Tag: google

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.

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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.

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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.

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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.

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Paying the piper – the cost of the internet’s walled gardens

The web’s walled gardens have a real business cost

With the web increasingly dominated by four major, and many minor, fiefdoms the cost of being part of those groups is gradually becoming clear.

As part of Facebook filings in advance of their public float they published the key agreements with their developer partners including that with games provider Zygna, technology journalist Tom Foremski has a disturbing look at Facebook’s conditions that illustrate the costs and risks.

In terms of the costs, Tom identifies Clause 2.1 of Facebook’s “Statement of Rights and Responsibilities” – shown as Annex 1 in the Developers  as probably the biggest price for all content creators;

… you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (“IP License”). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

So by sharing something on Facebook, you grant Facebook the right to do what they like with what you’ve created. That’s something worth thinking about.

For anybody trying to make a living off Facebook, it’s important to consider they also retain the right to throw you off the service at any time. From clause 4.10 of the Statement Of Rights Annex;

If you select a username for your account we reserve the right to remove or reclaim it if we believe appropriate (such as when a trademark owner complains about a username that does not closely relate to a user’s actual name).

So get into a trademark dispute with a big corporation – and often their lawyers cast a very wide net on potential similar spellings – and your account is shut down.

There’s also the specifics of the Zynga agreement that should concern anyone investing in the games company. Right at the beginning of the agreement we see this clause;

The parties further acknowledge that Zynga is making a significant commitment to the Facebook Platform (i.e., using Facebook as the exclusive Social Platform on the Zynga Properties and granting FB certain title exclusivities to Zynga games on the Facebook Platform). In exchange for such commitment, [*] the parties have committed to set certain growth targets for monthly unique users of Covered Zynga Games.

So Zynga is closely tied into the fortunes of Facebook, we knew that on a business level but now we know just how deep and binding the agreements are.

We should be clear, all the major social media and online services have similar clauses on intellectual property and copyright infringements; there’s no shortage of businesses who’ve been caught out by eBay or Paypal and plenty of people found their Google accounts shut down by their obsession with real names.

For all businesses the message is clear – be careful before committing totally to one online platform or another. Should you end up in a dispute, or find you’ve backed the wrong service, it may be a very costly process to get your company off that platform.

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Is Twitter’s censorship a good thing?

National laws are a reality for web based businesses

Since Twitter announced they were going to start blocking messages on a country by country basis if required by the laws of that land they have received a lot of criticism.

Most of this criticism of Twitter revolves around the belief that every message should only edited or deleted by the person who posted the tweet.

Anything else a breach of free speech and a threat to the underlying principles of the internet.

That utopian view of the Internet doesn’t translate into real life; the online world is as subject to laws as any other part of life and social media companies have to comply with the same laws as newspaper organisations or fast food chains.

Regardless of what you think of those laws – and in many countries they certainly are unreasonable and oppressive – they do matter.

Were Twitter not to comply then the entire service would be at least blocked in those countries and, should an action be enforced in a US court, then the tweet removed anyway for every user around the world.

By introducing country specific blocking, the service can let the rest of the world see a tweet that would otherwise be lost and in countries with restrictive or authoritarian laws, local people can still use the service.

A particularly clever way of dealing with removal requests is to note that the specific message has been blocked in a country. This adds a level of transparency and accountability to the actions of courts and governments that want to close the service.

We can see that being particularly effective in jurisdictions like the UK where British judges have been quick to apply “superinjunctions” preventing the merest mention of something by anybody.

Should Britain’s overeager judges start demanding Twitter block tweets, those in the UK will quickly realise something is amiss. The effect will probably be to increase the interest in the blocked tweets that can be seen anywhere around the world.

Despite the utopian view that transparency and openess will solve the world’s problems, we don’t live in that world right now and people can – rightly or wrongly – ask that false, defamatory and damaging posts on the Internet can be removed.

Interestingly Google this morning announced they will be introducing a similar system to deal with country specific problems on their blogger platform.

Twitter’s handled this in the best way possible, in many ways this could be a step forward for social media and the Internet in general.

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Can you trust your friends?

Does showing social results hurt search?

I remember the first time I heard about Google, it was in the run up to the year 2000 and my radio segments were mainly discussing if computers would blow up, dams collapse or aircraft fall from the sky as computer systems failed to deal with the change into the new millennium.

Despite the risk of impending disaster, I had a play with Google search and found the results to be far better than the established sites like Yahoo! and Altavista. Millions of others agreed.

Quickly Google became the definitive search engine. If you were serious about finding information on the web then Google was the way you found it.

For a while we wondered how Google would make money, it turned out that linking advertising to the search results was immensely profitable and the company quickly became one of the richest in the world.

Today, Google’s decided their searches will be something else. Rather than being a trusted source they’ll tell us what our friend think.

Which is great if our friends are trusted sources on Aristotle, post colonial South American politics, how to book sleepers on the Trans-Siberian or the best pie shop in Bathurst. But it’s kind of tricky if they aren’t.

As much as I love and enjoy the company of my friends both online and offline, not many of them are authorities in anything – except possibly pie shops.

This the flaw at the heart of integrating search and social media, they are two different things and we have different expectations for them.

As Pando Daily’s MG Seigler puts it; “Evil, Greed, And Antitrust Aren’t Google’s Real Problems, Relevancy Is.”

For most of my online searches, my friends views and ideas aren’t relevant. If they are, I already know how to find them.

The prediction is that tinkering with search will not end well for Google, it’s hard to disagree if we lose confidence in their results.

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