Tag: google

Mapping new industries

Can Google Maps Coordinate change the business world?

As smartphones become ubuiquitious in business, more applications are appearing that take advantage of the devices’ inbuilt features like GPS and cameras.

To date, many of these have services have been in consumer based, social media style applications but as the market matures, more business orientated services are appearing.

Google Maps Coordinate, the latest service from the search engine giant, uses a smartphone’s built in location services to track field staff and allocate jobs through an Android smartphone app.

On top of that, Google have added a Maps-style interface for businesses to schedule appointments and for staff to accept assignments.

It’s a nice but basic product that doesn’t really address any gaps in the marketplace with job scheduling technology being available for over a decade in the logistics and field service industries.

Connect2Field’s chief executive Steve Orenstein compared Google Maps Coordinate to his own product and while Steve is talking up his own company, the comparison does show this is a market that’s well catered for.

Given the market already has plenty of participants, it would make sense for Google to make the API available to existing players and profit from the rich data they can provide, that move might even give the edge to Android devices in an enterprise market that will become a two horse race if Microsoft fail to execute on Windows 8 and their tablet devices.

Unfortunately Google has chosen not to include these services into their enterprise API packages, leaving them competing against existing players rather than working with them.

At the moment Google Maps isn’t on a roll, having dropped their developer rates by 88% to deal with threat from Apple’s new mapping service.

Probably the biggest drawback to Google Maps Coordinate is its lack of integration with Google Docs, the increased siloing of Google’s operations makes the company start to resemble Microsoft and this is an issue Sergei Brin and Larry Page are going to have address lest the company find itself locked into the same inward looking stagnation.

While its difficult to see Google Maps Coordinate surviving in its current form given the nature of the marketplace, the trend in business orientated geolocation services is changing how companies work.

As smartphones take over the market and location based services become accepted, we’ll see more tools taking advantage of the business opportunities. For Google, this sector has huge potential and it will be interesting to see how they succeed in capitalising on their market dominance.

Building the Internet’s Frankenstein monsters

Changing Internet empires give rise to strange alliances

Apple’s announcement of deep Facebook integration into their iOS6 operating system for the iPhone and iPad is the latest in the weird beasts created as the various online empires jostle for position in a changing marketplace.

We’re used to failing companies creating alliances – most notably Microsoft and Nokia in the mobile phone sector – and almost all of these ventures fail as they are akin to the two slowest runners in a race tying their legs together believing that will make them faster than the leader.

In other areas we see the big players buy out hot new businesses as the incumbents figure its easier to buy out the competition rather than try to compete.

While those purchases form the basis of the Silicon Valley greater fool model, usually the new business gets subsumed into the big corporation, the technology is lost and all but the most cynical founders wander off to do something more interesting.

Then there’s the merger of equals, and today’s announcement of Apple and Facebook’s deep co-operation is one of these.

Facebook has been talking about building its own phone – much to the scorn of industry participants – as the company struggles to deal with user moving onto mobile phones.

Apple is hopeless at social media, which is barely surprising from a company that employs its own secret police.

So the two coming together make sense although it may not work well as alliances like these can be likened like mating the world’s best golfer with a Grand Slam Tennis champion and expecting the child to be an Olympic swimmer.

Of course Apple had a successful merger of equals back in the early days of the iPhone – Google. The alliance worked well and, Google’s then CEO Eric Schmidt sat on Apple’s board for some time.

Than Google decided to develop its own mobile software build its own phones so relationships soured between Steve Jobs and Eric.

Now Google Maps has been ditched from the iOS phone system and steadily Google are finding their services being dropped from all of Apple’s products.

Those moveable alliances – not dissimilar to Eurasia, Eastasia and Oceania in George Orwell’s 1984 – are something we should get used to as the Big Four maneuver for position in the changing online world.

While it’s going to be tough time if you’re a mindless fanboi following the progeny of these strange alliances, for the rest of us it should be fascinating viewing.

Google merges business with social

What should businesses expect from Google Places being merged with the social Plus platform.

As of today, Google Places is now part of Google Plus with the old accounts being merged into the social media and identity service.

The effect of the merger means listings will now appear with the features of Google Plus added, for US based hospitality businesses, Zagats’ reviews are now also integrated into the results.

For business owners, there’s little change in the administration panel and it appears any accounts that are suspended because of Google’s obscure listing policies remain in limbo.

How the complexities of the Google Places policies mesh with the arcane and arbitrary rules applied to Google Plus identities will be an interesting thing to watch.

One area of concern is that the owner of a Google+ Local listing will need a personal profile – for businesses this means a nominated individual has to run the account. Should that individual leave the business, then there will problems with shifting ownership.

I have some questions in with Google’s PR folk about these aspects of the transition and hopefully we’ll get some more ideas on how to deal with these issues.

While this merger of the two services are to be expected, it’s going to be interesting to see how it evolves. Right now it appears Google have dropped the ball on local with their focus on social and identity management.

The identity management aspect of this integration is the key point as Google’s hope is that individuals will check into and rate businesses which in turn will give them a more complete picture of that person’s habits and preferences.

How that pans out depends on how individuals value their personal information, it may be that once people understand the value of this data they’ll demand more than just the warm feeling of sharing their meal review with a circle of their friends.

Flunking the Local Search Market

Are we repeating the mistakes of the tech wreck?

At a breakfast last week a business owner told me about his struggle to counter negative reviews about his B&B on Tripadvisor.

There’s little doubt that sites like Tripadvisor and Urban Spoon are important to the hospitality industry, as customers check out reviews of establishments before they make a booking or set off for an evening’s entertainment.

Over the last two years most of us in the industry thought Facebook and Google’s Local Search services – both confusing called “Places” – would dominate the market for these services.

Google seemed to have the biggest advantage as the integration of local search and user reviews seemed to be a no-brainer for the search engine giant.

A combination of poor implementation and anal retentive policies left Google Places stranded. The distraction of trying to slap a “social layer” onto the search platform can’t have helped.

Facebook haven’t fared any better. Much of the problem for the dominant social network has been that users aren’t particularly interested in engaging with businesses unless there’s an incentive like a freebie or prize.

Just last week a US based social media expert was recommending local businesses offer incentives such as “a slice of apple pie” in return for favourable Facebook reviews and likes.

Business owners themselves are finding it too difficult with the demands of too many social networks overwhelming them. This isn’t helped by the services offering confusing products, arcane policies and requiring information being duplicated.

Most importantly though is customers just aren’t using these services. Increasingly it’s clear we want to use custom applications, particularly if we’re using smartphones where it’s difficult to navigate through a social media service’s multiple options.

It could well be that we don’t want to use all in one “portals” – this was the web model that companies like Yahoo! and MSN tried to impose upon us when it became clear that the walled gardens of AOL and The Microsoft Network didn’t work on the Internet.

One of the factors driving the tech wreck of the early 2000s was the failure of those portals as highly valued web real estate proved to be based on faulty assumptions and shaky maths.

The failure of specialised search engines and social networks to expand into mobile and local services indicates many of our assumptions today are flawed.

Could it be that the next popping of a tech bubble is a repeat of the mistaken assumptions we should have understood over a decade ago?

Rivers of gold

Can there be a downside to Google’s massive profits?

Google’s announcement that their revenues have increased by 24% over the last year shows the search engine juggernaut keeps rolling on.

It’s tempting to think that Google is untouchable and that’s certainly how it appears when you’re on track to earn forty billion dollars a year and book close to 40% of that income as profits.

On the same day, Sony announced a massive restructure including with 10,000 redundancies and the company’s CEO, Kazuo Hirai, spoke of a sense of urgency to address the once dominant corporation’s drift into irrelevance.

Twenty years the thought of Sony – one of the world’s innovators in consumer electronics – would be wallowing in the wake of companies like Apple and unknown upstarts like Google was unthinkable.

Fortunes are won and quickly lost in a time of great change and this is something we should keep in mind about Google when we look at their rivers of gold.

“Rivers Of Gold” was a term coined to describe the advertising riches of the newspaper industry in the 1980’s. Google’s online advertising is partly responsible for destroying that business.

Today Google is a search engine business that makes its money from the advertising that deserted print media and went online.

It may be that manufacturing mobile phones, running “identity services” disguised as social media platforms or augmented reality spectacles are the future of Google but right now they it’s search and advertising that pays the bills and books the massive profits.

The challenge for Google is not to lose sight of its current core business while building the future rivers of gold.

If Google’s leaders can’t manage this, then they risk following the newspaper industry that they themselves disrupted.

Bubble economics

The fear of missing out drives most investment booms. Today’s Silicon Valley is no different.

You know you’re in an investment bubble when the pundits declare “we’re not in a bubble”.

A good example of this is Andy Baio’s defence of Facebook’s billion dollar purchase of Instagram.

Justifying the price, Andy compares the Facebook purchase with a number of notorious Silicon Valley buyouts using two metrics; cost per employee and cost per user.

Which proves the old saw of “lies, damn lies and statistics”.

The use of esoteric and barely relevant statistics is one of the characteristics of a bubble; all of a sudden the old metrics don’t apply and, because of the never ending blue sky ahead, valuations can only go up.

Andy’s statistics are good example of this and ignore the three things that really matter when a business is bought.

Current earnings

The simplest test of a business’ viability is how much money is it making? For the vast majority of businesses bought and sold in the world economy, this is the measure.

Whether you’re buying a local newsagency outright or shares in a multinational manufacturer, this is the simplest and most effective measure of a sensible investment.

Future earnings

More complex, but more important, are the prospects of future earnings. That local newsagency or multinational manufacturer might look like a good investment on today’s figures, but it may be in a declining market.

Similarly a business incurring losses at the moment may be profitable under better management. This was the basis of the buyout boom of the 1980s and much of the 1990s.

Most profitable of all is buying into a high growth business, if you can find the next Google or Apple you can retire to the coast. The hope of finding these is what drives much of the current venture capital gold rush.

Strategic reasons

For corporations, there may be good strategic reasons for buying out a business that on paper doesn’t appear to be a good investment.

There’s a whole host of reasons why an organisation would do that, one variation of the Silicon Valley business model is to buy in talented developers who are running their own startups. Google and Facebook have made many acquisitions of small software development companies for that reason.

Fear Of Missing Out

In the Silicon Valley model, the biggest strategic reason for paying over the odds for a business is FOMO – Fear Of Missing Out.

To be fair to the valley, this is true in any bubble – whether it’s for Dutch tulips in the 17th Century or Florida property in the 20th. If you don’t buy now, you’ll miss out on big profits.

When we look at Andy Baio’s charts in Wired, this is what leaps out. Most of the purchases were driven by managements’ fear they were going to miss The Next Big Thing.

The most notorious of all in Andy’s chart is News Corp’s 580 million dollar purchase of MySpace, although there were good strategic reasons for the transaction which Rupert Murdoch’s management team were unable to realise.

eBay’s $2.6 billion acquisition of Skype is probably the best example of Fear Of Missing Out, particularly given they sold it back to the original founders who promptly flicked it to Microsoft. eBay redeems itself though with the strategic purchase of PayPal.

Probably the worst track record goes to Yahoo! who have six of the thirty purchases listed on Andy’s list and not one of them has delivered for Yahoo!’s long suffering shareholders.

The term “greater fools” probably doesn’t come close to describe Yahoo!’s management over the last decade or so.

While Andy Baio’s article seeks to disprove the idea of a Silicon Valley bubble, what he shows is the bubble is alive, big and growing.

One of the exciting things about bubbles is they have a habit of growing bigger than most rational outsiders expect before they burst spectacularly.

We live in exciting times.

The tough world of smartphones

Competing in the smartphone market is tough as Dell have discovered.

Dell’s announcement they are going to exit the Smartphone business – for the second or possibly even third time – comes on the same day Nielsen release a survey showing smartphones are now the bulk of US mobile phone purchases.

For Dell this shows the problem they have in being locked into the commodity PC business, what was once a lucrative business is now suffering softening margins and slowing sales. In desperation they are looking to other product lines but struggle to differentiate themselves in other markets.

The difficulties of doing this in the smartphone sector is shown in Nielsen’s analysis of what phones are selling.

Of those sold in the last three months, a whopping 43% were Apple products while 48% were Google Android devices.

Even more frightening in those Nielsen figures is Blackberry’s collapse where the Canadian product has 12% of the market but only 5% of sales in recent months. It’s little wonder Blackberry’s owner RIM is laying off senior managers.

For Microsoft, that only 4% of phones were “other” than Android, Apple or RIM show just how tough the task of selling Windows Phone is going to be, something that won’t be helped with dumb marketing stunts.

Google’s apparent success in mobile isn’t all that it seems either; while the Android platform has nearly half the smartphone market it doesn’t appear to be particularly profitable.

The Guardian’s Charles Arthur looked at a number of legal cases involving Google’s mobile patents and extrapolated the claimed damages to get an estimate of how much Google earns from Android.

Arthur estimates Android has earned Google $543 million dollars between 2008 and 2011 which, given Google’s mobile revenues last year were claimed to be $2.5 billion last year, indicates Google makes more money from Apple devices than it does from its own products.

While Arthur’s estimates are debatable, they show how Apple’s profits dominate the smartphone market. Google, like Dell in computers, are locked into the commodity, low margin end of the market.

Just as Dell have learned that entering new markets doesn’t guarantee success, Google may have to learn the same lesson.

To be fair to Google, at least management are aware of being too dependent upon one major source of revenue.

Whether mobile services built around the Android platform can provide an alternative cashflow of similar size to their web advertising services remains to be seen.

You hold us harmless

How the terms of social media sites risk your assets and their business

Social media site Pinterest was recently caught in one of the ongoing quandaries of social media – the ownership of content.

The subject is tricky; social media sites rely on a vibrant community of users posting news and interesting things for their online friends.

Unfortunately many of things social media users post are someone else’s property, so almost every service has a boilerplate legal indemnity term like Pinterest’s.

You agree to defend, indemnify, and hold Cold Brew Labs, its officers, directors, employees and agents, harmless from and against any claims, liabilities, damages, losses, and expenses, including, without limitation, reasonable legal and accounting fees, arising out of or in any way connected with (i) your access to or use of the Site, Application, Services or Site Content, (ii) your Member Content, or (iii) your violation of these Terms.

Facebook have similar terms (clause 15.1) as do LinkedIn (clause 2.E) and Tumblr (clause 15). Interestingly, Google’s master terms of service only holds businesses liable for the company’s legal costs, not individuals.

Boilerplate terms like these are necessary to provide at least an illusion of legal protections for investors – those venture capital investors, greater fool buyers or punters jumping into the latest hot technology stock offering need a fig leaf that covers the real risk of being sued for copyright infringement by one of their users.

The risk in these terms shouldn’t be understated; by agreeing to them a user assumes the liability of any costs the service incurs from the user’s posts. Those costs don’t have to be a successful lawsuit against the service, it could be something as minor as responding to a lawyer’s nastygram or DMCA takedown notice.

Of course, none of the major social media platforms have any intention of using these indemnity terms; they know that the first time they go after a user all trust in the service will evaporate and their business collapse.

Somewhere among the thousands of social media services though there is going to be one that will pull this stunt. Strapped for cash and slapped with an outrageous claim for copyright damages, the company’s board will settle then send out their own demands to the users responsible.

Those “responsible” users – probably white, middle class folk sitting in somewhere in the US Midwest, South East England or North Island of New Zealand – will be baffled by the legal demand that requires them to file a defense somewhere obscure in California or Texas and will go to their lawyer friends.

When the lawyers tell them what it means their next step will be to their local news outlet.

The moment the story of a middle class person facing losing all their assets hits the wires is the moment the entire social media business model starts to wobble.

In many ways what the social media sites are trying to do is offset risk.

Risk though is like toothpaste. Squeeze the tube in one place and the pressure moves elsewhere.

By laying off a real risk by using legal terms the social media sites create new, even bigger risks elsewhere in their business.

The dumb thing is these terms really don’t protect the services anyway – it’s unlikely the typical social media user will have anything like the assets to cover the costs of a major copyright action by a rich, determined plaintiff.

It’s going to be interesting to see how many services still have these indemnity clauses in 12 months.

For the industry’s sake, the big players will need to have ditched these terms before that first dumb attempt to claim damages from users hits the wires.

Who will be the future Betamaxes?

A modern version of the video tape standard wars is being fought on our phones

This morning Paypal announced its PayPal Here service, a gizmo that turns a smartphone into a credit card reader.

On reading PayPal’s media release in the pre-dawn, pre-coffee light I found myself grumpily muttering “which platforms?” as the announcement kept mentioning “smartphones” without saying whether it was for iPhone, Android or other devices.

It turns out to be both Google Android and Apple iOS. It adds an interesting twist to the Point Of Sale market we’ve looked at recently.

The omission of platforms like Windows Phone raises the question of which platforms are going to go the way of Betamax?

Sony’s Betamax and JVC’s VHS systems were the dominant competitors in the video tape market in the early 1980s. They were totally incompatible with each other and users had to make a choice if they wanted to join one camp or the other when they went to buy a video recorder.

On many measures Betamax was the better product but ultimately failed because VHS offered longer program times and Panasonic’s licensing out of their technology meant there were more cheaper models on the market.

A few days ago Bloomberg Businessweek listed the Betamax device as one of the “technology’s failed promises”

With a superficial comparison, Apple would seem to the Betamax while Google and possibly Microsoft are the VHS’s given their diverse range of manufacturers their systems run on and Apple’s refusal to license out iOS, which was one of the reasons for Sony’s failure.

But it isn’t that simple.

In the smartphone wars, it’s difficult to compare them to VCRs as the video tape companies never controlled content and advertising the way smartphone systems do – although Sony did buy Columbia Studios at the peak of the Japanese economic miracle in 1987.

This control of content is what makes the stakes so high in the smartphone and tablet operating systems war. A developer or business that dedicates their resources to one platform could find themselves stranded if that platform fails or changes their terms of services to the developer’s detriment.

Another assumption is there is only room for one or two smartphone systems; it could turn out the market is quite happy with two, three or a dozen different systems and incompatibilities can be overcome with standards like HTML5.

In a funny way, it could turn out to be Android becomes the Smartphone Betamax due to having too diverse a range of manufacturers.

One of the first questions that jumps out when someone announces a new Android app is “which version?” The range of Android versions on the market is confusing customers and not every app will run on each version.

More importantly for financial apps like PayPal Here and Google Wallet, smartphone updates include critical security patches so many of the older phones that miss out on updates pose a risk to the users.

In the financial world confidence is everything and if customers aren’t confident their money is safe or will be promptly refunded in the event of fraud they won’t use the service.

Whether this uncertainty will eventually deal Google out of the game or present an opportunity for Microsoft and other companies is going to be one of the big questions of the mobile payments market.

Channel blues

Cloud computing is changing the IT industry

“We do the pre-sales work then they come along and steal the customers. It’s wrong, just wrong” growled the sales manager of an IT integrator while talking about one of the leading cloud computing services.

The business model of systems integrators is to be a company’s, or home’s, trusted advisor on IT and make money from charging for their services and the profit in selling software and equipment.

In the last few years that model has become tough – the collapsing price of hardware has made the profits on selling systems leaner while the increased life of systems has meant the big lucrative upgrades have become scarcer.

At the same time services have become less lucrative as more participants have entered the market, many using offshored cheap labour to provide remote support. It hasn’t helped that computers have become vastly more reliable, particularly since Microsoft have largely solved Windows’ gaping security holes.

The icing on the cake has been the end of boxed software and corporate licenses. These were extremely profitable for the systems integrator – a big sale of Microsoft Office or Oracle licenses to a government department could see an IT salesperson pay for a holiday home or cover the kids’ school and college fees.

Cloud computing has largely been the driver of all of these factors’ decline and now it is really hurting those integrators and their salesfolk who were used to a very profitable existence.

While that’s good news for computer consumers – and even better news for hapless shareholder and taxpayers who’ve been largely dudded by big IT sales pitches to gullible directors and ministers – it does beg the question of how customers now get advice and support.

Largely cloud based services rely upon customer self service and many of the providers would struggle to include user support in their list of core competencies.

There’s a business model there for systems integrators, but it’s difficult to see how many those used to fat profits in the past can, or will, adapt to the new environment.

An interesting side effect of this change is how it affects companies like Microsoft where their channel partners – largely those big and small systems integrators – are one of the most important distribution networks for their products and probably their best defense against competitors like Google and Apple. That strength is being steadily eroded.

It’s tempting to think that change affects just “old” industries like retail, publishing or car manufacturing; in reality it affects all sectors and sometimes the most modern might be hurt more than the established players.

The high stakes of Lumia

Microsoft and Nokia have a lot riding on their new mobile phone product

Yesterday Nokia and Microsoft gave a preview of their upcoming Lumia 710 and 800 phones for the Australian market. It’s make or break time for both companies in the mobile space.

The phone itself is quite nice – Windows Phone 7.5 runs quite fast with some nice features such as integrated messaging and coupled with good hardware it’s a nice experience. Those I know who use Windows Phones are quite happy with them (I’m an iPhone user myself).

Whether its enough to displace the iPhone and the dozens of Android based handsets on a market where both Nokia and Microsoft have missed opportunities remains to be seen.

The battle is going to be on a number of fronts – at the telco level, in the retail stores and, most importantly, with the perceptions of customers.

Probably the biggest barrier with consumers is the perceived lack of apps, to overcome this Nokia have bundled in their Maps and Drive applications while Microsoft include their Mixed Radio streaming features along with Microsoft Office and XBox integration.

As well the built in services, both parties are playing up their application partners with services like Pizza Hut, Fox Sports and cab service GoCatch. Although all of these are available on the other platforms.

While application matter, the real battle for Nokia and Microsoft is going to be in the retail stores where the challenge shouldn’t be underestimated.

Apple dominate the upper end of the smart phone market and Android is swamping the mid to low end. How Windows Phone devices fit remains to be seen.

In Australia, if they going to find salvation it will be at the tender hands of the telco companies.

The iPhone is constant source of irritation for the telcos as not only do Apple grab most of the profit, but they also “own” the customer.

On the other hand, Android devices are irritating customers who are bewildered by the range of choices and frustrated by inconsistent updates that can leave them stranded with an outdated system.

So the Windows Phone does have an opportunity in the marketplace although one suspects commissions and rebates will be the big driver in getting sales people at the retail coal face to recommend the Microsoft and Nokia alternatives.

Overall though, it’s good to see a viable alternative on the market. For both Microsoft and Nokia the stakes are high with the Lumia range – it could be Nokia’s last shot – so they have plenty of incentives to get the product right.

Microsoft has consistently missed the boat on mobile computing since Windows CE was launched in 1996 while Nokia were blind-sided by the launch of the iPhone in 2007 and have never really recovered.

To make things worse for Nokia, the market for basic mobile phones where they still dominate is under threat from cheap Android based devices. So even the low margin, high volume market isn’t safe.

For both, the Lumia range is critical. 2012 is going to be an interesting year in mobile.

On becoming a Captive Business

On being trapped by your suppliers or customers

I’ve been writing a lot recently about the risks of businesses aligning their interests too closely with one or another platform, last weekend The China Law Blog discussed the opposite – being a captive customer.

The term “captive customer” is new to me but it’s a familiar concept; in the IT industry most of us found ourselves hostage to Microsoft’s whims at one time or another and it wasn’t a good place to be.

Many smaller businesses and consultants fall for the trap of having just one big customer which their income becomes dependent upon.

While Dan’s point on The China Law Blog is about manufacturing, this risk is becoming even more pressing on the web where there’s a tendency to be captured by one platform or another.

Sometimes entire industries are captured – the Search Engine Optimisation sector is wholly dependent upon whatever Google chooses to with their search algorithm. To make things worse, no SEO expert knows exactly how Google’s equations actually work.

We’re seeing the mass media being captured in a number of ways – by granting licenses to Facebook, one suspects unwittingly, or developing content for Apple’s iPad.

For startups depending upon cloud services or single payment platforms like PayPal there are serious risks as we saw with the co-ordinated takedown of Wikileaks.

In nature, the animal or plant that depends on one source of food or habitat is at risk from even small changes in their environment. Be careful you aren’t a business dodo.