Tag Archives: Google

Where are we?

Over the past few weeks, I’ve noticed two themes in press and analysis around the tech world.

economist cover

Theme #1 : Where has the innovation gone?  This was represented best I think with this week’s cover of the Economist, asking whether we’ll ever invent anything as useful as a toilet ever again.  This echoed folks like Michael Arrington who quipped that he was bored and Peter Thiel who griped that instead of flying cars, we got instead 140 characters.

Usually, when I hear lots of mainstream concern that innovation is dead, that’s when I start getting excited.  The froth is coming out of the market, and the true innovation is out there, lurking, perhaps unrecognized (yet).  But it’s out there, just waiting to delight.

So on one hand, I’m excited.  Bullish about the future.

Theme #2: Thoughts on the Series A crunch.  Lots has been written about the pending Series A crunch.  I basically agree with Michael Maples Jr’s as quoted in a PandoDaily article, where he says (paraphrasing) that every year there are about 10 fantastic startup companies.  Irrespective of funding environment, those 10 are the ones everyone wants to get into and those have little trouble finding funding.  The goal is to start or be involved with one of those companies.

With that as context, I’ve read with increasing alarm the press that prominent incubators are putting out about how much follow-on funding their companies have attracted.  Here was one such announcement just made today.  I can understand why its useful and its not to take away from the work that incubators are doing to help companies get themselves started and off of the ground.   I’ve never been much of a fan of funding announcements though.  I’m more of a fan of announcements of big customer wins, market share achievements, and partners that are committing to your solution.  That’s real traction and where you have those wins, funding will follow.  I do worry that the signal from incubators on follow on financing is going to, if anything, prolong the Series A crunch.

These are just thoughts.  The concrete action feedback, if you’re a startup, is to stay focused on winning in the market place through traction–customers, market share, partners, revenue, growth, etc.

Delight a rapidly growing customer base and the Series A crunch and the concerns on a lack of innovation in today’s tech market will magically work themselves out.

 

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Disruption Daily: Early Thoughts on Facebook Graph Search

Peter Drucker dies at 95

Big tech news today with Facebook announcing its new Facebook Graph Search.  Wall Street apparently didn’t like the news, sending FB down -2.74% on a day the rest of the market was pretty sharply up.  I might need to lean in and pick some up.

I think it is a big tech story for 2013.  I agree with David Weekly’s initial observation that this is a serious ongoing threat to Google.  It’s a pretty obvious step for Facebook and I think its going to pay off for a few basic reasons.

First, it starts to highlight in a very mainstream way how Facebook has, in effect, become the internet for many people.  People are spending so much time on Facebook that it makes sense that FB would invest in convening a “Dream Team” of Google Search engineers to do some semantic forking and NLP stuff to make Facebook the place you go for search.  It makes all the more sense when you consider that Facebook content isn’t really searchable via Google–I can’t go to Google and search for that status update, photo, or meme you posted.  Just doesn’t work.  So an obvious strategic move.

Will it succeed?  I’m bullish.  It’s one of these strategies where Facebook’s chocolate meeting the peanut butter of search seems to fit really nicely.  Certainly it seems a lot smoother of a fit than Google trying to veer into social with G+.  (With Marissa Mayer taking her talents to Yahoo, I think Google’s push into social is perhaps even more at risk, as her fingerprints in terms of user experience and design were so pervasive.)

Second, I think that there are a variety of scenarios where FB search could be quite disruptive in the shorter term–with local in particular.  We are all connected to friends through Facebook, and I’d bet that a lot of accounts have a huge portion of friend connections who are nearby.  The next time you need to know whether that new Chinese place is any good, are you really going to go to Yelp or Google, or would you like to see that 6 of your friends had “Liked” the place on Facebook.  Local is a big kahuna market, and FB has a nice route to going after it.

Third, it’s a winning move in that FB is growing engagement and retention, and search (along with mobile) gives it a new avenue to continue driving this lift.  Surely there’s an opportunity to go for the jugular over time with Google, and this is good for the industry.

A final point on Facebook’s capacity to disrupt Google in a major way… I remember reading an interview of Peter Drucker in 1997 or 1998, around the time that the Department of Justice was lining up to take on Microsoft for anti-trust violations.  The interviewer asked the father of modern management what his opinion was on the anti-trust case. His answer, basically, was that in the case of the technology industry, the market moves too quickly.  When a company becomes as big as Microsoft  the seeds for obsolescence are in a sense already planted.  He forecast that based on Microsoft’s size, some small, disruptive company that no one had yet heard of would step up to take on Microsoft in relatively short order.  Though there’s no reason to think Drucker had ever heard of them in 1998 when the interview happened, it’s pretty clear that he was prophesizing Google.

Now certainly we’ve all heard of Facebook, so this time around is a little different.  But at the same time, it’s not lost on me that in the same week that the Department of Justice announced it would not pursue action on Google after 2 years of investigation–the true sign of being a tech behemoth–Facebook announced its Facebook Graph Search.

 

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Market Cap / Employee

Monday I caught up over lunch with long time friend and superb Japanese entrepreneur, Nori Matsuda.  Matsuda-san is the CEO & Co-Founder of Sourcenext, a publicly listed consumer software company in Japan.

During the discussion, he talked to me about how he thinks about building public technology companies.  He mentioned a metric he thinks about a lot: Market Cap per Employee.  He thought that this was an interesting expression of a company’s culture, of how much opportunity, how much energy there likely was at the company.  He then rattled off the Market Cap per Employee of several large public tech companies.

I built this simple chart below, and I think it’s telling:

Company Market Cap (B) Employees (K) M/E (M$)
FB 52 4 $13.0
APPLE 528 73 $7.2
GOOG 219 54 $4.1
MSFT 227 94 $2.4
AMZN 107 51 $2.1
YHOO 21.8 14 $1.6
CSCO 98 67 $1.5
Zynga 1.8 3 $0.6
Nokia 13 105 $0.1
HPQ 23.6 350 $0.1

 

If you’re thinking of working at a public company, then this is probably an interesting metric to look at and consider.

Alternatively, if you’re running a startup, it’s also an interesting metric.  You might consider your current valuation and divide it by the number of employees.  See where you stack.  It’s probably at least some kind of indicator of the opportunity and the momentum in front of you.

 

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Be Careful What You Wish For : Color’s Cautionary Tale

TheNextWeb broke the news that Apple is acquiring Color Labs.  This closes what was one of the highest profile, most hyped startups of the last 5 years.  In my time in Silicon Valley, I’d say Google’s launch of Google Wave and the launch of Color were the top two in building massive hype that then came up really short.  (Do you all remember when people were *begging* for Google Wave invites?)

And that’s ok.  Sh*t happens. New ideas fail every day.  That’s reality.  What *has* changed I think that the costs of failing are dropping.  A lot.  Moore’s Law, the continuing growth and robustness of cloud-based infrastructure and open source tools and development environment, and the development of methodologies like the Lean Startup, have all combined to help teams run customer development cheaply and quickly.  They can build and vet ideas quickly and when they start raising money, they have a much better sense of what works and why.

Color ran counter to this–it went big.  On every front.

I think the cautionary tale is that you should be careful what you wish for.  I was once invited to judge a startup pitch contest.  This contest was held at Color’s Headquarters in downtown Palo Alto.  This was post Color launch, and the bloom was definitely off the rose.  Half of Color’s office space was allocated now as kind of event space, which is where we held this startup pitch competition.

Anyway, before the contest, there was a long networking cocktail type event.  I remember standing there talking to different startup teams.  One of the teams I talked to pitched me their idea.  I said to them, ‘hey, what you’re doing is interesting.  I am not interested in investing in it [for wahtever reason, can’t remember] but let me know if there’s anything I can do to help.’   One of the founders looked at me, then glanced around the room and said to me, ‘Well, there’s a $42m check sure would help,’ referring of course to the monster Series A Round that Color had reportedly raised.

My response: “Look, be careful what you wish for.  If I had invested $42M in this thing, and now half of the prime real estate in Palo Alto was being used as event space for cocktail parties and startup pitches, I would want to fire everything that breathed.  This would make me so angry.  Go out and build something awesome.  Then the world of investors will find their way to your door.”

Too much of the press and Silicon Valley community celebrates the raising of money.  Indeed, a raise is seen as press worthy.  I’m less convinced that its news worthy–some founder convinced some investor to write a check.  Meh.

To me what is news worthy is winning a customer, getting a really high profile, value added partnership nailed and in market, landing a truly world class exec or developer.  The really important building blocks to constructing a real company are what we should be celebrating.  Not that you got someone to write you a check.  Focus there, and do that great and the funding announcements will find a way of happening.

 

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Thoughts on Apple’s Tim Cook’s Apology on Maps

Today, Apple CEO Tim Cook posted an apology letter to its customers over the release of its mapping product in iOS6.  It is direct and sincere.  It also recommends partner (or potentially competitor) products to users.  A link to the letter is here, and it is a clear sign of Cook’s leadership style and how this style differs from Jobs’ style.

One of BlueRun Ventures‘ portfolio companies, Waze, is specifically recommended to users.  This is quite a turn of events, as just a few months ago, Apple’s announcement that it was launching its own mapping product had led many in the technorati sphere to pronounce Waze roadkill.  What a difference solving a hard technical problem makes.

This is not a post that is negative to Apple at all.  It is still the most amazing and most valuable company in the tech world, and rightly so.  I am a big time Apple fanboy.  At the same time, today’s development is actually great news for startups as a whole for several reasons.

There are no sure things.  First, today’s note is evidence that just being the 800# Gorilla isn’t enough to guarantee winning a market.  With some markets, even if you are the most valuable company on the planet and you can literally devote limitless resources to a technology, you are not guaranteed a win, at least straight out of the gate.  In some market segments, like Maps, people depend on them and care about them greatly.  And it turns out the technology solution is difficult and takes more than just money to solve–it’s going to take, in the estimation of some analysts “two or three years,” to for Apple to build  a competitive offering.

Competition is good.  The second observation that’s good for startups is that this is evidence of a healthy and competitive marketplace.  Imagine that this happened in the PC ecosystem at the height of Microsoft’s dominance with Windows…  Users would have complained and raised a fuss, and Microsoft would have stuck with the message that ‘as more users use our [crappy] maps, the maps will get better,’ but there wouldn’t have been the same ecosystem support and robustness.  There’d also not have really been an alternative.

Today, not only is Apple recommending products like Waze, but analysts are wondering whether this will drive more users to Google’s Android platform, where Google Maps are happily distributed.  This is the wonder of competition–the invisible hand is clearly at work.  More competition at the platform level is good for startups and good for users, as it drives more diversity, more desire for offerings that each ecosystem can build upon.

Mobile is about local and real-time–maps here are key. The third observation that is that #MapGate and the customer uproar over it highlights things I’ve written about before.  Namely,  the Mobile Web 3.0 is upon us, and it offers the opportunity for real time commerce right here right now at the hyper local level.  When you  think about computing as being very local and real time, you realize that the map is the central locus point, that the map is extremely strategic in this world.  This is great news, not just for Waze, but for the coming future of the Mobile Web 3.0.

 

http://techcrunch.com/2012/08/11/analysis-web-3-0-the-mobile-era/

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Android Slowing in the US?

An article from today’s NYT Tech Section questions whether Android growth is slowing in the US.  The article quotes an analyst who states that iPhone growth remains healthy, but that growth rates of Android in the US are dropping.  No mention of Windows Phone or RIM btw, which I interpret as those two platforms not yet having achieved relevance.

The article is light on analysis, but it will be worth digging in on.  My quick take on Android is that as the very clear unit share leader in smartphone OS’s, it gains several advantages.  It gains broad ecosystem support from hardware/handset makers.  Developers have to pay attention, etc.

But unlike the Apple/Windows ecosystem battle of the PC Era of the 90s, in which Windows’ commanding market share basically pulled all client app developers to their ecosystem, the same effect is not happening.  In fact its the opposite this time around.  The iOS ecosystem seems by most accounts to be where the money is for developers, and few  development teams that would target Android at the long-term exclusion of iOS.  (Some devs will use Android as a test platform as its app approval process is far simpler than Apple’s.)

What’s driving the different outcomes this time around are a few things, namely:

  • Mobile adoption is happening much faster and more broadly than the PC era of yesteryear.  The market has grown so fast and so many users are now using smartphones that the market to support two (or more) viable ecosystems clearly exists.  While not the market share leader in units, iOS has a big unti share and it pulls the vast majority of profit share in the space.  iOS gets the premium users and their ecosystem is well designed to get users spending money and developers rewarded.  All in all a very healthy ecosystem over there in Apple.  In the PC war era, Apple lacked this virtuous cycle.  The explosive market growth of Mobile enabled 2 ecosystems to do this.
  • Android’s developer ecosystem is still too fractured.  Developers tell me about real concerns on Android owing to the different OS versions, firmwares, etc.  The compatibility problems are all over the place, and it has a chilling impact on developers.  iOS has its own issues, but at a minimum, developers know that if they get an app Approved by Apple they’ll get their app onto devices that can run their app.
  • The mobile app ecosystem and infrastructure is much better developed, enabling developers to support (with some cost) both ecosytems.  In the early PC era, app developmernt and distribution was still so inefficient that developers had to make a choice as to which ecosystem to target.  In today’s world, with eveyrthing from AWS, Phone Gap, HTML5, to say nothing of the ease with which the different app stores can help distribution all helps developers build and support apps on more than one ecossytem.  This efficiency enables more than one ecosystem to thrive.

So all in all, I’m not super troubled by this report.  Android is still a big dog in the space.  It does need to simplify the development ecosystem, IMHO, and showcase that developers can really succeed there.  But being the #1 market leader in units always has benefits, and I expect Android to retain that spot for some time.

 

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Lessons from the Facebook IPO

The most anticipated tech IPO since Google’s offering a decade ago, Facebook‘s going public was today called “A Perfect Storm” by the Wall Street Journal’s AllThingsD, pushing further the narrative that Facebook’s IPO was a failure.  There is plenty to support the storyline– NASDAQ faced serious technical glitches to being able to fulfill all the activity, underwriters were reducing Facebook revenue forecasts during the roadshow, and two key banks on the IPO, Goldman and JP Morgan were helping hedge fund clients short Facebook stock (the horror!). Listening to the radio out here in Silicon Valley, the narrative has been that the IPO has been a disaster, in particular for the retail investor who fought to buy shares at the IPO and were expecting Facebook to surge in the first day of trading.

I see things differently.

Facebook acted in a particularly rational and concrete manner, and I think if anything should be applauded for its approach.  Notably, it priced its shares high at offering.  Recall that the preset range was between $28-35 per share according to a Wall Street Journal article from May 3, 2012, several days before Facebook began trading.  When it came time to pricing the IPO, Facebook chose $38–22% above the mid-point of the range, and well above the $35 high-end.  Facebook signaled very clearly with this pricing, that it was uninterested in providing early IPO investors with the opportunity to get a “quick pop” at the opening of trading.  Investors should never buy a product at any price, and those who didn’t re-calibrate their expectations as the prices got solidified should be looking in the mirror, as opposed to blaming Facebook.  In fact, there is no law guaranteeing that hot IPOs sizzle in upward price appreciation, and there shouldn’t be.

So why did Facebook set its price so high, when it could have been so easy to set it lower, get a pop and silence all this noise?  I think two factors came into play.  First, Facebook likely didn’t want to leave money on the table.  Setting its IPO price high would yield Facebook as much cash for its balance sheet (and for pre-public investors) as possible.  Second, Facebook likely reasoned that it didn’t want to attract investors looking for quick, short-term gains, but rather wanted investors focused on the long-term.  Certainly this approach has been consistent with how Mark Zuckerberg has built and driven his company–with a clear focus on  delayed gratification and for the longer-term.  Given that that’s been Facebook’s approach over time, its totally logical that its approach towards offering its stock to the public would similarly be optimized towards longer-term focused investors.  So the unsaid message from Facebook to its public investors with this pricing approach is this: “If you want to be an early investor in Facebook’s public stock, you had better be ready to hang on for a while.”

I applaud this approach for a few reasons.  First, when selling its shares to the public, a firm should get as much capital as it can for its balance sheet.  That is the key purpose and reason for the IPO in the first place.  Second, this approach addresses one of the key problems with today’s investment environment, namely its ultra-short-term focus.  From my perspective, Facebook’s behavior is spot on.

Those who should be excoriated are NASDAQ, retail brokerages who f*cked up trades for their retail clients, and retail investors who expected to make money on the initial pop.

NASDAQ has long positioned itself as the tech-centric exchange for stocks.  Not anymore.  The incompetent exchange is more like it, 30M shares were excuted imporperly, the largest problem the exchange has experienced.  This would be like being the wedding planner for the Royal Wedding in the UK and basically screwing the whole thing up.  This was something NASDAQ had to nail, and it didn’t.  It will be interesting to see how they recover here.  To fail this badly in this high profile an IPO is amazing.  In a world where the next Facebook will have its choice of exchanges, expect NASDAQ to be playing catch-up.

The New York Times has an interesting article about how retail brokerages like Scottrade, Charles Schwab, and Fidelity have basically universally declined to take direct responsibility for losses their retail investors suffered owing to the NASDAQ’s screw up.  Further, as retail investors are not members of Nasdaq, they can’t file complaints, whereas large institutions can.   Instead, the retail investor whow as screwed by NASDAQ’s incompetence has a totally fugly remediation process that I can only imagine involving lots of automated phone trees with cut rate brokerages like Scottrade or Fidelty.  “Dial 3 if you’d like to talk to someone about your trade… current wait times are unusually high, we expect someone to be with you in approximately 95 minutes.”   Yuck.

So retail brokerages who won’t stand behind their retail customers and who offer crumby service deserve to be called out.  Definitely.  But there is also some accountability that retail investors have to take here.  They should not come into an IPO expecting to see a quick pop.  That’s lotto thinking, its not stock investing.  It exposes you for a sucker and your foolishness deserves to be repaid with you losing your money.  When you buy a share, you are buying a share from someone ready to sell.  You need to ask yourself if you’ve really thought carefully enough about the trade you’re making, as its likely that the person or computer on the other end has dedicated a lot more brainpower to what they’re doing.  If you’re ready to put your money into the market or into Facebook, you’d better understand that its a long-term game, you really shouldn’t be doing this with an eye towards what happens today, this week, this month, or frankly this year.  To do so is foolish.

This tough love message is especially important now.  With all that we have been through in the last 10 years–DotCom Crash, WorldCon, Enron, the banking crisis, Bernie Madoff, the housing crisis–we should have learned that you’ve got to be mindful when you invest.

To see how quickly these lessons were forgotten, and how quickly the mirage of a sure thing of Facebook’s IPO took hold of the psyche, is cautionary indeed.  Fools and their money.

Disclosure: I have no investment position in Facebook.  I plan to be a long-term buyer, but frankly plan to wait a little longer, as I think the price is still too high.  I expect it to drift down over coming months, and will hope to pick some up.

 

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The Vice Tightens

Nokia warned this week of softer than expected revenues and a slower uptake of its new line of gorgeous Lumia phones running Windows Phone.  Nokia also announced aggressive price cuts to drive volume.

Its an expected, necessary response to slow consumer uptake on this launch.   The  price cut also exposes the challenge in front of Nokia and Microsoft–namely that to become a credible “third ecosystem,” they’re going to have to carve out a niche that is distinctly different and protected from Apple/iOS on the high-end, and Google/Android on the low-end.

Though Android is now clearly winning on unit volumes in the smartphone market, Apple is still earning the bulk of profits.  Consumers yearn for Apple products, and Apple appears to still have a lot of marketing magic in terms of whipping us into a frenzy for its new product releases.  And more importantly, the developer ecosystem around Apple  remains strong.  Developers know how to make money on iOS and it remains a ‘must target’ platform from a developer standpoint.  So long as these factors remain true, expect Apple to retain the high end.

Google Android has arrived big time.  Now the leader in terms of unit share run-rate, Android is now the market leader in smartphone shipments.  Being #1 has benefits, in particular, any hardware manufacturer not named Apple basically has to be in the Android ecosystem.  Google’s strategy of giving away the OS and its better than free value proposition to hardware OEMs, which Peter Fenton discusses in this great post, is great competitive defense.  If there’s any weakness in the Android ecosystem, its that the profitability of the developer ecosystem seems lower than iOS’s.  Developers I speak to generally find Android users less likely to pay for an app, less likely to complete in-app purchases etc.  Android runs too many units for developers to not target the platform, but the developer revenue seems less clear.

With these two leaders in place, then the question is how does Nokia / Windows fit?  It will be difficult to compete with Android’s less than free.  To the extent it is successful in gaining (buying?) share at the low end, this strategy has to problems.  First, Nokia/Windows have a business model that will have to likely compete against the better than free model of Android.  While charging nothing to handset manufacturers, Google makes revenue on default searches and reportedly shares this revenue with carriers/handset makers.  This is better than free, and MSFT/Nokia will have a challenge responding.

The second issue here, also important, is the signaling to mobile app developers.  Most mobile app developers I speak to tell me that Android is a broadly distributed platform, but it is nowhere near as profitable (in general) as iOS.  Developers will run you through a litany of complaints: the Android Market is a mess, the in app purchasing platform is weak, users don’t upgrade to the latest versions of the Android OS (or their apps), etc.  The other issue is a function of price point: Android users are generally cheaper and more price sesnitive than iOS users.  Developers know this.  With Windows / Nokia chasing this segment, they are heading into a problem area for their developer efforts–namely, developers will want to understand what the profit profile is for building apps on the platform.

So Windows Phone / Nokia will have challenges fighting against Apple.  And opening a front against Android will I expect prove both costly and difficult to attract developers.  This is the risk of becoming a third ecosystem.  This is what happens when the vice tightens.

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6 Observations from Mobile World Congress 2012

GSMA Mobile. WorldCongress

Image via Wikipedia

This year’s Mobile World Congress drew record crowds to the beautiful Fira de Barcelona venue.  The scale of attendee growth–up over 30% from last year and forecast to be well over 100,000 next year–drove home the obvious message: this mobile thing is going to be really big. 

As venture investors who’ve focused on mobile investments for over a decade, BlueRun has been coming to MWC/GSMA for years, and its interesting to track the moves occurring in the industry year on year. 

At a high level, this year felt relatively incremental versus last year–a lot of overall market growth, but few individual moves.  Here are a key observations that I came away with, generally with observations on a year over year perspective. 

  1. Brands are getting in the game in a big way, but the days are early.
    One of the biggest changes I saw year over year was the interest big brands have in mobile.  We saw this most clearly at the mini-conference AppNation, which was produced in partnership with Nokia, BlueRun Ventures, held its Social Loco conference at MWC.  In it, speakers from a broad range of companies–from Ebay/PayPal, Visa, ESPN, Verizon Wireless, Four Square, Waze, Groupon, Retailligence, Bing Mobile, Keep, and others–discussed how the rise of SoLoMo was impacting their businesses.  The net/net is that we are in the early innings of mobile’s rise in increasing as a new outlet for brand franchises to build and nurture. 

    Over the last 12 months, brands have watched the rise of firms like Groupon (couponing), Zong (now Ebay) (payments), and the opportunity is starting to become clear.  At the same time, the opportunity to do much, much more in terms of building relationships with users is still very apparent.  One example: loyalty.  One panel asked each speaker to name a company who’s mobile strategy had improved the loyalty the speaker had with that brand.  Everyone on the panl could name one brand: Amazon, Starbucks, Delta (sic).  But everyone’s list was relatively short. 

    Brands to date are using mobile as an extention of their brand, e.g., ESPN is now available with scores, news and highlights in your pocket.  Or perhaps they’re using mobile to help extend the ability to drive commerce, e.g., Amazon now gives me the ability to price shop whenever I’m in the store.  But when thinking about how brands really think about building loyalty via mobile, few could point to brands that are yet thinking about this.  Right now, mobile is mainly about driving foot traffic and sales at point of sale, according to the folks that I spoke to.  I expect much opportunity over the next 2-3 years for brands to think really hard about not just closing sales through using their mobile strategies to build real-time purchase intent, but also to spark opportunities to drive long-term loyalty.

    At the same time, in the shorter term, there was a lot of discussion at this from brand’s perspectives about this being the year where m-commerce really explodes.  Several felt that the ecosystem around NFC is finally in place.  And with the next generation of phones having wallet technologies turnkey ready, there’s a sense that we’re finally going to see m-commerce and m-payments really poised to explode.  So for the time being, the brands that were speaking here are looking most heavily at how they position themselves to capitalize on this.  All in all, that’s good for the whole ecosystem. Its going to drive a big solid step for mobile as a market, and it highlights how much opportunity remains in front of us. 
  2. Microsoft / Nokia partnership progress has exceeded expectations 1 year in.  A year ago at MWC, the MSFT/NOK partnership had been just announced.   Leading up to last year’s MWC, Nokia had just released new CEO, Stephen Elop’s “Burning Platform” memo, a clear-eyed assessment of how far behind Nokia had fallen and the level of urgent focus required.   At last year’s show, Elop proclaimed that the Nokia / Windows Phone partnership would provide a “3rd Ecosystem.”  But at the booths of both Microsoft and Nokia, no phones existed, few partners were on board.  So last year, the pronouncements were strong, but the execution wasn’t yet there–skepticism was the order of the day. 

    What a difference a year makes.  Nokia’s Lumia 900 looks awesome–I got a 7 minute demo (and finally had to beg to leave the booth)–for the high end and should grab some share in the premium smartphone market.  At the same time, there are a range of lower end smartphone devices that are going to disrupt the feature phone share. 

    Much work remains.  The app ecosystem is still way too far behind and developers I speak to are not seeing a need to prioritize WP ports yet.  For gaming, the lack of OpenGL and the inability to program in native C or C++, has several mobile game developers unable to shift their focus.  And how WP users will monetize in this 3rd ecosystem is still a big wild card.  Developers I speak to in general understand that iOS monetizes far better than Android.  How WP users will monetize is hazy, especially given that a big chunk of share WP will grab will be feature phone replacements. 

    But all in all, given where Nokia and Windows Phone were a year ago, more progress has been made in a year than I think most would have forecast.
  3. Android’s ecosystem continues to hum.  Last year, Google’s Android presence was in a word: awesome.  Their Android area was a party, and all the cool apps were there.  Cool visualziations of Android activations conveyed the global momentum.  And a smoothie bar and slide rounded out the momentum with “googley” good cheer. 
    This year all this stuff was on display.  Momentum still strong, no big change here.  Steady progress, the stance of a leader.  Kind of like the Dallas Cowboys under Jimmie Johnson–they’re expecting to win. 
  4. Samsung’s Tablets made a lot of progress since last year.  Last year Samsung was demoing its first mainstream Android tablets.  They felt like good version 1.0, but Apple’s iPad really seemed quick, faster, and more real as a producct  The Samsung Galaxy tabs at the booth last year also got really hot, like drop out of your hand hot. 

    This year, Samsung’s product line up is eye-opening.  These machines cover a range of sizes and hit a range of prices.  The software is faster and much more responsive.  The hardware feels sturdier, no device felt hot, and the screen resolution is terrific.  Whereas last year, I thought no tablet would really stand up to the Apple iPad for years, I’m wrong.  Samsung is in the ring.  Game on! 
  5. Blackberry is still dead.  On first impression, the two things that caught my eye at Blackberry’s booth were both negative.  First, they had a Porsche 911 4S in their booth.  Always a bad sign when you’ve got to bring a power car into the booth of a big company like this–its a signal your products aren’t cutting it. 

    Second, it was really dark, low lighting inside the booth.  This also usually conveys to me that the vendor doesn’t really want you to see stuff clearly.  This was in sharp contrast to the Samsung booth, which is light like the inside of a surgical theater–brigh, bright lights. 

    Inside the booth, it just seemed as though there wasn’t much excitement, a high ratio of RIM employees to attendees.  Uninspired product line, with the Playbook still seeming basically at least 18 months behind in terms of product functionality. 

    The lack of momentum here carried over to the Developer Day they hosted.  The developers I talked told me that the Blackberry Developer Day wasn’t really developer focused at all.  The first hour of the session was basically a bunch of marketecture.  The first question in the Q&A was from a developer who asked, “ok so what can we do and what can’t we do?”  This is basically the Developer 101 question that any developer has of any platform.  The developers I spoke to expressed exasperation that on top of having so little market momentum, such weak products, that Blackberry would put together a Developer Day that was so disconnected fromm what developers want to hear about. 


    In addition to the big ecosystems, here are some other big shifts that I perceived out of this year’s show.
  6. The big carriers are still struggling with this new world order.  Because of the huge size, scope and presence of many big carriers, Mobile World Congress / GSMA retains some of the feel of the mobile industry pre-2007, before iOS and Android.  In that old world, the carriers had huge power at MWC (and indeed everywhere), but the carriers were synonymous with distribution.  To get your mobile app or service in front of users, you had to convince a handset OEM (Nokia, HTC, etc) and/or a carrier to support you.  The carriers have the ultimate billing relationship with the user, so their power was pretty much unrivaled.

    That world is over, and now MWC is a walking illustration of how the great unwashed masses of app developers have ridden the iOS and Android waves to liberate their routes to market.  With the ever falling costs of distributed computing services provided by Amazon’s AWS, Rackspace, and others, along with the rapid rise of new mobile-oriented instrastructure services such as Urban Airship, Parse and others, developer power is only going to rise.

    Facebook announced the integration of carrier billing into its platform, a great move and one that makes Facebook even more interesting as a mobile dev platform.  And it exposes a central challenge to carriers–they need to avoid becoming just a ‘dumb pipe of data,’ but how concretely will they achieve that?  I don’t think there is yet a crisp answer here.  I do think that we are starting to see slightly more aggressive and creative carriers, seeking to build value in this new world order.  The Facebook integration with billing systems is one move.  Some carriers are getting more aggressive about the work they do with startups.  Verizon Wireless in the US is one example. 

    But this carrier evolution needs to continue.  Startups and mobile apps and services I spoke to at MWC talked about how difficult it is to work with carriers, how it takes 10+ meetings to get even the simplest things done.  One VP at a very prominent mobile service expressed to me that at last MWC, the carriers he talked to felt as though they still had a lot of leverage over his company.  This year things have changed, he remarked.  When asked why, he said, “Well, we more than tripled in size!”  No more discussion of leverage, the startup has it, no discounts, no rev shares.  Put me on the phone and let’s go.  I expect more of that, not less so. 

    So a big year at Mobile World Congress.  Great to see everyone there, and great to see the industry with as much vibrancy and excitement as there was.  Can’t wait for next year! 
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Google’s Huge Q3 & Why It’s Huge for Mobile

Android robot logo.

Image via Wikipedia

Google had a huge Q3 and its great news in the mobile startup world.

Mr. Page added that revenue from mobile devices, largely from use of its search engine on smartphones and tablets, is on pace to generate $2.5 billion over the next year. The figure is up from a $1 billion-a-year pace Google disclosed a year ago, thanks in large part to the proliferation of devices powered by Google’s mobile operating system, called Android. Mr. Page said more than 190 million Android devices, the vast majority of which come pre-installed with Google’s search engine, had been activated.

WSJ, 10/15/2011

We all know and are excited about the promise of mobile.  Mary Meeker‘s fantastic presentation from last fall showcased how the mobile internet and the gadget centric world that is oncoming is a tech trend far outpacing the speed and impact of the internet of the late 90’s.  We’ve seen huge tectonic shifts in the mobile ecosystem with big moves from players including Google (buying Motorola Mobility), Microsoft (purchasing Skype), Amazon (releasing its Kindle Fire), and Apple (just being awesome).

But this announcement from Google has got to be a wakeup call to us all.  Mobile is upon us.  In a big way.  And faster than I’d have expected.

This is a great development to see, as it shows that this huge market — mobile — now is developing a profit pool in a second key ecosystem.  For the past several years, Apple has owned the profitable developer ecosystem.  Apps were built and monetized principally through Apple’s ecosystem.  It was great–Apple offered an ease of distribution unthinkable before the iPhone.  But it had limitations–if Apple didn’t like what you were doing or if your model didn’t fit their approach you were SOL.

Android is much more open.  Developers can experiment with all kinds of different business models and approaches, in ways that wouldn’t work anywhere near as well with Apple.  The promise was great, but the reality was unclear: we all knew Android was out there, gaining traction, but we didn’t know its health as a developer platform.  Well, this announcement should go a long way towards removing the doubt.  Now Google’s Android platform is both broadly distributed and starting to generate money.  This is a big announcement and its great for developers, investors and consumers in the mobile ecosystem.

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