One of the key themes we're focused on at the moment is the multilateral asymmetric contest amongst major platform players (Apple, Google, Microsoft and Nokia in particular), device vendors (Apple, RIM, Nokia, Samsung, Sony Ericsson, LG, Motorola, HTC in particular), service providers (Google, Apple, Amazon in particular) and network operators (Verizon, Vodafone, FT Orange and so on). There's some interesting data from Silicon Alley Insider illustrating the size of the stakes...
The cash resources of some of the major players
While the numbers are interesting, I have to confess I hate the graphic... It looks like an area chart, but it's actually a line chart. Tufte's head would explode...
And I'd love to see the analysis extended to include Nokia, RIM, Samsung and so on. And in this context, who cares about Intel, other than ARM and Qualcomm?
Moe Kelley | Tuesday, December 22, 2009 at 11:45AM
I saw this at the gas station yesterday; I suppose they have one at every gas station:
Air is free, but water isn't
It struck me that at one time or another someone may have thought they would make money from air. Or clearly, that they were monetizing this device in some other way. For instance, by attracting customers from the station across the street that didn't have free air. But now all the gas stations have this service, so no one makes any money from it even in an indirect way.
It's also interesting that air is free, but water is expensive at the gas station. In fact, water is more expensive by the gallon than gasoline!
We've been thinking a lot lately about why some things are free and some things are expensive - and, in particular, why so many more things are becoming free. Technological progress, asymmetric competition, and open innovation are relentlessly driving costs down and capabilities up. A prior post pointed out the innovation trajectory of processors, storage costs, and bandwidth.
Asymmetric competition is when competing players have very different motivations and are happy to destroy each others economics in order to chase these goals. For instance, Google has been going along merrily, annihilating the value propositions of email, watching videos, smartphone operating systems, office productivity applications, and mobile navigation all in the name of capturing more eyeballs and clicks for advertising. These are all areas where people once spent billions of dollars.
A recent video I saw of an NEC product under development brought this all home to me, and it is worth looking at more closely. NEC appears particularly blind to the power of open innovation - leveraging the achievements of others and the vast army of technologists and developers moving forward at breakneck speed in a wide-variety of areas. Instead of building on the best of what is available, they appear to be developing something proprietary and from scratch.
Well, at first it seemed like a cool idea. Two users with glasses. One user speaks in, say, Japanese, and then the other can see the words in English projected on the lens of the glasses. Wouldn't it be great if you could go anywhere and have the world translated for you like this?
The system has two glaring problems, however:
The price - NEC is targeting a price of around $83,000, making it barely competitive with hiring a full-time human translator
The clunky hardware - the current lab version of this is so geeky and clunky as to be completely ridiculous and impractical at any price
Of course, NEC plans to bring the price down with volume. And I am sure that they will be investing to make the glasses nicer and more like "regular" glasses. Unfortunately for NEC, they seem to be investing a lot of money in things that might not matter that much (like wearable computing) and competing against an avalanche of free stuff that likely will.
The universal translator has five key elements:
Five elements to make a universal translator work
First, we have the device itself. The concept of a wearable, glasses-based system is intriguing and sexy. The reality, however, is horribly expensive, clunky and a long, long way from ready for mass market appeal. Also, why have a specialized device for translation? Wouldn't the use case be nearly identical if you presented the translation on an iPhone or Android device or even better if you text-to-voiced it to a blue tooth earpiece? These technologies are here today and effectively free for this service.
Then we have some part of the service working in the cloud. Sounds good, but don't expect to charge extra for this.
Then we have voice recognition. Similar to the device, don't we have armies of developers working on this problem in other fields? Won't voice recognition just improve on its own and not require NEC to spend much time or money on this element? Eventually, there will be a voice recognition piece that can be bought off the shelf and work well enough. It won't cost $83,000 and won't contribute to NEC's value creation. Windows 7 has apparently made some strides in this area.
The translation itself. This has to be the secret sauce, right? But once I have it in text I can already go to Google and translate it for free. Any language into any other language. No, it isn't perfect, but is it good enough to avoid paying much? Or do I want the $83,000 version? Probably good enough.
Presentation of results of the translation. This is a solved problem, very easy in either text format or voice.
So, what is NEC basing it's pricing strategy on? And when are they planning to come to market? Based on this quick and dirty analysis, we should have a free app on iPhone within a year or so (if there isn't one already!).
I guess this means translation is more like air than water.
My colleague, Moe, posted a fascinating chart from Alexa.com comparing page views for Google and Facebook. I dug a little deeper and made three observations:
Users look at more pages on Facebook
Source: Alexa.comPeople spend more time on Facebook
About 18 months ago I was at a wedding on the West Coast with some folks from Google. An interesting topic of conversation was about "Who could unseat Google?" and, generally, the importance of search. A major theme of this discussion was about how as technology and user behavior changes, the leaders in one era rarely make effective transitions to become winners in the next era.
Google bested Webcrawler, Northern Lights, and other online search companies, but - more importantly - search beat out directories such as Yahoo! and AOL as the preferred way to find and access information on the Internet. Our little group agreed that none of the search contenders (Ask.com, etc. - there was no Bing yet) had a chance.
I argued that social networking in general and Facebook in particular were the biggest threats. Hours and hours of online activity are occurring on Facebook where Google has no sway, no advertising opportunities, and no information about what users are doing. More importantly, Facebook is becoming an important mode of content discovery: People recommend books, sneakers, music, and movies to their friends. It is also becoming an important method for spreading breaking news. Facebook is, for example, how I found out about the Ft. Hood shootings.
Today, I saw some extremely intereresting data on Alexa.com that shows how this battle is playing out. The following chart shows how each week Facebook and Google flip-flop as the Internet leader in total pageviews. Facebook rules on the weekend; Google rules during the week:
Each weekend Facebook passes Google in pageviews; during the week Google reclaims the lead
Source: Alexa.com
This has been going on since Facebook caught up to Google back in August:
Source: Alexa.com
Let me know what you think. Will social networking displace search as the default approach to discovery on the Internet? What are the implications for Facebook and Google if this occurs?
(By the way, this is the second time that Facebook caught Google in share of total pageviews. The first time was during the 2008 Presidential Election. After the election, Facebook's pageview share dropped precipitously and took about six months to recover to their prior level.)
One of the key themes of the way the web is changing is the decline and demise of mass media. One facet of that is a battle over access to content, and some recent work has led us to the conclusion that the current business models are doomed.
Perhaps the scariest presentation from a great recent event on the West Coast was the guys from First Paper, who came across as dinosaurs from another era. What does that make Rupert Murdoch?
This interview on Sky News, reported through mUmBRELLA, definitely goes in my "didn't you get the memo?" file (along with Microsoft being late on the UI work for WinMo 6.5 and Palm being late with the SDK for the Pre and WebOS):
Rupert Murdoch has suggested that News Corporation is likely to make its content unfindable to users on Google when it launches its paid content strategy
Murdoch claimed that readers who randomly reach a page via search have little value to advertisers.
Wrong! We're actually going in the opposite direction: the advertising apocalypse involves adspend inexorably migrating to channels that are targeted (such as by a search term - duh!) and which provide feedback to the advertiser.
Michael Davies | 
The cash resources of some of the major players
