Category: Innovation

Extending the knowledge graph

Big data takes baby steps on our desktops

Google’s latest search changes – introduced by Search Senior Vice President Amit Singhal – are another development, or baby step as Amit would call it, in making data more useful for us.

The flood  of data that’s washed over us since the web arrived has left most of us befuddled. Increasingly, a basic keyword search just hasn’t been enough to find the information we’re looking for and we’ve had to trawl through pages of irrelevant information.

One of the aims of Google’s new features is to make data more relevant to a user – so if someone in the US types “Kings” into Google, they will be given details of the Los Angeles Kings hockey team or the TV series “Kings”.

Those details will include snippets of information about the topic. It could be the teams venue or the cast of the TV show. For tourist locations it could be some basic facts or transport information.

Amit is particularly proud of integrating tourist information and flight details into search and Gmail which indicates Google is beginning to leverage its buyout of the ITA travel booking network last year.

Google’s treatment of data reflects what’s happening with other services. At the recent Australian Xero conference and in an interview with MYOB executives, it’s been emphasised how knowledge is being aggregated to give customers and users better, more useful results.

With Google’s knowledge graph we’re seeing the realisation of what big data can do, there’s many baby steps ahead but there’s a lot of potential.

Are IT workers the new loom weavers?

Transition changes hit the technology industries once again, and many aren’t happy.

“There are IT workers who can’t put food on their table,” complained an industry representative at an outsourcing conference.

It’s true – there are hundreds of once well paid project managers, technicians and support staff staff who can’t get work in their industry as some tasks go offshore and others are supplanted by new technologies.

None of this is new, we only have to think back to the heady days of the Dot Com boom when any punk with a basic knowledge of HTML could pull down six figures a year.

Just like the loom weavers of the 17th Century who became the Luddites, the HTML coders of 1998 and the project managers of 2008 have had a short period of affluence before been overtaken by change.

It’s something that today’s hot shot coders should keep in mind, bubbles burst and technology changes.

So you think services are easy?

The differences between service, hardware and software businesses shouldn’t be understated.

ZDNet columnist Ed Bott is possibly one of Microsoft’s closest followers and among the few to defend Windows Vista, Ed though can’t be faulted for doing the hard yards including reading Microsoft’s stock market10-K  filings.

In their most recent filing, Ed finds Microsoft has used the word “service” 73 times as opposed to 44 appearances last year.

A key phrase in the filing is “a growing part of our strategy involves cloud-based services used with smart client devices.”

This is consistent with the hands on previews of Windows 8 which Microsoft have been giving journalists over the last few months. Something that leaps out is the integration with online services; something that both Google and Apple have also been pushing.

What should worry investors is that moving into services isn’t easy. Service businesses are far more labour intensive and, as a consequence, far less profitable.

Despite having relatively low labour costs, cloud computing services are problematic as many sectors have been commoditised, which is the genius of Salesforce in establishing a profitable niche.

The fat margins Microsoft are used to in their core software business can’t be replicated in the cloud based markets, which is one of the reasons why customers are switching to the cloud.

Microsoft’s problem is shared by telecommunications companies who are finding their cloud offering don’t generate the same ARPUs — Annual Revenue Per User — that they’ve become accustomed to in the mobile phone market. Which means pain for executives whose KPIs are tied to historical performance.

For Microsoft, the problem is compounded by their simultaneous move into hardware with the Surface tablets. Meaning the company’s has to deal with two significantly different business models to the ones they are used to.

Again Microsoft aren’t alone in this, Google is having similar problems adjusting to the hardware market though its acquisition of Motorola Mobility.

Integrating hardware with services and manufacturing isn’t impossible, we only have to look at Apple for how a company can succeed in that space although most managements struggle with the very different demands of each sector.

During the 1980s we saw the rise of the “all business is soap” philosophy where MBAs and management consultants preached that the challenges of running a business were the same regardless of whether you sold cleaning products, soft drinks, computers or automobiles.

Those folk were wrong. Most famously the Australian media company Fairfax hired as CEO a business school professor who preached this philosophy and managed to ignore the rise of the Internet, the echoes of the failed McKinsey ideas haunt Fairfax over a decade later.

While its possible for a software company to succeed at services or hardware, the magnitude and complexity of the management challenge shouldn’t be understated. Both Google and Microsoft will be defined by how well their leaders succeed.

Closed data doors

It’s time to reform government.

“Sydney now joins global cities including London, New York and Hong Kong that also have public transport on Google Maps” boasted Gladys Berejiklian, New South Wales minister for transport, last week that Sydney’s complex and confusing public transport system will now appear Google’s mapping service.

The minister neglected to mention the other 400 cities that already offer this service including Perth, Adelaide and Canberra in Australia. What’s more concerning is the attitude of public servants and governments towards access to what should be freely available data.

It’s difficult to think of anything less innocuous than public transport timetables yet access to the data is carefully guarded by most Australian governments under the claim of ‘Crown Copyright’.

Underlying the idea of Crown Copyright is all the information held by governments is the property of the state – or the monarch in Australia – rather than belonging to the people. This is a great example of governments and the law living in the 18th Century which gives a modern perspective of what the US founding fathers were thinking of when they wrote their constitution in 1787.

This refusal to make data available is not the attitude of any single government, the Victorian government notoriously refused access to fire information during the tragic 2009 bushfires and Google are still negotiating to add Melbourne’s public transport information to the Maps service.

‘Open Data’ is a concept that many agencies pay lip service to, as do many politicians while they aren’t in government, but in practice information is a precious resource which should be hoarded and hidden.

In the public service itself, information is power – your position and status with an agency is directly proportional to the knowledge you possess and the contacts you can hoard. This attitude spills over into the way services are delivered, or not as the case may be.

For startup businesses, this hoarding of data hurts local industry – with transport timetables application developers have to negotiate on a case by case basis for data access meaning that only big companies with plenty of resources are able to get hold of the information.

The tragedy is government are trying to encourage smaller developers and startups. New South Wales had its Mobile Concierge program but these well meaning initiatives fall down when agencies won’t open their data.

It’s time to scrap the idea of Crown Copyright and the philosophy that all government data is the property of the public service, or the monarch of the day. Certainly there are plenty of areas where it isn’t in the public interest to release confidential information but bus timetables are not one of those areas and there are plenty of laws already in place to protect that sensitive data.

Like many things in our political and legal sectors, thinking is stuck not in the 1980s but in the 1780s. Maybe it’s time to grab our politicians and their learned lawyer friends and drag them by their horse haired wigs into the 21st Century.

Eating the Old Man’s lunch

Optus’ purchase of Eatability is ironic given Fairfax’s and Telstra’s failure with Citysearch.

Optus today announced the purchase of restaurant review site Eatability for $6 million.

Eatability is one of the services that’s destroyed the business models of both the phone directory business and that of newspapers.

Thirty years ago the Sydney Morning Herald launched its Good Living section and it became the way people went found where the good places were to eat.

Diners wanting to make a reservation at the hip eating places being reviewed in Good Living picked up the phone book.

Now they do neither, they go to web sites like Eatabilty or Yelp where they get reviews, contact details and everything else they need about the venue.

Which killed the advertising revenues that newspapers and phone directories depended upon.

The sad thing is both the newspapers and Yellow Pages could have owned this space. Citysearch was setup by Fairfax to address the online market and it was sold to Telstra when the newspaper chain struggled to make it work.

Citysearch today languishes neglected and nearly forgotten under the Sensis umbrella. Optus now owning Citysearch’s biggest local competitor which must bring a hollow laugh to those involved in the early days of Fairfax’s digital experiment.

Whether Eatability thrives under Optus remains to be seen, but it illustrates just how incumbent strengths like telephone directories are being eroded in the online world.

Old men have to start moving quickly if they don’t want upstarts eating their lunch.

Creating a fresh view for online commerce

Andable provides a platform for time pressed creative entrepreneurs to sell their work.

When you’re running a part time business and holding down a full time job, selling is difficult and its hard to find the time to setup websites.

Online marketplace Andable provides an outlet for creatives and those entrepreneurs juggling full time jobs. The site’s mission is to be “an online marketplace where you can discover extraordinary things to buy and sell.”

The problem for those passionate entrepreneurs busy making things is they don’t have time – and often lack the skills – to sell their works. Co-founders Rupal Simian and Melissa Dean decided they would set up an online marketplace to help those businesses.

Central to Andable’s service is the ability for these small businesses to tell their stories. Most of the service’s merchants are part time businesspeople who hold down full time jobs.

Andable’s name comes from compressing “willing and able” and the site lets micro businesses list their products for free with a 5% commission from sales. Payments are handled through PayPal who they work closely with.

For sellers to qualify for a listing, they have to meet at least one of Annabel’s FRESH criteria; Fairtrade, Reused, Eco-friendly, Supporting local business or Handmade.

An interesting thing about Andable is how 10% of the sale goes into a Kiva microfinancing project. After six months that loan is repaid – Kiva boasts a 99% repayment rate – the 10% is rebated to the merchant.

Since the service’s launch in July, two investments have been made with Mel and Rupal looking at completing 600 loans by the end of their first year’s trading.

A month into operation, Andable has close to 200 shops including ranging from hand crafted jewellery, vintage lightboxes and hipster homewares. Sellers are based around the world from Germany and Indonesia through to Byron Bay and Fremantle.

What’s interesting about Andable is how we’re seeing different online marketplaces appearing to cater for different markets. For businesses, this means it’s becoming easier to get your products to market.

The challenge is to get attention in a marketplace that’s saturated with advertising and information. Platforms like Pinterest, eBay and Andable are ways motivated customers can find businesses.

Writedowns and triumphalism

Sometimes headlines don’t tell the full story

The contrast between Microsoft’s and Google’s results released on Thursday attracted a lot of interest – for the first time in twenty years Microsoft posted a quarterly loss with Google’s profits continue to grow.

While there’s no doubt Microsoft are challenged by the effects of their lost decade and bad decisions made in that time, but the business itself is still extremely profitable.

Microsoft’s posted loss is due writing down 6 billion dollars in their aQuantive investment, an attempt to compete with Google in the online ad placement space.

Despite a six billion dollar writedown, Microsoft only posted a 500 million dollar loss showing the business is still making over 5 billion dollars profit each quarter.

Google on the other hand posted a profit of 2.8 billion, up 11% from the same period last year.

But Google also has some nasty writedowns coming in the future – the purchase of Motorola will see some substantial write downs of that 12 billion dollar deal. It’s conceivable that a very big portion of that investment will have to be written off as well.

Right now, Google’s seeing some benefit from the Motorola acquisition as the phone company’s cashflow is covering a decline in online advertising revenue, a threat to Google’s core business.

It’s easy to be triumphant when the headlines proclaim you’re a winner, but it’s often worthwhile looking at the fine print to see the real story.

 

Outsourcing’s changing face

Freelancer’s 50 fastest movers job list shows some interesting trends

Outsourcing company freelancer.com regularly releases the fifty fastest moving job descriptions requested by their customers.

This year’s list shows how the online industry is changing – content creation, social media and SEO job requests are all down substantially as users and gatekeepers like Google adapt to the information flood we all have to deal with.

Keeping in mind the market that Freelancer.com caters to small businesses and many of the jobs posted are for fairly small – some would say laughingly tiny and insulting – amounts, it’s probably safe to say we’re looking at the low value end of the market.

Article writing (down 15%), proofreading (5%), blogging (13%) and submission (4%) jobs are probably the cheap and nasty “Demand Media” style of low quality content designed for SEO purposes.

SEO itself is in trouble with jobs in that sector down 7% indicating Google’s Panda and Penguin search engine changes have achieved their objectives of improving search results and knocking out those gaming the system with low quality content.

A similar thing has happened with social media. Facebook is too hard for many businesses and they’re not seeing a return on their substantial time investment.

“Companies in industries from consumer electronics to financial services tell us they’re no longer sure Facebook is the best place to dedicate their social marketing budget—a shocking fact given the site’s dominance among users,” Freelancer quotes Nate Elliott, an analyst at market research firm Forrester.

A bright part in Freelancer’s list is the rise is in open standards as HTML5 starts moving up the list with 20% growth.

“The Internet is becoming more interactive, and the technologies that are winning and will continue to win are open standards like HTML5 and jQuery- to the detriment of the incumbents proprietary technology providers like Adobe and Microsoft,” says Freelancer’s CEO Matt Barrie.

Open standards aren’t winning everywhere though as Apple’s iOS is clearly winning the developer war as iPhone grows by 30% and iPad by 26% compared to Android’s 20%.

Freelancer’s list is an interesting snapshot at where industry demand is right now, what’s we’re starting to see are some of the transition effects working their way through the system. The rise and fall of the social media and SEO specialists being one of those.

The full Freelancer list is below;

Android’s corporate wins

Android is increasingly becoming the platform for business hardware.

Telstra’s launch of the second iteration of their T-Hub device and the Commonwealth Bank’s Albert tablet Point of Sale device are notable in their choice of operating system.

For the T-Hub, the first version was a bug plagued and slow proprietary system that which one of the reasons for the device’s market failure. Telstra’s second attempt runs on the Google Android system.

The Commonwealth Bank didn’t make Telstra’s mistake with the Albert device, instead choosing  the open source system from the beginning.

Choosing an open platform like Android makes it easier for the developers and company to support the device and develop new products. There’s also the advantage of thousands manufacturers supplying hardware that runs on Android.

If we compare the costs of developing a proprietary system and sourcing hardware for it to run on, the choice of an open system is almost irresistible.

For Microsoft, this adoption of Google Android by corporations is another blow to Windows’ dominance of the market, a few years ago all of these devices would have been running a version of Windows but Android is a cheaper, more flexible and better suited to most of the tasks required.

It could be worse for Microsoft – Apple could be dominating this market. Apple though have had their own victory on consumer devices and increasingly companies have to cater for their customers and staff wanting an iPhone or iPad app.

Like on smartphones, the battle is now between Android and Apple.

On being a Luddite

Being skeptical about technology isn’t the same as being a Luddite.

“I’m a Luddite”, magazine editor James Tuckerman proclaimed as Master of Ceremonies for Microsoft’s Asia Pacific Bizspark Summit this week.

James was referring to an article in Australian Anthill in the 1990s where he predicted businesses would never use the Internet for research.

Being a Luddite isn’t a bad thing, James contends. In his view being skeptical about technology enables business owners to better evaluate technology as Luddites “think like a layman, don’t know the limits and think commercially”.

None of this is true though – being a skeptic is not the same as being a Luddite.

The original Luddites in the English Midlands weren’t anti-technology, they were opposed to the technology that would put them out of work.

At the beginning of the 19th Century, mill workers were a highly skilled and extremely well paid trade but the new automated loom technology meant those skills were no longer needed.

To protect their livelihoods, the loom workers started smashing the new machines and burning down factories. Eventually they were viciously suppressed by the British government with some being executed while others were transported to Australia.

What drove the Luddites was the loss of their income and who is to say we would have behaved any differently if we were faced with being unemployed and destitute in the harsh conditions of 19th Century England.

However we shouldn’t equate being skeptical about technology with being protecting one’s turf.

Today’s Luddites are those businesses who don’t want to move with the times – those who have grown fat on easy credit or lazily clipping the tickets on state sanctioned monopolies.

Some of those Luddites are going broke as consumers stop buying electrical goods or cars, while others lobby their friends in government to protect their privileged and profitable positions.

In the early 1800s the Luddites eventually lost, we can only hope that when history repeats itself two hundred years later today’s Luddites haven’t damaged the economy too much.

James Tuckerman isn’t a Luddite and that’s why he’s part of the future. I just wish he wouldn’t call himself one.

Little disruptions

A hotel’s change to iPhones is symptomatic of a change in technology.

Seasoned travellers learned long ago to treat the phone in their hotel room with caution as massive mark ups on call charges were a nice profit centre for most establishments.

With the arrival of the mobile phone, that revenue stream started to shrink and now one hotel in Vancouver has decided to replace their room phones with iPhones.

The Vancouver Opus hotel already supplies iPads in their rooms and the phones seem a natural extension to that, particularly given the chain has a “virtual concierge” app to guide guests.

Increasingly it’s only the older hotel chains that rely on excessive charges for things like telephone calls and Internet access. Those establishments rely on the more senior business traveller who are locked into a 1970s way of travelling.

When you stay at cheaper accommodation or newer boutique establishments, you find many of the expensive extras in the major chains are available cheaply or free. It’s a quandary of travel that a backpackers’ hostel will offer free Wi-Fi while the Sheraton up the road will charge $60 for an often inferior service.

The opportunity for the Sheratons, or the Hiltons, or the Four Seasons to charge those sort of rates is dying at the same rate their older clientele is retiring. Its a dead model.

Fortunately for those hotel chains, slamming guests with fat phone charges was just icing on a very rich cake, the loss of those revenues over the last two decades has been unfortunate but not fatal.

Other businesses though might not be so lucky – if your business relies on big, unreasonable markups then right now you are in a sector very ripe for disruption.

How much did Vista really cost Microsoft?

Microsoft Vista’s failure hurts Microsoft today.

Microsoft Vista was the company’s despised stepchild – released way past schedule, clunky, slow and disdained so much by the market that PC manufacturers started offering “downgrades” to Windows XP to attract customers.

Despite the embarrassment, Microsoft retained its position as the world’s leading software company and does so today. But Vista certainly did hurt Microsoft and today’s marketplace shows the deep, long term effects of that damage.

Research website Asymco earlier this week looked at the ratio of Windows PCs sold to the sales of Apple Macs over the last 30 years. The ratio peaked at 56 to 1 in 2004.

Today that ratio is 18 and when phone and tablet sales are added in, the ratio is approaching 1:1. Apple has caught up.

It’s no accident 2004 is the peak of the Windows-Apple ratio. In 2004 Windows XP had matured after three years on the market, the older computers running Windows 98 or ME (another hated operating system) were being retired and a new version of Windows – codenamed Longhorn – taking advantage of newer technologies and with improved security was due to be released.

On August 27, 2004 things started to change with Microsoft’s announcement Longhorn would be delayed two years. This effectively broke the product roadmap that underpinned the business models of Microsoft and their partners.

To make matters worse, Apple were back in the game with their OSX operating system well established and a steady stream of well designed new products coming onto the market.

For consumers and businesses one of the advantages Windows systems had over Apple was the cost difference. The “Apple Tax” started to be eroded by the company’s move to Intel CPUs which delivered economies of scale coupled an aggressive program of tying up the supply chain with key manufacturers.

Then Longhorn – now known as Microsoft Vista – was released.

Despite the cheerleading of the Microsoft friendly parts of the technology media, consumers weren’t fooled. The product was slow and buggy with a new interface that confused users. Making matters worse was Microsoft’s ongoing obsession with multiple versions offering different features, something mocked by Steve Jobs,  which further confused the marketplace.

Vista languished, customers decided to stick with Windows XP or to look at the faster and better designed Apple computers, and Microsoft’s market share started to slowly erode.

By the time Windows 7 was released Apple had clawed back their market position, launched the iPhone and caught the shift from personal computers to smartphones.

Probably the biggest embarrassment of all to Microsoft was the launch of the iPad, the market had been gagging for good tablet computer since the late 1990s and Microsoft’s partners had failed to deliver, partly because Windows XP, Vista and 7 didn’t perform as well as Apple’s iOS on the tablet form factor.

Microsoft’s completely blowing a decade’s lead in the tablet market is almost certainly due to the misguided priorities and feature creep that dogged Vista’s development. This is now costing the company dearly.

Asymco’s conclusion of Microsoft’s new market position is stunning and accurate.

The consequences are dire for Microsoft. The wiping out of any platform advantage around Windows will render it vulnerable to direct competition. This is not something it had to worry about before. Windows will have to compete not only for users, but for developer talent, investment by enterprises and the implicit goodwill it has had for more than a decade.

It will, most importantly, have a psychological effect. Realizing that Windows is not a hegemony will unleash market forces that nobody can predict.

Vista’s cost to Microsoft was great, it meant the company missed the smartphone surge, the rise of tablets and – possibly most dangerous of all to Microsoft – the move to cloud computing.

A lot hangs on Microsoft’s next operating system, Windows 8. Another Vista could kill the company.