities. I think they will need to build up some more features that exploit the wireless properly such as song swapping. Getting the labels on board will be the challenge but I know from our dealings with them that they are open to new ideas if you have a clear explanation of how it benefits them to participate they are showing interest.

On Microsoft strategy

I’ve been reading through some more of the coverage on Windows 7 and two things struck me. First of all Vista has been abandoned. I don’t know what the release date for W7 is but its perfectly conceivable that most users could stick with XP then jump straight to W7, assuming they wanted to stay with Microsoft at all.

The second thing is that with all the features that were demonstrated at D6, touch screens and the like, along with the other devices which have dribbled out like the interactive coffee table MS is looking beyond desktops. Now it is true that Gates has stepped down but I don’t think the current leadership has sufficient imagination to deviate from the strategy he has laid down. In a way they would be stupid to abandon it entirely as whatever else you can say about Bill Gates he is a brilliant strategist.

What it seems to me is that they are creating an operating system for an entire house, not just a desktop. I think MS imagines a world in which it runs your TV, mobile device, coffee table, fridge etc. etc. in the same way in ran your desktop and everyone will have to dance to their tune as everyone did in the nineties. This is why they put all the money into the Xbox – the games console as Trojan horse for the living room. Unfortunately Nintendo have thrown a spanner in the works with the cheaper and much more innovative Wii.

I think MS are as likely to succeed with this as they were with their ill fated attempt to usurp the Internet with MSN. This is not to say that MS has no place in the future but they will never have the dominance they had over the PC desktop. They are not the only company to suffer from such delusions, Apple seems to have similar ideas with Apple TV, iPhone, iTunes and so on. And they have made a similar mistake by tying down their STB to such an extent nobody will use it. They have taken the wrong lesson from the success of the iPod which thrived as because it was built on the back of filesharing, not the iTunes Store.

What any large company aiming to control everything fails to grasp is that those days are over. The ultimate goal of any company wanting to succeed is to look at what their users want rather than what they want. Users are in control now and the companies that recognise it will be the ones that prosper.