tag:blogger.com,1999:blog-178983842024-03-11T07:06:30.671-07:00Mobile OpportunityComments on the tech industry, with a focus on mobile, wireless, & the webMichael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.comBlogger308125tag:blogger.com,1999:blog-17898384.post-62940689413592121002023-06-17T17:20:00.001-07:002023-06-17T20:36:12.104-07:00How does Amazon think about devices?<p>A bad dialog box made me wonder today about the limits of Amazon’s business model. The dialog box was on the Kindle Paperwhite, my preferred ebook reader:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg91p9UV66B13fAystZwL4_eUpMea8ox8MqvFbyy22xbtOpEdS2ewjuh5biL6UBNYlDrJ0nNJ-AZS0sJNf39_kEACFK7GnvObxF9U51yZHz9SMT2QA4B33OrfBEvBPEDXuisoqG6QHe-uGRCL4ZaDiP8Cmznk627-0v3nrXvxgMR8LmtuHB-A/s2754/Kindle%20dialog%20box.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1711" data-original-width="2754" height="249" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg91p9UV66B13fAystZwL4_eUpMea8ox8MqvFbyy22xbtOpEdS2ewjuh5biL6UBNYlDrJ0nNJ-AZS0sJNf39_kEACFK7GnvObxF9U51yZHz9SMT2QA4B33OrfBEvBPEDXuisoqG6QHe-uGRCL4ZaDiP8Cmznk627-0v3nrXvxgMR8LmtuHB-A/w400-h249/Kindle%20dialog%20box.png" width="400" /></a></div><p>I’m dog-sitting this weekend at my daughter’s house, and hadn’t yet connected my Kindle to the home Wi-Fi network. The Kindle’s home screen suggests books you might want to read, and when I tapped on one of them, that was the dialog box I saw.</p><p>I think there are three important things wrong with it. Can you spot all of them?</p><p><br /></p><p><b>1. Lack of clarity. </b>The first problem is that your choices are ambiguous. What does the Yes button mean?</p><p></p><ul style="text-align: left;"><li>-Yes, I want to cancel</li><li>-Yes, I want to connect to Wi-Fi</li><li>-Yes, I understand that I need to either cancel or connect to Wi-Fi</li></ul><p></p><p>I guess that pressing Yes will probably try to connect to Wi-Fi, but I’m not at all sure. Mostly I am peeved at the device for confusing me.</p><p>A better way to structure the dialog would be to ask the question in a yes/no format: “To view this book in the store, you need to connect to Wi-Fi. Do you want to do that now?” Or you could label the buttons differently. The left one could be “Cancel,” and the right one could be “Connect to Wi-Fi.” Some companies have guidelines that you should put only one or two words in a button, but I am a fan of clarity over brevity. There’s enough room to make the buttons bigger.</p><p>Okay, that’s the first problem. Can you spot the second one?</p><p><br /></p><p><b>2. Mixed usage paradigms.</b> Why is the Yes button black and the No button white?</p><p>On a computer, one button is usually highlighted to show you what will happen if you press the Enter key on the keyboard. My Kindle doesn’t have a keyboard; all I can do is tap or swipe (or turn it off). So the highlighting is meaningless. Why is it there? I think either:</p><p></p><ul style="text-align: left;"><li>-The software was designed to be used with or without a keyboard, and they did not bother to insert cases for different device types, or </li><li>-The design tool used to build the software insisted on highlighting one of the buttons, or </li><li>-We’re dealing with a designer who was having an off day.</li></ul><p></p><p>This problem doesn’t necessarily confuse the user, but it’s sloppy design. There are many other examples of this in Kindle. For example, if I press Yes in the dialog box above, here’s what I see next:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCO3zNp3me_V3m2TbTiM5ySurrBjeNPCuobZcB9UaTm7T0BFVCYnfDMjQummwz3P_kjDRcUhg1jka9cWGgy6LvmhFDabJYoQ8MGj_5f77HspJDdK5NAutN_u0lV_qcc6nESzQiDBOXfyty11p2rKHXQESzbWCprPl8x_n3CJmH3j-m3yT5UQ/s3676/Kindle%20-%20password%20required.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3676" data-original-width="2742" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCO3zNp3me_V3m2TbTiM5ySurrBjeNPCuobZcB9UaTm7T0BFVCYnfDMjQummwz3P_kjDRcUhg1jka9cWGgy6LvmhFDabJYoQ8MGj_5f77HspJDdK5NAutN_u0lV_qcc6nESzQiDBOXfyty11p2rKHXQESzbWCprPl8x_n3CJmH3j-m3yT5UQ/w299-h400/Kindle%20-%20password%20required.jpg" width="299" /></a></div><p>At least neither of the buttons are highlighted, but what does pressing WPS do? And why is it in the right-hand position, the place where Yes was in the previous dialog box? Does that mean WPS is the preferred choice? Why don’t the buttons have boxes around them the way they did in the previous dialog? Why can this one be dismissed by tapping an X, but the other one could not?</p><p>(I know, technically they are two different types of dialog boxes, but why change the basic interface elements common to both of them?)</p><p>Oh, and here’s what happens after you enter the password and hit Connect:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilxISdgsZF9Dz78ia8aL8_CkFvshUNsQ1fjmNAC9TOP_pgGmvKlpzswsTGyrzl0w82LT9XzW6HPcnY7U9BDkbsJ1vPd7BfadgySjnUANFn1xnYv01qpiGV5FzavJwbSsZqRwLNlOnOE-AnWcNC_FhriOhisbQwrkmnyKVqbax8bHx7ytTZ0w/s3783/Kindle%20-%20back%20to%20home.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3783" data-original-width="2963" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilxISdgsZF9Dz78ia8aL8_CkFvshUNsQ1fjmNAC9TOP_pgGmvKlpzswsTGyrzl0w82LT9XzW6HPcnY7U9BDkbsJ1vPd7BfadgySjnUANFn1xnYv01qpiGV5FzavJwbSsZqRwLNlOnOE-AnWcNC_FhriOhisbQwrkmnyKVqbax8bHx7ytTZ0w/w314-h400/Kindle%20-%20back%20to%20home.jpg" width="314" /></a></div><p>Does the Kindle remember that I wanted to know about a particular book? No, it just dumps me back to the Home screen. I have to tap the book again to see a short description of it. I’m not sure yet if I want to buy it, so I’ll cancel that and go back to home, and…</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzZoXz_-A5XQjsgKEfuzeFT_BE6R_ylqDlswBR8hLsgc88w9nqkP4UIzgWrse4305thSF3brRvP-SrWIdmK-LNWn0q7679KTUSQWhq-8ydZ5mUb4t70XhpF_AR0t2ug2GcLKtAYYOmfMexIyd1vkbliHGOPlCWObSSk9KWuRIUKQiOOkFdVg/s3705/Kindle%20-%20recommended%20books%20changed.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3705" data-original-width="2888" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzZoXz_-A5XQjsgKEfuzeFT_BE6R_ylqDlswBR8hLsgc88w9nqkP4UIzgWrse4305thSF3brRvP-SrWIdmK-LNWn0q7679KTUSQWhq-8ydZ5mUb4t70XhpF_AR0t2ug2GcLKtAYYOmfMexIyd1vkbliHGOPlCWObSSk9KWuRIUKQiOOkFdVg/w311-h400/Kindle%20-%20recommended%20books%20changed.jpg" width="311" /></a></div><p>Hey presto, the recommendations have updated and the book I was looking at disappeared. How do I get back to it now?</p><p>Sigh.</p><p>This brings me to what I think is the third problem:</p><p><br /></p><p><b>3. Lack of systems thinking.</b> Too often, the Kindle interface acts like a piece of software, rather than a seamless part of an integrated hardware-software experience. For example, since the device is designed to push new books at me on the home screen, and since we know that an ebook reader will often be used in places where there’s poor or no wireless coverage (a beach, an airplane, etc), why aren’t the descriptions of the promoted books cached on the device ahead of time? Why can’t I decide to buy one now, and then have it downloaded later when I connect? (I know, that could create a different user satisfaction problem, but at least give me an option to put the book in the shopping cart to buy later, just like…oh, wait, just like the Amazon store normally works).</p><p>Individually, these are all small problems, but there are many more of them, and they’re irritating. I get the feeling that Amazon is just kind of mailing it in when it comes to Kindle. Maybe that’s because Amazon famously operates in small, lean development teams that work like startups. That’s a great way to move fast and learn in software, but when you’re creating hardware-software systems it can lead to devices that are extremely adequate rather than wonderful.</p><p>Don’t get me wrong, I am a deep admirer of Amazon and I know the people there are super smart. But I wonder if their well-documented struggles in hardware might be partly a result of thinking of devices as a way to sell stuff rather than a way to delight customers.</p><p>What do you think?</p><p><br /></p><p>PS: Probably one of Amazon’s design challenges with Kindle is that it’s awkward to do user tests with a device when you can’t directly record its screen. If you can’t test something, it’s hard to optimize it. Here’s a hint: Have testers use their smartphones to video themselves using your device. This is easy to set up with a testing system like UserTesting; you don’t even need help from our pro services team. Ping me if you want the details.</p><p>PPS: I’m curious to see which method of publishing gets more eyeballs, LinkedIn or my blog, so I posted this in both places. Let me know if that’s irritating.</p><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com3tag:blogger.com,1999:blog-17898384.post-69248683606750412372020-10-16T04:00:00.001-07:002020-10-16T04:00:10.634-07:00We’re not as divided as we think we are<p><i>The United States is not as polarized and angry as you think it is. The shrill voices that dominate discussions online and in the press are actually a very small percent of the US population. Unfortunately, social media and the press accidentally amplify the voices of the angriest people, giving us a twisted view of society. It’s like we’re all trapped in a funhouse, staring at the mirrors 24/7, believing they’re real.</i></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLlzkg68jv5OfsrbZkfLgQ1JDde0pQauVKfUeLA2BgeRx25qR3fMt_meA3MO3CAU9XKrjuqYwCaXl55MiPyyDnUtd4F7fXaYDXnTudM62s8drumEFatoohdLKkIzfYELKbQ7YK/s2048/FUnhouse+mirror.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><i><img border="0" data-original-height="2048" data-original-width="1594" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLlzkg68jv5OfsrbZkfLgQ1JDde0pQauVKfUeLA2BgeRx25qR3fMt_meA3MO3CAU9XKrjuqYwCaXl55MiPyyDnUtd4F7fXaYDXnTudM62s8drumEFatoohdLKkIzfYELKbQ7YK/w311-h400/FUnhouse+mirror.jpg" width="311" /></i></a></div><p><i>The way out of the funhouse is to spend more time listening to average people, the ones who aren’t trending on Twitter. If you do, you’ll find that most of your neighbors are far more reasonable and willing to compromise than you expected. We don’t all agree on everything, but there’s a lot we can do to work through our differences. To help make that happen, some of my coworkers and I are setting up a new website, called the Human Empathy Project (<a href="https://humanempathyproject.com/" target="_blank">link</a>). We’ll bring you video of regular people talking about the country’s problems. The stories you hear may surprise you, and give you some cause for hope.</i></p><p><i>Here are the details on what we’re doing, and why…</i></p><p><br /></p><p>My employer, UserTesting, helps companies get super-fast public feedback on just about anything: websites, apps, marketing messages, etc (<a href="https://www.usertesting.com/" target="_blank">link</a>). You specify what you want to test, and within a few hours you get video of your customers reacting to it. UserTesting processes more than 130,000 of these feedback videos every month.</p><p>This year we’ve experimented with using that system to get feedback from average people on hot-button national issues, starting with the pandemic and branching out to include the election and racial justice.</p><p>We learned two important things:</p><p style="text-align: left;">• First, it turns out regular people are very willing to speak candidly in a video test. Most of them welcome the opportunity to be heard.</p><p style="text-align: left;">• Second, the stories we heard from regular people were strikingly different from the narrative we all see on social media and in the press. The people we heard from were far less polarized, more thoughtful, and more willing to compromise than the voices that dominate the national debate. It was like we’d slipped into a parallel universe in which Americans were still willing to listen to one another and work together to help the country. (That doesn’t apply to everyone, of course, but the really polarized people are a small percentage, at most about one person in ten.)</p><p>This was a puzzle. The UserTesting platform is designed to gather feedback from average people chosen randomly, so we couldn’t understand why we were getting results so different from the things we see online. We investigated further, and it turns out there was nothing wrong with our methodology — we were hearing from the true mainstream of the country, one that is vastly under-represented online and in the press.</p><p>We also found that we’re not the first people to notice this disconnect. For example, a nonpartisan research organization called More in Common did a very extensive survey of Americans in 2019 and concluded:</p><p></p><blockquote><p>“Today, millions of Americans are going about their lives with absurdly inaccurate perceptions of each other. Partisan media consistently elevates the most extreme representations of ‘them’…. This creates a false impression that outliers are somehow representative of the majority….Despite America’s profound polarization, the middle is far larger than conventional wisdom suggests, and the strident wings of progressivism and conservatism are far smaller…. Yet both sides have absorbed a caricature of the other.”</p><p>--Hidden Tribes report by More in Common, 2019 (<a href="https://hiddentribes.us/" target="_blank">link</a>).</p></blockquote><p></p><p><br /></p><p><b>How did we get so out of touch with each other?</b></p><p>There’s a toxic feedback loop between social media and the news media. It works like this:</p><p>Behavior in online forums is driven by something called the 1% rule: The vast majority of the content posted to a forum is created by about 1% of its users (<a href="https://en.wikipedia.org/wiki/1%25_rule_(Internet_culture)" target="_blank">link</a>). That’s just a basic fact of human behavior, and everyone who runs an online forum knows about it.</p><p>What many people don’t understand is that those 1% are not a representative sample of the rest of the forum’s membership. Something unusual has made them far more motivated than the average visitor. It may be that they’re more interested in the subject, or they may be trying to become influencers, or they may be working through other issues that make them want to talk. Whatever the cause, they’re not average.</p><p>In most online forums, this self-selection bias doesn’t have a big negative effect. It means the reviews on a travel or restaurant review site will be written by people who are especially enthusiastic about traveling or eating out, but usually that’s OK. However, in a mass social network like Twitter or Facebook, it has a profound effect on discussions about social issues and politics. The people who post heavily on those subjects tend to be extremists, the angriest and most polarized members of society.</p><p>For example, just 2% of the US population writes 97% of the Twitter posts on national politics, according to the nonpartisan Pew Research Center (<a href="https://www.pewresearch.org/politics/2019/10/23/national-politics-on-twitter-small-share-of-u-s-adults-produce-majority-of-tweets/" target="_blank">link</a>). Those 2% “political tweeters” are not representative of the country as a whole. Pew found they’re more extreme in their politics and are more likely to be hostile toward members of the opposing party.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQgatesfArdOTMbVegML3CtfJCVcMGz0CAi8I1GDN2VoL2ZFrePPEJTuAhwp7pTZaGkyXX5vVPDFcPCeuyPk37opE73lhqzuR4ZrHMRuGr5dg1qlhGSYhLbLEucOziFEE9S281/s1167/Political+tweets.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="434" data-original-width="1167" height="149" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQgatesfArdOTMbVegML3CtfJCVcMGz0CAi8I1GDN2VoL2ZFrePPEJTuAhwp7pTZaGkyXX5vVPDFcPCeuyPk37opE73lhqzuR4ZrHMRuGr5dg1qlhGSYhLbLEucOziFEE9S281/w400-h149/Political+tweets.png" width="400" /></a></div><p>This is not a conspiracy theory. I’m not saying 2% of the population got together and decided to hijack the country. It’s just the way people behave on online. Similar biases happen in every social media platform. Add them together, and the voices we hear on social media are systematically far more polarized, shrill, and confrontational than the population as a whole.</p><p>But I don’t think social media alone could create the divisions we see in society. Huge chunks of the population don’t pay attention to social media. About 78% of Americans don’t have Twitter accounts, and only 4% of Americans say social media is their main source of political news (<a href="https://www.pewresearch.org/pathways-2020/MAINSOPOL_GROUPS/total_us_adults/us_adults" target="_blank">link</a>)</p><p>This larger problem is that the mainstream press, which far more people do rely on for news, too often treats social media as an opinion poll and source of stories. The things that reporters see online often shape news stories and drive the selection of what gets covered. We’re bombarded with reports about issues that are trending on social media, or quotes from someone who posted something offensive online. Let me give you a couple of examples of how pervasive this problem is…</p><p>Here’s a screen capture of the top story on the Fox News website on the day after Supreme Court Justice Ruth Bader Ginsburg died:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPvYnWKKTTd3N_t9UOqoR3Xw9zVS5NW8F3MCeDLt6zaqIrrTgHxOuBgWltEWdEd-PAoSRb5RG6juWh0hQX3Yz7Xshjg2hrWRqFutJXcEXTzHRoJxCmIifMrhyphenhyphencDxYjYdYK0av7/s429/Fox+news+front+page.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="222" data-original-width="429" height="208" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPvYnWKKTTd3N_t9UOqoR3Xw9zVS5NW8F3MCeDLt6zaqIrrTgHxOuBgWltEWdEd-PAoSRb5RG6juWh0hQX3Yz7Xshjg2hrWRqFutJXcEXTzHRoJxCmIifMrhyphenhyphencDxYjYdYK0av7/w400-h208/Fox+news+front+page.png" width="400" /></a></div><p>If you read the story, it tells you that several people online threatened to protest violently, and a Canadian lawyer and a Fox news host both said that’s a bad thing. I agree, it is a bad thing, but how did it become the top national news story? Given who writes most posts, the real news would have been if no one said anything offensive online (<a href="https://www.foxnews.com/media/ginsburg-death-burn-it-down-threats" target="_blank">link</a>).</p><p>Lest you think I’m picking on the right wing, check out the New York Times’s coverage of the Pence-Harris vice presidential debate. On the home page, above the fold, there was an article describing online comments about the debate. Before quoting from a bunch of Twitter posts, the reporter described the Internet as “that insular, blue-check-verified version of the proverbial diner in a steel town” (<a href="https://www.nytimes.com/2020/10/08/us/politics/fly-pence-harris-debate.html" target="_blank">link</a>).</p><p>The trouble with that sentence is that the Internet actually is nothing like a diner in a steel town. If you went to a diner in a steel town you’d get a random sample of working class people in middle America. When you go to Twitter you get a self-promoted sample of angry people and celebrities, all looking to get noticed by saying something snarky. It’s not a survey, it’s performance art. </p><p>I’m not saying the press is evil. Most reporters are trying to be professional and are under huge stress from the changing economics of the news. But social media is seductively convenient to a reporter. You feel like you’re in touch with the mainstream of society when actually you’re soaking in a hot tub with a bunch of fanatics. I think many reporters are spending way too much time in the tub.</p><p>When we make the things that people say online into news, we’re missing what’s really happening in the country. We amplify the voices of the extremes, and play them back as if they represented the center of society.</p><p>Our constant diet of anger and division are breaking down the dialog that makes a society livable. More in Common found that about 77% of Americans are in an “exhausted majority” caught between the extremes. They are willing to work together and compromise to solve the country’s problems, but feel intimidated and shouted down by people with extreme views. More in Common wrote:</p><p></p><blockquote>“We don’t seem to disagree anymore without perceiving another person’s views as stupid, wrong or even evil. We’re being played off each other; and told to see each other as threats and enemies, not Americans just like us but with separate experiences and views. The loudest and most extreme voices get heard, and others just feel like tuning out altogether.”</blockquote><p></p><p><br /></p><p><b>We need to change the dialog</b></p><p>If the problem is built into social media and the press, how do we solve it? We can start by getting more exposure to regular people. If we heard from each other more often, the extremists couldn’t make their caricatures stick.</p><p>My coworkers and I are launching a project to help regular Americans listen to one another. Called the Human Empathy Project, it’s a website where we share the voices of regular people discussing their views and problems (<a href="https://humanempathyproject.com/" target="_blank">link</a>). Through videos in which they get to do the talking, you’ll understand where we actually agree and disagree, and the reasons why. Sometimes we’ll dig into the reality behind an issue that’s generating controversy. Sometimes we’ll just feature people talking about their lives and challenges, so you can get a better understanding of other Americans.</p><p>We’re launching the site with three sets of videos:</p><p>• The views and concerns of undecided voters in the 2020 Presidential election (they’re far more nuanced and informed than the stereotype) (<a href="https://humanempathyproject.com/election-2020-understanding-the-undecided/" target="_blank">link</a>)</p><p>• Messages that regular Americans want to send to the country (we asked a balanced mix of Republicans, Democrats, and independents, and I bet you’ll have trouble telling the difference between them) (<a href="https://humanempathyproject.com/messages-to-you-from-the-rest-of-the-country/" target="_blank">link</a>)</p><p>• A look at the hardships being caused by the pandemic (they vary tremendously from person to person) (<a href="https://humanempathyproject.com/covid-stress-everyone-is-suffering-differently/" target="_blank">link</a>)</p><p>In the weeks to come we’ll post additional videos on other important issues. I think you’ll find that your real neighbors are far more reasonable and thoughtful than you realized. We sometimes disagree deeply, but there are usually understandable reasons for those disagreements, the sort of things you could work through over a cup of coffee. And I promise we won’t take sides against anyone — except maybe the people who tell you that the other side is evil and that you have to destroy them.</p><p>Please join us, listen to each other, and get to know the real America.</p><p><i>Note: Although we used the UserTesting system to collect these videos, the opinions expressed here are my own and do not represent the company.</i></p><div><br /></div><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com3tag:blogger.com,1999:blog-17898384.post-42133581273064523722020-02-02T10:51:00.000-08:002020-02-03T08:38:31.692-08:00Q. Are the big tech companies guilty of antitrust violations? A. It doesn't matter, they will probably be punished anyway<i>In a previous post, I wrote about the big tech companies’ tin ear for public relations, and how that’s feeding mistrust of the whole industry (<a href="http://mobileopportunity.blogspot.com/2018/06/here-comes-hammer-tech-industrys-three.html" target="_blank">link</a>). More than a year later, we’ve made little progress on public mistrust, and that’s feeding a legal and regulatory attack on the industry. Today I’ll talk about that attack, and why it should worry all of us, not just people who work in tech.</i><br />
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If you grew up in a democracy, you were probably taught that the rule of law is essential to a free society. It’s supposed to work like this:<br />
- The law describes clearly what's illegal<br />
- If you're accused of breaking the law, you'll be tried by an objective judge or jury who protect your rights<br />
- If you're innocent you'll go free<br />
- If you're guilty your punishment will be comparable to that of others who committed similar crimes<br />
- The law can't be changed after the fact to make you guilty<br />
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None of those principles apply to the antitrust actions being proposed against the big tech companies. For those companies, actions that were previously legal are now being made illegal. This change is being made without the enactment of new laws, but rather by reinterpreting existing laws to give them dramatically different meanings. Many of the people accusing the tech companies are not objective; they are also the ones who will judge them. And the punishments are being made up as we go along.<br />
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Don’t get me wrong, I'm not here to excuse the actions of the big tech companies. As I’ve said before many of them have done things that are morally reckless, stupid, and bad for society. You may think they deserve to be punished. In some cases I agree.<br />
<br />
But let's all be clear about what’s going on right now: The crusade against the tech companies is much more about emotion than rationality, and it’s eroding the rule of law that protects us all from arbitrary action by populists.<br />
<br />
If this doesn’t scare you, it should.<br />
<br />
Here's why:<br />
<br />
<br />
<b>Fun and games with the federal government</b><br />
<br />
In my career, I've had a lot more involvement with competitive law than I wanted. Specifically, I had a front row seat to four cases:<br />
- When Apple sued Microsoft for stealing parts of the Macintosh interface, I was working in Apple's competitive analysis team. I saw the runup to the suit, gave a deposition, had a lot of in-depth interaction with Apple's lawyers, and saw how the legal system worked.<br />
- When I worked in the Visual PC group at Silicon Graphics, I saw firsthand how Microsoft and Intel manipulated their products and licensees to keep control over the PC market.<br />
- While at Palm, our legal team had me travel to brief the Federal Trade Commission on what we believed were deceptive advertising practices by Microsoft. I saw up close how the government handled that case.<br />
- Also while at Palm, I was subpoenaed to testify in the states’ antitrust suit against Microsoft. That involved many more trips to Washington that I wanted, a deeply unpleasant time in federal court, and another inside look at the system in action.<br />
<br />
In all four cases, my side, the people and companies I thought were in the right, lost. My painful experiences being beaten up by big competitors ought to make me rabidly enthusiastic about the charges against today's tech titans. But I’m not, because there’s a double standard in play. The courts and government decided the behavior of the “Wintel” duopoly was generally legal, and those companies escaped serious punishment. I didn’t always agree with that outcome, but there was a logic to it, and it set out some fairly consistent rules for what tech companies could and could not do. Apple and Google and Amazon and even Facebook have generally followed those rules; their behavior wouldn’t have even gotten you charged in the 1990s, let alone punished. So why are we now talking about breaking them up?<br />
<br />
<b>How competitive law used to work.</b> Traditionally, regulation of big companies has focused on one central principle: Are you hurting customers? If the answer was yes, the government would act aggressively against you, on the assumption that individual customers didn’t have the ability to defend themselves against a corporation. But if there was no customer harm – in particular, if prices weren’t being jacked up – the government left companies to duke it out in the market, with the idea that the public should be allowed to choose the winners and losers rather than a government bureaucrat. Here are a couple of examples of how it worked:<br />
<br />
<b>Example 1: Deceptive advertising.</b> When I worked at Palm, Microsoft was late in focusing on mobile, and did a lot of misleading promotion for Windows CE (the mobile version of Windows). In particular, it made claims in ads that overstated its features outrageously. We were so mad about it that we complained to the Federal Trade Commission, which regulates advertising. The FTC asked us to give it a briefing. That seemed to go well, and we thought the government was going to protect the good guys (us) from unfair advertising by the beast in Redmond.<br />
<br />
Imagine our surprise when, months later, the FTC accused both Palm and Microsoft of misleading advertising. Ads from both companies, we were told, had failed to disclose that if you bought a wireless device you'd need to pay for a service plan. We thought that was kind of obvious, but it was the early days of wireless data and the FTC said our ads might deceive customers. Palm and Microsoft were both forced to sign consent decrees, legal agreements with the government committing us to add text to every ad, for many years, saying that a service plan was required for wireless data.<br />
<br />
It was a slap in the face for both companies, but we got the FTC's message: Don't come to us whining about your competitive problems; we're here to protect consumers. I was not happy at the time, but gradually I’ve come to respect the government’s behavior. Companies have lots of money and many different ways of defending themselves; they should not expect the government to do them favors. Individual consumers have much less power. So the priority is to protect consumers from predatory behavior by companies.<br />
<br />
<b>Example 2: Tying products together.</b> At several places where I worked, one of our biggest complaints against Microsoft and Intel was that they manipulated the Windows-Intel standard to protect their other businesses. For example,<br />
- Microsoft threatened to withhold its Basic programming software from Apple unless it licensed the Mac interface to Microsoft<br />
- When Silicon Graphics tried to enter the personal computer market with a computer that had supercharged graphics, Intel withheld its latest processors from SGI until Intel’s own competing graphics accelerators reached the market<br />
- When Palm had its most momentum in the market, Microsoft threatened and manipulated our ability to sync Palm handhelds with MS Office, in order to discourage IT managers from standardizing on us<br />
<br />
I complained bitterly to our lawyers about this "tying" together of unrelated products. But I was told blandly, "the courts don't view tying as illegal unless you can show that it's increasing prices to consumers." Once again, the standard was not complete fairness between companies, but avoiding predatory behavior against consumers.<br />
<br />
<br />
<b>Today’s tech leaders are not breaking traditional competitive law</b><br />
<br />
The big tech companies are being threatened with all sorts of new regulations and lawsuits, but by the standards of previous decades, it's almost impossible to make a case that they've broken the law.<br />
<br />
Has Amazon's e-commerce business hurt consumers? It’s hard to find the damage. Amazon has almost certainly lowered prices and increased availability of goods, especially for people outside the big cities. Yes, it has taken money from a lot of other retailers, but there’s a long tradition of competitive change in retail. What’s happening in online commerce is just a continuation of a trend that’s been going on at least since the first mail-order catalogs took on general stores in the 1840s (<a href="https://en.wikipedia.org/wiki/Mail_order#In_North_America" target="_blank">link</a>). More recently, in the late 20th century Walmart devastated the shopping districts of small towns across America (<a href="https://www.nydailynews.com/new-york/brooklyn/study-proves-walmart-super-stores-kill-local-small-businesses-article-1.140129" target="_blank">link</a>), and nobody broke them up. On the contrary, Sam Walton (founder of Walmart) was a folk hero.<br />
<br />
Has Google increased prices on anything? Considering that it gives away most of its software, it's really hard to make that argument. Even the things Google charges for are usually cheaper than the alternatives. For example, Android is incredibly less costly to license compared to Microsoft’s old OS pricing, and Google Docs is far more economical than traditional Microsoft Office was. Google has definitely hurt the advertising industry, and other tech companies, but remember that hasn't been illegal in the past unless it raised consumer prices.<br />
<br />
What about Apple? They definitely charge a premium for their products. But nobody I know of is being coerced into buying an iPhone. There are very good, lower-priced alternatives in the market. People choose to buy the iPhone and Macintosh because they like the brand, because of peer pressure, and because they admire their design and features. Nothing about that is illegal. The App Store is definitely a monopoly, but having a monopoly isn’t illegal unless you use it to raise prices, and the way Apple manages the store has driven down app prices, not raised them. The one time Apple did conspire to raise prices, in ebooks, the feds slapped them down promptly (<a href="https://www.cnet.com/news/apple-ebook-price-fixing-settlement-400-million-to-customers/" target="_blank">link</a>).<br />
<br />
Meanwhile, Apple’s tight control over iOS applications has kept many viruses out of its phones. All those controls suck for software developers, and I don’t really like them, but they haven’t been predatory against consumers.<br />
<br />
Then there’s Facebook. It’s an arrogant and reckless company that’s pathetic at public relations. But that’s not illegal, it’s just stupid. The time Facebook did break the law is when it failed to protect consumers’ privacy after promising to do so. For this it has paid huge fines and agreed to a consent decree that puts its privacy policies under an external monitor (<a href="https://www.ftc.gov/news-events/blogs/business-blog/2019/07/ftcs-5-billion-facebook-settlement-record-breaking-history" target="_blank">link</a>). Good. To me, that showed the system was working – when Facebook broke the law, it was punished, and it’ll be punished a lot more severely if it does so again.<br />
<br />
<br />
<b>The real motivation behind the attack is emotion</b><br />
<br />
There are many more charges against the big tech companies, and I don’t want to go through all of them here. But in my opinion, none of the situations would have, in the past, justified the extreme act of breaking up or deeply regulating a company. So the people who are advocating heavy regulation are trying to reinterpret the law.<br />
<br />
There was an article about the process in the NY Times last year, headlined “To Take Down Big Tech, They First Need to Reinvent the Law” (<a href="https://www.nytimes.com/2019/06/20/technology/tech-giants-antitrust-law.html" target="_blank">link</a>). The article explains many of the arguments being made by the re-interpreters, and it makes the point that there’s a history of antitrust law evolving. (If you want to read a much more detailed article on that subject that covers both sides of the issue, check out the article <a href="https://webcache.googleusercontent.com/search?q=cache:-KN65Q8AI4gJ:https://www.drinkerbiddle.com/-/media/files/insights/publications/2012/04/the-remarkable-50year-legacy-of-brown-shoe-co-v-__/skitol-vorrasi-article-in-antitrust-spring202012.pdf+&cd=1&hl=en&ct=clnk&gl=us" target="_blank">here</a>).<br />
<br />
But that’s not the most important part of the article. I think the key phrase in it is this one near the start:<br />
<blockquote class="tr_bq">
“Big technology companies work on artificial intelligence that threatens to create a world where human beings are eternal losers.”</blockquote>
<br />
Think about that for a second. It’s an amazingly sweeping assertion. I know the reporter is trying to summarize the public mood, but the fact that the paper put it in a news article without any attribution or supporting evidence is shocking to me. Unfortunately, this is a common pattern in much of the recent coverage of the tech industry. At its heart, the campaign against the tech companies isn’t really about antitrust law, it’s about fear of the future and distrust of the people running tech. We’re making decisions emotionally, and then trying to rationalize them by cherry-picking the evidence.<br />
<br />
The legal system (and the professional press) is supposed to protect us from this sort of hysteria. If you're reporting on an issue, you're supposed to cover it in a balanced way, and to fact-check every assumption. If you want to change the law, you’re supposed to propose a bill, debate it, pass it through Congress, and get the president to sign. It’s an intentionally complex process, designed to force us to pause, think about what’s happening, and listen to arguments on all sides of the issue.<br />
<br />
Re-interpreting the law bypasses all of that process, and puts us at risk of creating new rules that do more harm than good. To give you a couple of examples:<br />
- One proposal is to prohibit tech companies that have marketplaces, like Amazon, from selling their own branded goods. But if you make that a rule, what’s to stop it from eventually applying to Trader Joe’s, or to the discount house-branded products in every grocery and drug store in the country?<br />
- Another proposal says tech companies should be prevented from buying startups that might threaten them. But if you cut off the possibility of selling a startup to a big company, you reduce the incentive for VCs to fund those startups. You could end up crippling the creation of startups rather than increasing it.<br />
<br />
But my biggest concern is that if we give in to hysteria in this situation, what’s to stop us from doing it again and again, every time a group or an industry becomes unpopular?<br />
<br />
Who’s to say the next reinterpretation of the law won’t be used against you?<br />
<br />
In an age of general fear and populism, eroding the rule of law is the last thing we should be doing. If you really believe that tech needs to be reined in, write a bill and let’s debate it. That’s how democracy is supposed to work.<br />
<br />
<i>That’s my take on the legal situation; I welcome your comments, including disagreements. There’s also an underlying issue we should be discussing: Why have we all become so angry and afraid that we’re willing to sacrifice the law this way? Until we’ve dealt with that underlying situation, society will continue to be at risk from hysteria and the bad decisions it produces. I think the tech industry bears some of the blame for this mess, and also can help to help fix it. I’ll cover that next time.</i><br />
<div>
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<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com4tag:blogger.com,1999:blog-17898384.post-82426390238492788002018-06-11T22:08:00.001-07:002018-06-11T22:08:54.228-07:00Here Comes the Hammer: The Tech Industry's Three CrisesThe next few years are going to be extremely uncomfortable, and maybe disastrous, for the tech industry. Political opposition to the big tech companies is coming to a head, and the industry lacks allies who could protect it. On the contrary, one of the few areas where many politicians on the left and right agree is that they want to see the tech industry punished (even if they're not completely sure what it should be punished for).<br />
<br />
I think many people in tech are in denial about the situation. They think any punishment will apply only to a few firms, or they believe companies that have good intentions and haven't broken laws will be protected. Even big publications like the Wall Street Journal have indulged in this hope (<a href="https://www.wsj.com/articles/the-antitrust-case-against-facebook-google-amazon-and-apple-1516121561" target="_blank">link</a>). That article is behind a paywall, so here's the key section:<br />
<blockquote class="tr_bq">
"A growing number of critics think these tech giants need to be broken up or regulated as Standard Oil and AT&T once were...But antitrust regulators have a narrow test: Does their size leave consumers worse off? By that standard, there isn’t a clear case for going after big tech—at least for now. They are driving down prices and rolling out new and often improved products and services every week."</blockquote>
<br />
The reality is that the usual standards don't matter. Antitrust and regulatory law are incredibly vague, and their enforcement is driven by political attitudes more than by the rule of law. If enough politicians and pressure groups want to hurt tech companies, they can find many ways to do it.<br />
<br />
Although the focus of public discussion is on the big American tech companies, that's not the real danger. The big companies will face some new regulations, but they have enough money and momentum to weather almost any storm, at least in the short term. I think the much larger danger is the collateral damage that may be inflicted on the leaders of the future, the next generation of tech companies that are just getting started now and can't survive adversity. Reckless regulation could disrupt their ability to create new markets, and changes in antitrust enforcement could dry up the flow of funding to new companies.<br />
<br />
Ironically, careless regulations could easily strengthen the current tech dominators rather than weaken them, by stopping the growth of the new companies that would displace today's leaders. It could also shift tech leadership out of the democratic world by enabling firms in other parts of the world, where the government doesn't put the same restrictions on their business practices, to dominate the next wave of technology (<a href="https://www.nytimes.com/2018/05/31/technology/china-tencent-alibaba.html" target="_blank">link</a>).<br />
<br />
The challenge to tech is especially daunting because the industry doesn't actually have just one problem, it has three: a PR problem, a legal problem, and a political problem. They're all coming to a head at once, and they all interact to reinforce each other. I'm going to write a few posts exploring the problems, what caused them, and what we can do about them.<br />
<br />
Let's start with the PR problem: the tech industry's mishandling of its own image.<br />
<br />
<br />
<b>How we hurt ourselves</b><br />
<br />
I won't say the tech industry deserves what's happening, but part of it is our own fault. As a group, we don't communicate well with the rest of the world. We've created a distinct culture, language, and set of business practices that don't make intuitive sense to people outside the industry.<br />
<br />
Because we're living in our own little bubble, we are profoundly tone deaf about the way we come across to the rest of the world. We assume people will understand our good intentions, but they don't. What we think is playful they see as arrogant. We celebrate a cool new technology and they see a threat to yet another segment of the economy. Our idea of good aggressive business tactics comes across like careless brutality.<br />
<br />
There are so many examples of this that they could fill a book. But here are three recent incidents:<br />
<br />
<b>1. Elon Musk's decision to sell flamethrowers.</b> What in the name of God is he thinking? Democracy is in trouble, nukes are proliferating, there's Ebola in Africa -- and Elon and his buddies play with fire guns. If you want to convince people that you're an unstable man-child unworthy to plan the future, I can think of no better way to do it. Elon's poor judgment and lack of self-control is especially troubling because he's running businesses that rely on public trust: trust me not to kill you with my car, trust me not to blow up your astronauts, trust that my tunnels under Los Angeles won't collapse in an earthquake, etc.<br />
<br />
I care deeply about what Elon's doing with SpaceX. It's the sort of bold game-changing initiative that the tech industry ought to be driving. Why distract from it with self-indulgent trivia?<br />
<br />
(Speaking of SpaceX, I loved the photos of the Tesla in space, but how much better would it have been to send into orbit something that was a symbol of peace and hopefulness rather than a commercial for your cars? Such a wasted opportunity.)<br />
<br />
<b>2. Google bamboozles an innocent hair-dresser. </b>Technologically, one of the most interesting demos at Google's recent I/O conference was Duplex, the AI-driven appointment scheduler (<a href="https://www.youtube.com/watch?v=D5VN56jQMWM" target="_blank">link</a>). It made a voice call to a hairdresser and set up a haircut appointment. To folks in the tech industry, it was a cool (if very limited) effort to pass a Turing test. But to everyone in the normal world, it came across as Google using its technology to trick a poor woman in a hair salon into thinking she was talking to a human being – while tech insiders laughed at her.<br />
<br />
Sure enough, there were immediate calls for regulation of the technology. Way to go, Google – in one demo you made yourself feel good and simultaneously creeped out everyone else on the planet.<br />
<br />
<b>3. Amazon's headquarters competition.</b> Jeff Bezos is an incredibly good businessman, probably the equal of Steve Jobs in his own way. But sometimes he lets his competitive instincts get in the way of good judgment. From Amazon's perspective, it makes perfect sense to have a big public competition for the location of its next headquarters: Amazon can play off all the cities against one-another, and it gets tons of free publicity in the process.<br />
<br />
But politically the competition is awful. It positions Amazon as a colossus to which cities and states must genuflect, and it's generating dozens of communities that will be disappointed when Amazon turns them down. The politicians there will have to face voters asking why they lost the opportunity. Do you think those politicians will say "well, candidly, our business climate and incentives just weren't competitive"? No, they'll say Amazon was greedy and they'll blame it for jerking them around. Amazon is creating grass roots enemies for itself across the country.<br />
<br />
<br />
<b>Tech in the age of cynicism</b><br />
<br />
The tech industry has always had these communication problems, dating back at least thirty years. But the problem was survivable in the past because we were kind of cute and dorky, and we weren't all that big a chunk of the economy. Huey Lewis told people it was hip to be square, and they gave us a pass.<br />
<br />
But the dorky act doesn't come off well any more, for two reasons. First, the public mood has changed. The 1980s and 1990s were a time of optimism; many people were willing to trust that the benefits of our products would outweigh any disruption we caused.<br />
<br />
But a series of shocks, starting with the terrorist attacks on 9/11, have systematically eroded public trust. Our institutions have repeatedly failed to keep us safe, and some huge companies have been revealed as corrupt at the highest levels. We've entered an age of cynicism and fear in which institutions are assumed to be dishonest and self-serving, and almost no one gets the benefit of the doubt.<br />
<br />
For an industry that generates change and uncertainty, losing the benefit of the doubt is a severe problem.<br />
<br />
Second, the tech industry has grown to be a much more prominent part of the economy. Tech companies are seven of the 10 most valuable companies in the world. That prominence has changed us. We used to be the outsiders who wanted to help destroy corruption. Apple sold the Macintosh as a tool to defeat dictators, and Google said it was going to break the monopoly of the wireless carriers. Today, in order to do business, we have to get along with those same entities. So Apple bans apps when the Chinese government tells it to, and Google cosponsors ads with the carriers it once wanted to destroy.<br />
<br />
Somewhere along the line we became The Man. And in today's world, The Man isn't trusted.<br />
<br />
Our rising profile and the loss of public trust alone would be enough to create a crisis for tech, but it's actually the simplest of our problems. We're also in trouble legally and politically. Next time I'll talk about the legal situation.<br />
<br />
I welcome your comments.<br />
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<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com2tag:blogger.com,1999:blog-17898384.post-83976016369099111912018-03-05T09:16:00.001-08:002018-03-05T19:37:35.695-08:00VR Cinema: Keep TryingAfter two and a half nonstop hours of watching VR "cinema" this weekend, I reached two conclusions:<br />
--My head hurt, and<br />
--This stuff is not yet ready for prime time<br />
<br />
The setting was Cinequest, Silicon Valley's quirky independent film festival. This year it added a VR "experience," with eight half-hour VR programs you could watch, at ten bucks a pop. I chose five of them. They were a diverse selection: Big-budget Hollywood movie excerpts done up in VR, independent animation, what appeared to be game trailers, and some live action shorts.<br />
<br />
I came in with high expectations: I've always been fascinated by 3D computing, and my first experience with an Oculus Rift was close to a religious event. So I was excited to see Cinequest's "new and amazing worlds" in which "you don't just watch, you actually experience these movies all around you," as the program put it.<br />
<br />
Cinequest is a cool organization and they put on a great show. They're a nonprofit, staffed heavily by volunteers, and I applaud them for trying this experiment. But mostly what the VR experience showed is that our technology, and VR cinema itself, isn't yet living up to the hype.<br />
<br />
That's not too surprising – we're still in the very early days of this new platform, and my experience with every new platform is that you get a lot of weird experiments while people work out what they can do with it. Based on what I saw at Cinequest, VR cinema is still in the weird stage. Below I'll give you details on each of the shorts I experienced, but here's a summary:<br />
<br />
<b>The technology needs more work.</b> When you came into the VR room, the staffers equipped you with a Samsung Gear VR headset with a Galaxy smartphone and a pair of wireless earphones, and told you how everything worked. So right off the bat, this wasn't a movie-like experience; you don't just sit down and watch. The staffers did a very good job of teaching people and maintaining the devices (more on that below), but it was still confusing. The most puzzling part was that there were volume controls on both the headset and the earphones, and you had to turn them both to max in order to hear the content.<br />
<br />
The on-screen interface was familiar because I'd played with a Rift before, but as soon as I started my first program I had problems. The video was running at about five frames a second, and the sound seemed way out of sync with the images. After several minutes of futzing around with the controls, I gave up and called over one of the staffers. He explained that the Galaxy smartphones used in the headsets were getting overloaded by all the video files, and had to be restarted regularly. He rebooted my system, a procedure I had to do two more times in the two and a half hours.<br />
<br />
Now the video was running at good speed, and I was very pleased that I didn't experience any lag when I moved my head. But the images were grainy, far more so than either a film or television show. The color palette seemed to be limited as well – the live action videos looked washed out, peoples' faces were monochrome, and in dark scenes there was noticeable pixelation. It reminded me of watching an old pre-hi-def color TV.<br />
<br />
<b>None of the programs were as immersive as a good movie. </b>In movies we have almost a century of experience in how to tell a story visually. VR is different enough that we need a new set of best practices. For example:<br />
<br />
<i>--The camera was sometimes in odd positions.</i> In one film, you appear to be sitting in the passenger seat of a car, but squashed down about a foot above the seat so you're looking up at the characters and can't see out of the front of the car. Instead you have a panoramic view of the world's largest car stereo.<br />
<br />
<i>--You don't know where to look.</i> In some of the films I ended up looking in the wrong direction and missed important action.<br />
<br />
<i>--Whiplash.</i> One of the films featured a tense discussion between two actors, one on your right and one on your left. You had to whip your head back and forth to follow their interaction. That got old really fast.<br />
<br />
<i>--The seams get in the way.</i> Live action VR is filmed with multiple cameras pointing in different directions. The edges between the camera images are blended so you don't usually notice them. But occasionally a character would step into the border between them and his head or some other important body part would disappear.<br />
<br />
<i>--It's hard to do closeups. </i>There's a very fine art to the way a film communicates human interaction, a subtle rhythm of closeups, reaction shots, etc. A VR film can't jump your perspective around that way – you'd feel like you're being teleported all over the room. So your perspective tends to stay in one or two places for the duration of a scene, which makes it feel a bit like watching surveillance camera footage. Instead of being in the story, you feel like you're spying on it.<br />
<br />
Add these issues to the resolution and color problems, and often I found myself paying more attention to the technology than to the story.<br />
<i><br /></i>
<b>The rules of storytelling still apply.</b> In some of the films, the script and storytelling were awful. No amount of great technology can compensate for awkward dialog and a lack of conflict. Ironically, the worst offender in this area was one of the big-budget Hollywood productions. You'd think they would know better.<br />
<br />
<b>I doubt that cinema is the killer app for VR.</b> Even if all of the problems above were solved, I came away doubting that cinema experiences will be the thing that pushes VR into the mainstream. For me, the thing that makes VR special is its eerie sense of presence, the feeling that you're actually in another place even though you know you're not. The VR films gave me almost no sense of presence, which surprised me. I felt like I was in a wraparound Imax theater (with bad image quality), rather than being transported to a different place.<br />
<br />
I think the problem is that in a movie your point of view has to be controlled in order to tell you a story. The movie pushes you around – sometimes gently, sometimes forcefully, but almost always you have no control. I think the ability to move around is an important part of the sense of presence in VR. Without it, the whole experience was much less compelling. I think I'd prefer to watch a conventional movie; the resolution is better, and you don't get a headache from the headset shoving your glasses into your face.<br />
<br />
<br />
<b>What it means: Keep looking</b><br />
<br />
VR today reminds me of the early days of multimedia: We're seeing some interesting bits and pieces, but they're more like curiosities than finished products. I think we'll need a lot more experimentation, and better hardware, before VR will be ready to take off in the mainstream.<br />
<br />
Multimedia software came of age in 1993 when Cyan released Myst, the first software title to fluidly merge the large storage of CD-ROMs with high-quality graphics, sound, and interesting experiences. Along with a couple of other popular titles, it created a whole multimedia industry in the 1990s. If we've found the Myst-equivalent for VR, I didn't see it at Cinequest.<br />
<br />
<br />
<b>Details on the programs</b><br />
<br />
<b>Speed Kills. </b>VR scenes from an upcoming movie starring John Travolta. A movie about speedboats and drug runners ought to be gripping in VR, but this was the weakest program of the bunch. The scenes (which didn't fit together into a narrative whole) were mostly tedious: Travolta feeding a horse, Travolta hitting on a waitress, Travolta talking to a guy in a restaurant. To make it worse, they inserted credits and titles between every scene. So the whole thing felt like a bad commercial.<br />
<br />
<b>La Camila.</b> This is a cute animated story with lovely colors, and it was obviously a work of love for the people involved. Unfortunately, the character models were surprisingly primitive. My expectations have been skewed by Pixar, and it was jarring to see people and animals that look like a bunch of linked sausages bouncing like marionettes. Unfortunately, about 2/3 of the way through the program I accidently restarted it while adjusting my headset, and I couldn't get the video to fast forward to where I'd been. So I moved on.<br />
<br />
<b>The Humanity Bureau.</b> More movie excerpts, these from an upcoming Nicolas Cage movie. Much better structured than Speed Kills, but I was distracted by some very strange camera angles. There were some good outdoor sequences, but when the story moved indoors I felt the surveillance camera effect very strongly.<br />
<br />
<b>The Recall.</b> A VR experience based on a 2017 alien abduction film featuring Wesley Snipes. Stilted and confusing. It reminded me of the Geico commercial parodying horror films. This is the one where I missed a lot of the action because I was looking in the wrong direction, but the things I did see were unintentionally amusing rather than scary.<br />
<br />
<b>Boxes.</b> Much better thought-out than the movie excerpts, this is a live action short in which a young man cleans out the home of his late parents, and reminisces about his childhood in a series of flashbacks. A nice story well told, but I don't think it gained much from the VR.<br />
<br />
<b>Volt: Chain City.</b> A frantic four minute animated chase with Star Wars-style speeders plunging through a landscape of wreckage. Hello motion sickness.<br />
<br />
<b>Women on the Move.</b> A sweet live-action story about a woman in Niger who has high hopes for her granddaughter. It was an interesting visit to a village in Africa, and the VR did give me a good view of the homes and streets of the village. But I didn't feel like I was there, probably because I couldn't move around on my own.<br />
<br />
<b>Doctor X: Pale Dawn. </b>Dinosaurs chasing a dune buggy. Even more dizzying than Volt.<br />
<br />
<b>Hutong in Live. </b>A love letter to the Hutong lifestyle in Beijing, this one was interesting because it mixed animation and video. Unfortunately, the animation was very limited – the models were low res, you could only move between predetermined spots, and your perspective jumped from place to place rather than moving smoothly. Other than the 3D, it reminded me of a QuickTime title from 1992. I think it would have been much more successful if it had recreated a hutong and allowed you to move through it freely.<br />
<br />
<b>Meeting Rembrandt: Master of Reality.</b> An animated interaction with Rembrandt. Nice idea but not very engaging. It felt like an explanatory video you'd see in a museum.<br />
<br />
<b>Ultraman Zero VR. </b>Campy but fun: A guy in a monster suit attacks a scale model of Tokyo, and is defeated by a guy in a superhero suit. It was kind of fun to be between the monster and giant superhero, with both of them towering over me. But they still looked like a couple of guys in suits, and the novelty wore off quickly. If I were an Ultraman aficionado I probably would have been more charmed.<br />
<br />
<br />
<b>What do you think? </b>Have I missed the point? Is there a killer title I should have watched? I'm interested in your comments.<br />
<div>
<br /></div>
<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com3tag:blogger.com,1999:blog-17898384.post-11620953623528188432017-06-25T15:46:00.000-07:002017-06-25T15:46:06.623-07:00Amazon, Whole Foods, and the Shopping ExperienceThere's already been a lot written about Amazon's offer to buy Whole Foods, and what it means for the retail industry. The <i>LA Times</i> says it's all about home delivery of groceries (<a href="http://www.latimes.com/business/la-fi-tn-grocery-delivery-20170620-story.html" target="_blank">link</a>) and the <i>NY Times</i> focused on efficiency (<a href="https://www.nytimes.com/2017/06/16/business/dealbook/amazon-whole-foods.html" target="_blank">link</a>). Ben Thompson wrote an excellent analysis pointing out the logistical advantages for Amazon of buying a food distribution network along with the stores that give it critical mass (<a href="https://stratechery.com/2017/amazons-new-customer/" target="_blank">link</a>). The article is worth reading if you haven't done so already.<br />
<br />
I don't disagree with any of the above, but I find myself thinking back on a conversation I had recently with a former Amazon employee, and I wonder if there might not be a second motivation for the purchase, focused on what Amazon can learn from Whole Foods rather than what the company does for Amazon's infrastructure. The former Amazonian I spoke with was very careful not to discuss company confidential information, but he was happy to talk about the company's philosophy, and he said Amazon is often misunderstood.<br />
<br />
I started off our conversation praising Amazon for its outstanding logistics, the relentless focus on efficiency that drives its dominance. The former employee gave me a funny look and said that's exactly what people don't understand about Amazon. The company's senior management isn't focused first and foremost on logistics, he said. It's focused on customer experience: How do you solve customers' problems and how do you make them happy?<br />
<br />
What the company is relentless about, he said, is its willingness to pick away at customer problems, running experiment after experiment to find new ways to satisfy people. That's the motivation behind many of Amazon's new products, he said. Kindle? An experiment in instant delivery of digital goods. Drones? Faster delivery of physical goods. The thread tying them together is that Amazon has realized instant gratification is a very powerful benefit, and anything that moves in that direction is worth exploring.*<br />
<br />
Usually when the tech industry talks about customer experience we think of Apple, with its focus on design and elegance. The experience of using the product becomes the product itself. Amazon's customer experience is more transactional. Nobody I know would call the Amazon website elegant in the Apple sense. If Apple ran Amazon, there would be only a single product on the Amazon home page, but it would be presented so compellingly that you'd feel driven to buy it, and you'd feel good afterward because the mere act of owning it validated your taste and intelligence.<br />
<br />
Amazon is more about efficiency <i>as an experience: </i>the way you feel when you can find what you want effortlessly and get it quickly. Viewed in that light, the Echo is an extension of that effortless experience.<br />
<br />
So then, why buy Whole Foods? The grocery industry is under chronic financial stress. Amazon could have its pick of grocery chains and logistics centers. Why pick this particular one?<br />
<br />
I got an interesting perspective on Amazon from the speakers at Etail West, a big retail conference I attended last year. Retail and ecommerce companies get together at the conference, drink heavily, brag about their accomplishments and complain about their challenges. One of the central topics is always Amazon and what to do about it.<br />
<br />
To many retailers, Amazon is the grim reaper: unstoppable, lurking in the background and preparing to harvest them all. For a long time retailers hoped to learn from Amazon and become as efficient as it is, to compete toe-to-toe on price. Lately many seem to be giving up on that, realizing that they'll never match Amazon's scale and efficiency. "Amazon is an algorithm," one retailer said. "You can't win by being a better algorithm than they are."<br />
<br />
Instead, many of them are focusing on the customer relationship: Connect with people about their values and interests, give them a great in-store experience that reinforces that connection, and they'll buy from you even if it's not quite as cheap or convenient as buying from Amazon. At least that's the theory, and faced with extinction on the logistics front, that's what many retailers are trying to do.<br />
<br />
Viewed in that light, what does Whole Foods bring to Amazon?<br />
<br />
Whole Foods connects with its customers around values. Whole Foods has one of the best, most differentiated in-store experiences in all of retail. In many ways, Whole Foods is like the Apple of grocery shopping. It's everything that people say Amazon isn't.<br />
<br />
Maybe the outcome of the purchase is that, as many critics predict, Whole Foods will become a soulless place where robots replace friendly clerks. Or maybe the culture clash will disrupt both companies, like a mini AOL/TimeWarner. In that case you'll eventually see Whole Foods dismembered and digested by Amazon, its stores closed down and its house brands just another line item in the Amazon store.<br />
<br />
But what could Amazon learn from Whole Foods about in-store experience and connecting with customers around values? How much better can the Whole Foods experience become when paired with Amazon's instant gratification engine? And if Amazon can combine Whole Foods' sort of experience with Amazon's, how much more powerful will the resulting company be?<br />
<br />
And what in the world could the other retailers do next?<br />
<br />
__________<br />
*I asked him what explains the Fire Phone. He grimaced and said he wasn't involved in that one, and besides it was designed by a team in California that didn't understand the Amazon way. I know some folks who close to that team, and they tell a different story that centers on a meddling Jeff Bezos who forced bad ideas into the product. But that's another story.<br />
<div>
<br /></div>
<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com6tag:blogger.com,1999:blog-17898384.post-53680398460062754602016-12-12T20:38:00.000-08:002016-12-12T20:38:34.563-08:00The Tech Industry and the Return of the Zero-Sum Game<b>Summary.</b> In the tech industry we worship “disruption,” but to most people it’s a dirty word. In a world where insecurity and mistrust in institutions are on the rise, tech is increasingly out of step with the values of the public. This puts our companies at risk of hostile regulation and customer backlashes. We need to change our attitude and our behavior, or our industry may be seriously damaged in the years to come.<br />
<br />
<b><br /></b>
<b>The situation: No more win-win.</b><br />
<br />
Across many countries, and across the political spectrum, we are seeing a dramatic erosion in peoples' faith in win-win situations. Compared to the past couple of decades, there's less willingness to believe that the benefits of any change will outweigh the costs. Along with that, there's a general feeling of mistrust in institutions. Many people on both ends of the political spectrum believe the political and economic system is being gamed by insiders to the detriment of everyone else.<br />
<br />
Those feelings have always been present in our culture to some extent, but today the feelings are very strong, and what's especially unusual is that fear of the future and mistrust in institutions are rising together. People are simultaneously afraid of change and unwilling to trust those who are supposed to protect them from its problems.<br />
<br />
That's what gave us President Trump (<a href="http://mobileopportunity.blogspot.com/2016/12/why-trump-won-fairness-and-change.html" target="_blank">link</a>). People call him a businessman, but he actually practices a very particular type of business: He's a deal-maker from the real estate industry. If you've ever dealt with real estate developers (and I have) you know they live in a world dominated by zero-sum negotiations in which one side gains and the other one loses -- the taller your building gets, the more shade it casts on the neighbors. For one person to win, the other has to lose.<br />
<br />
Mr. Trump is a perfect embodiment of the zero-sum attitude that's rising in society today. The attitude is showing up more and more frequently even in the supposedly-liberal press, but most of us in tech don't see it. We still believe in win-win situations. We have faith that the world will be better for the changes we create, and we expect that to be obvious to everyone else.<br />
<br />
Silicon Valley is like a hothouse full of orchids in the middle of a blizzard. Warmed by our stock options and VC pitches, and insulated by the buzz of our fans on social media, we often fail to listen to the people out in the cold.<br />
<br />
For at least a year I've seen a trend in the general press toward skeptical, if not downright hostile, coverage of leading tech companies. Airbnb and Uber/Lyft are prime examples. They're poster children for disruptive change, and increasingly I think the general press is covering the damage they cause far more than the benefits.<br />
<br />
That's understandable. Among all the industries being disrupted at the moment, traditional journalism is one of the hardest hit. When reporters see their own careers threatened, can you really blame them when they show sympathy for other people in the same boat?<br />
<br />
For example, in the Los Angeles Times, coverage of Uber and Lyft has focused very heavily on their damage to traditional taxi companies, with much less attention on their benefits for the average citizen.<br />
<br />
An article in April 2016, headlined "Uber and Lyft have devastated L.A.'s taxi industry," (<a href="http://www.latimes.com/local/lanow/la-me-ln-uber-lyft-taxis-la-20160413-story.html" target="_blank">link</a>) did a pretty thorough job of highlighting the economic pain being felt by taxi drivers in Los Angeles, but said next to nothing about the benefits of ride-hailing.<br />
<span class="Apple-tab-span" style="white-space: pre;"> </span><br />
The taxi drivers' pain is real, and I don't want to dismiss it. But anyone who's lived in LA can tell you that taxi service there has always been dysfunctional: notoriously unreliable, slow, and expensive. If ever an industry deserved to be disrupted, the LA taxi industry is it.<br />
<br />
Part of the challenge for the ride-hailing companies is that their benefits are very diffuse -- they make it a bit more convenient for lots of people to get around the city -- but the pain they cause is very localized and visible: Working class taxi drivers who can't make ends meet. Balanced coverage would talk about the costs and benefits of ride-hailing, and would explore ways to offset the pain for those who are on the losing side. But that balance is often missing.<br />
<br />
A couple of other examples:<br />
<br />
--A column in the NY Times detailed government efforts to regulate what it called the "frightful five:" Apple, Amazon, Facebook, Microsoft, and Google/Alphabet (<a href="http://www.nytimes.com/2016/06/02/technology/why-the-world-is-drawing-battle-lines-against-american-tech-giants.html" target="_blank">link</a>). The fact that the Times' tech columnist chose the word "frightful" to describe the nation's most successful consumer tech companies says a lot, but the column added to the problem by quoting academics who fear the companies' power. Did you know Amazon is about to destroy the nation-state? Dang! There was zero effort to describe the benefits those companies produce, or the consumer harm that could be caused by regulation of them.<br />
<br />
--A ferocious column in the Guardian declared that the tech industry is destroying democracy (<a href="https://www.theguardian.com/technology/2016/nov/06/technology-disruption-infects-political-system" target="_blank">link</a>)<br />
<br />
--In a similar vein, a column in the NY Times credited tech with creating Donald Trump (<a href="http://www.nytimes.com/2016/11/18/opinion/silicon-valley-helped-create-trump-and-thats-bad-for-it.html" target="_blank">link</a>).<br />
<br />
--This graphic on the front page of BBC.com summed it up nicely:<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwak0UoKZU9kfUBRPlFdmV8FqUoV88bSG4mt55psgy1Qaz1IaAp0GFA-lbhsvrjeY5ksoP_OvBHOrine-7oI5DrRC4zUQ-Mk-V7QQTJ5GZYYATVgIdWDm25Z8Y7Cg7oNBfWDYj/s1600/BBC+eyeballs.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="178" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwak0UoKZU9kfUBRPlFdmV8FqUoV88bSG4mt55psgy1Qaz1IaAp0GFA-lbhsvrjeY5ksoP_OvBHOrine-7oI5DrRC4zUQ-Mk-V7QQTJ5GZYYATVgIdWDm25Z8Y7Cg7oNBfWDYj/s320/BBC+eyeballs.png" width="320" /></a></div>
<br />
The most disturbing thing to me is that the articles are becoming more and more shrill as time goes on. This is creating a toxic atmosphere for technology companies. Our industry is all about the benefits of change. For us, "disruption" is a positive thing. We welcome competition, because we assume that when a company or industry is destroyed, the new one that replaces it will be even better.<br />
<br />
Our attitude is out of sync with the rest of the world. Our optimism makes us sound callous and arrogant. When we preach the benefits of something new, many people are reluctant to believe us, and some search avidly for any potential downside. The next step will be for them to actively oppose us, as is already happening to Uber and Airbnb.<br />
<br />
In other words, tech companies no longer get the benefit of the doubt. Instead, any disruption we cause is likely to be assumed guilty until proven innocent.<br />
<br />
<br />
<b>What to do: It's time to eat humble pie</b><br />
<br />
Om Malik recently wrote a commentary in the New Yorker suggesting that we in tech need to get outside the latte bubble and talk with normal people (<a href="http://www.newyorker.com/business/currency/silicon-valley-has-an-empathy-vacuum" target="_blank">link</a>). That's a great beginning, but there's a lot more we need to do:<br />
<br />
<b>First step: Think.</b> We should take these criticisms to heart. As a start, it you haven't done so already, read the Guardian article I linked above and think about it. In my opinion, the author is mistaking a transition for a collapse, but the important thing is for <i>you </i>to decide what <i>you </i>think, and then for all of us to have a rational conversation about it.<br />
<br />
That sort of sober, logical discussion is very hard to do when everyone's frightened and reacting emotionally. So we need to drain some of the emotion out of the discussion of tech:<br />
<br />
<b>Shut up about destroying things.</b> The tech industry thrives on negative energy; we love to brag about the brain-dead products and industries that we're going to destroy. It's an old habit we picked up from Steve Jobs, and it doesn't serve us well in the new era. That sort of talk needs to stop. The only person who thinks disruption is sexy is your VC, and the only place for discussing it is a private presentation to investors.<br />
<br />
<b>Don't be a jerk. </b>The culture in many successful tech companies isn't exactly compassionate. We tend to compete hard and talk bluntly, and sometimes we celebrate companies that will do anything to win. That leads to arrogant exec comments in public and employee behavior that skirts the edges of legality. When everyone loved the tech industry, that sort of behavior was often forgiven. But today it's more likely to get a company permanently branded as untrustworthy, and therefore in need of regulation. And it hurts the rest of us because it puts the whole industry in a bad light.<br />
<br />
<b>Don't overpromise.</b> Hype is another long-time tech industry tradition, born of our own enthusiasm for our products. We sell the vision we're trying to build rather than its implementation today. But in the current environment, that comes across as lying. Every time we do it, there's damage to not just the company that exaggerates, but to the trustability of the tech industry in general.<br />
<br />
Case in point: the term "artificial intelligence," which our industry applies to a technology that, when you strip away all the hype, basically consists of high-speed pattern matching. Are there potential job losses created by that pattern matching? Yes indeed. But the same thing happened with every technology breakthrough since the steam engine. You'll need to make a really strong case that this time is any different from the others. So far I have yet to see that case. But the term "AI" makes regular people think that we're about to create malevolent super-intelligent Skynet robots that crush humanity underfoot. That's not possible within the practical planning horizon of anyone who's not a singularity honk – and if Moore's Law continues to decelerate, it might not be possible ever. Meanwhile, our language terrorizes people and interferes with the real, rational discussion we need to have about productivity vs. job loss.<br />
<br />
If you want a simpler example, consider the damage done when Tesla named its driver assist feature "Autopilot." That term has a very specific meaning to the public, and Tesla didn't deliver on that meaning. Every time we do something like that, we say to the public (and government) that we can't be trusted and need to be regulated.<br />
<br />
<b>Speaking of regulations, we need to make friends in the government(s).</b> As a small-government guy, I dream of a world where companies are free to innovate, and the market alone chooses winners and losers. We don't live in that world. Government regulation is a fact of life in modern society, and in the current atmosphere, the more we disrupt things, the more we're going to be regulated.<br />
<br />
So we have two choices: We can either partner with government, and get regulations we can live with; or we can ignore government and get rolled. That doesn't mean we all need to turn into influence-buying pond scum. Engaging with the government means being up front with regulators about any problems you create, and being willing to engage with them on solutions. I know from personal experience that most government regulators mean well and are just trying to enforce the law. They usually don't have a deep understanding of tech, though. So getting to them early, being honest, and sharing information freely can help them understand the difference between reasonable and unreasonable regulation.<br />
<br />
This takes time and commitment, a price that most tech companies, especially startups, are not willing to pay. This is a case where the investment community should step in. The safety of your investments depends on good relations with the right regulators. You should be cultivating contacts in the government (national and local), and you should be teaching your portfolio companies how to use them, just the same as you teach them how to do Facebook advertising or agile product development.<br />
<br />
There's a separate issue of lobbying politicians (as opposed to regulators). Some industries have become so enmeshed in government that they see political influence-peddling as a primary means of competing (aerospace, telecom, etc). I am not suggesting that we join that group. The thing that motivates all politicians is getting re-elected. If you're not going to fund their election campaigns, the key to influencing them is to have a lot of public support. You don't have to make huge campaign contributions if you have a lot of customers who love you and will speak up for you. That brings us to the next issue...<br />
<br />
<b>Measure and document your benefits to society.</b> It may be obvious to you that your company produces a net benefit to society, but you should always assume that it's not obvious to anyone else. The press will focus on easily found victims: the mom-and-pop retail store put out of business by an online competitor, rather than the benefits of lower prices for everyone else in society. It's your job to document and communicate the good you do for society, preferably with charismatic examples of happy customers you've helped. If you can't find those, you need to get a better marketing team, and in the meantime you should hire a consultant to do a good economic analysis of the your benefits to society as a whole.<br />
<br />
<b>Take responsibility for the problems you cause. </b>If there is a group that's hurt by your disruption, be sympathetic to them. Can you do something to ease their transition? Are there ways society can help them? Get out in front of the problem and help to solve it. If nothing else, don't act in denial of the downside; instead, make clear that the upside is better.<br />
<br />
<br />
When we've done all of this – when we've calmed the panic and taken responsibility for the messes we create – then we can start rationally crafting a system in which we're allowed to innovate because the world trusts that we won't be irresponsible about it. That probably sounds like a tall order, but really I don't think we have any other choice. It's possible the public mood will improve dramatically on its own in the near future, but I doubt it. Big public swings between pessimism and optimism tend to last a decade or two, longer than the lifetime of most tech companies. For safety's sake, we should view the current situation as permanent and adapt ourselves to it, rather than huddling in the greenhouse and hoping the storm will pass.<br />
<i><br /></i>
<i><br /></i>
<i>What do you think? Am I overstating the problem? Am I wrong to believe that innovation is generally a force for good? Does the tech industry need to change in other ways? I welcome your comments.</i><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com6tag:blogger.com,1999:blog-17898384.post-34790651434505618182016-12-04T17:35:00.000-08:002016-12-04T17:35:29.046-08:00Why Trump Won: Fairness and ChangeDonald Trump won the 2016 US presidential election because of two issues: Deep concerns about the fairness of American government, and an intense desire for change. That's a different story that we've heard from many commentators (<a href="http://www.latimes.com/politics/la-na-pol-campaign-aides-harvard-20161202-story.html" target="_blank">link</a>), but I'm confident in my opinion because I heard it directly from Trump voters. Below I'll share their voices with you, and tell you how I found them.<br />
<br />
This post grew out of an experiment I ran at <a href="https://www.usertesting.com/" target="_blank">UserTesting</a> (my employer). I wanted to see if our technology could be used to gather public opinion info. I was pleased with the results, and wanted to share them. At a time when most people are focused on talking, think of this post as an opportunity to listen, and maybe get a better idea of what the whole election meant.<br />
<br />
<b><br /></b>
<b>Background.</b> Like many people in Silicon Valley, I was surprised and worried by the recent election of Donald Trump. I didn't understand why so many of my fellow citizens would vote for someone who had such obvious personal flaws. There were plenty of explanations in print and online, but most of them came from the same people who predicted the election wrong. I didn't trust their analysis; I wanted to hear from Trump voters directly.<br />
<br />
Fortunately, I had a way to do that. UserTesting runs a system to give companies fast user feedback on websites and apps. You come to us, describe the demographic you want and the tasks you want them to perform, and we recruit normal people to record themselves doing the task. The whole process is automated and extremely fast – you start getting videos back in as little as one to two hours.<br />
<br />
I figured I could probably use the same system to run interviews with voters. Instead of testing a website or app, the participants would just answer written questions about the election.<br />
<br />
<br />
<b>What I learned. </b>I reached out to Trump voters the day after the election, and within a few hours I had all the responses. As you'd expect, there were many different motivations, but I think two threads connected the Trump voters:<br />
<br />
--They feel the system in the US is unfair, and is being exploited by people who cheat on the rules.<br />
<br />
--They felt that Donald Trump, as an outsider, was the best bet to change the system. Hillary Clinton's long history in government worked against her with many of these voters, because it meant she was seen as a product of the system rather than a change agent.<br />
<br />
Trump stood for change. Clinton stood for continuity. Change won.<br />
<br />
<br />
<b>Don't take my word for it. </b>Below are recordings of the Trump voters, explaining the decision in their own words. First there's a sampler with highlights chosen by me, followed by the full recordings of each interview, so you can judge for yourself. A few notes:<br />
<br />
--To protect the privacy of the participants, I did not record their faces, and I have removed any references to their location. All you'll get is a black screen and their voices.<br />
<br />
--The participants came from all over the country, and range in age from their 20s to their 60s.<br />
<br />
--There are nine recordings. Before anyone objects, I know that's not enough for a statistically significant sample. But statistically significant surveys failed us during the election; do you really want another one? These recordings are more like a focus group, except it was completed in hours instead of weeks, each interview was separate, and the questions were written. So there's no groupthink and no moderator bias. This sort of research won't tell you the exact percentage of people who hold a particular view, but it's excellent for understanding why they think as they do, which is what I wanted.<br />
<br />
Here's my highlight reel of Trump voters talking about their choice:<br />
<iframe allowfullscreen="" frameborder="0" height="270" src="https://www.youtube.com/embed/oqMHgfJdFcM?showinfo=0" width="480"></iframe>
<br />
<b>Other issues: What's the mandate? </b> The full interviews are much richer than my summary, and I encourage you to listen to them. Here are some of the issues that stood out to me:<br />
<br />
--The vote was a <b>very difficult decision</b> for some of them. I was humbled by the amount of thought they put into it.<br />
<br />
--Some were motivated by intense distrust or <b>hostility toward Hillary Clinton</b>.<br />
<br />
--Some were motivated by <b>opposition to abortion</b>.<br />
<br />
--There was not a huge amount of hostility to immigration in and of itself. Some of the participants went out of their way to acknowledge the contribution of immigrants. What bothered many of them was illegal immigration, because that was viewed as cheating. Sometimes that was paired with concerns about citizens who cheat on government services. <b>It's the fairness aspect that bothers them</b>: "I'm working hard to make ends meet; it's unfair when others don't follow the rules."<br />
<br />
--Although I didn't ask about it, several people mentioned <b>health care costs</b>. They said health insurance prices have gone up dramatically in the last few years, despite President Obama's reforms. In fact, some blamed him for the rise in premiums.<br />
<br />
--There was a lot of <b>desire for reconciliation</b> with the part of the country that voted for Clinton. Some of the Trump voters went out of their way to say that they want more cooperation in the country, more equality, and less racial tension.<br />
<br />
Overall, I think it's fair to say that the election was a mandate for dramatic change in the system and for increased fairness. That's especially vivid when you think how close Bernie Sanders, another advocate of change, came to the nomination on the Democratic side.<br />
<br />
I don't think the election was necessarily a mandate for every other proposal that was floated during the election. In the recordings you'll even hear some Trump voters scoffing about the border wall, and saying they don't want Roe vs. Wade overturned.<br />
<br />
I think the election result was a cry for help from people who thought Trump was worth the risk. As one woman put it: "I decided to go with Trump...because I thought maybe he could make a change and he could make a difference, and I am praying that I am right."<br />
<br />
You're not the only one, sister.<br />
<br />
<b><br /></b>
<b>Here are the full interviews:</b><br />
<iframe allowfullscreen="" frameborder="0" height="270" src="https://www.youtube.com/embed/HBkYMJwH4gI?showinfo=0" width="480"></iframe>
<iframe allowfullscreen="" frameborder="0" height="270" src="https://www.youtube.com/embed/tuUY0UzSAhQ?showinfo=0" width="480"></iframe>
<iframe allowfullscreen="" frameborder="0" height="270" src="https://www.youtube.com/embed/SmKZ77msuvg?showinfo=0" width="480"></iframe>
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<b>What do you think?</b> I'm going to take a chance and leave comments open. I'd love to hear your thoughts on the interviews and what they say to you. But please don't vent, and don't criticize the interview participants. They had the courage to share their thoughts candidly, and deserve to be treated with respect.<br />
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<i>PS: Although UserTesting allowed me to do this research, I did it on my own time, because I wanted to understand the election, and I was curious to see if our tool could be used this way. I used personal time to edit the videos, which is why you're seeing this several weeks after the election.</i><br />
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<i>PPS: If you're wondering why I put a political post on a technology blog, stay tuned. There is a connection, which I'll explain in future posts.</i><br />
<br /><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com7tag:blogger.com,1999:blog-17898384.post-35554485693310844472014-07-02T22:51:00.001-07:002014-07-02T22:51:56.527-07:00The Real Meaning of the Fire PhonePeople have been asking my opinion of the new Amazon Fire Phone, but I’ve had a lot of trouble answering. My first reaction was overwhelmingly blah. I’ll be curious to try it, and maybe then I’ll feel better about it. But right now it seems to me like a bag of interesting features rather than a coherent product. (Quick, what do faux 3D imaging and a year of free mail order shipping have in common? Absolutely nothing.) Plus it’s available from only one mobile operator, and the pricing isn’t low enough to get anyone excited. I’m delighted anytime a major company tries to innovate, but I can’t imagine this phone having a huge impact on the market.<br />
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Many others are neutral to downright hostile. BGR wrote, “Amazon innovated in all the wrong places.” (<a href="https://bgr.com/2014/06/18/amazon-smartphone-specs-features-analysis/" target="_blank">link</a>). And CNN said, “if you're happy with your iPhone 5s or Galaxy S5, there's no compelling reason to change” (<a href="http://money.cnn.com/2014/06/19/technology/amazon-fire-smartphone/index.html?hpt=hp_t2" target="_blank">link</a>). <br />
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So why did Amazon build this product? Ben Thompson made a good case that the phone is designed to strengthen Amazon’s relationship with its lucrative Prime customers (<a href="http://stratechery.com/2014/amazons-whale-strategy/" target="_blank">link</a>). I’m sure that’s part of the motivation. But if that’s the only goal, wouldn’t you price the phone very low to grab more customers, the way you did Kindle? And as Ben himself noted, there are many other things you could do to more directly recruit Prime customers. For example, many of the Fire Phone apps could have been released separately for Android and iOS. Wouldn’t that be a better way to serve Prime customers? Rather than trying to rip people away from their iPhones and Galaxies, why not just co-opt them through some apps that run on their current phones? What Amazon’s doing is like selling your own line of sofas as a way to distribute slipcovers.<br />
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And so I go back to wondering why Amazon did it. Imagine you’re Jeff Bezos. You have a fairly stable relationship with Apple and many other phone companies at the moment; why turn yourself into their blood enemy for a product that that won’t move the needle in sales?<br />
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To me, the Fire Phone reeks of experiment. I think Amazon’s testing something, and the experiment is important enough to spend a ton of money and create a lot of competitive hostility. After thinking about it a lot and trying to look at the world through Amazon’s eyes, I think I can guess why the Fire Phone would be strategically important to Amazon. I believe it’s not about the phone market; it’s about the evolution of mobile commerce and the future of Amazon itself.<br />
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To explain why, I have to give a bit of background on mobile commerce. For online retailers, the single most frustrating thing about mobile technology, especially smartphones, is that it people using it don’t buy a lot of stuff. They’ll browse in your web store and use your shopping app, but when it comes time to buy they often don’t purchase. The industry rule of thumb is that a good commerce site on a personal computer will convert about 3% of shoppers to buyers (in other words, for every 100 online shoppers you make three sales). The conversion rate for smartphones is a third of that, about 1%. <br />
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In an industry that would kill to improve conversion by a tenth of a point, that drop from 3% to 1% is horrifying. Many commerce companies have spent years trying to fix it, and through incredible effort and careful experimentation it is indeed possible to increase the mobile conversion rate. In my day job at UserTesting that’s one of the things I help companies do. But it’s a slow process of incremental fixes, and in the meantime mobile web use is growing explosively. Here’s the nightmare scenario for an online retailer: <br />
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—What if the next generation of internet users moves to smartphones and wearables faster than we can figure out how to fix mobile shopping? <br />
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—What if, as people move to mobile, the conversion rate for our whole business drops from 3% to 1%? <br />
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—And most disturbing for a category leader like Amazon, what if the low conversion rate on mobile is a sign that the online store itself is not a good fit for smartphones? What if some new mobile technology or app makes online shopping obsolete, just as online stores have been making traditional retail stores obsolete? What if Amazon itself is the next big tech dinosaur?<br />
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Don’t laugh. Platform transitions in tech usually make the old category leaders obsolete. Read about Lotus Development or Digital Equipment Corporation if you don’t believe it.<br />
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That existential threat is the kind of thing I’d expect Jeff Bezos to worry about. It’s a huge change that comes from an unexpected direction and could cut the heart out of his business. What’s worse, by the time the threat becomes obvious it’ll probably be too late to respond to it.<br />
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So the time to act is now. Amazon needs to dive into mobile and figure out what the shopping experience would look like if you built it into a phone from the ground up.<br />
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If that’s Amazon’s motivation, then the Fire Phone is really all about Firefly, Amazon’s instant-buying technology. I think the question being tested is whether you can completely replace a web store with a properly configured phone. What if, instead of going to an online store to buy something, your phone itself became the store? What if, instead of searching for the thing you want to buy, you could just take a picture of it, or scan its barcode, or say its name? <br />
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<b>Amazon everywhere.</b> Futurist Paul Saffo put it this way: “Firefly allows Amazon to invade every store in every mall on the planet and turn it into a de facto showroom for Amazon” (<a href="http://www.cnn.com/2014/06/19/opinion/saffo-amazon-phone/" target="_blank">link</a>). I’d go even further. I’d say Firefly is an effort to turn the entire world into an Amazon store.<br />
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If Amazon makes that phone first, it takes another big chunk out of Walmart and Target and eBay and every other retailer out there, physical or virtual. If someone else makes it first, Amazon itself is in mortal danger.<br />
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I think that’s why Amazon had to make a phone. It needs to test and tune the integration of mobile hardware and software in the purchasing process, and that would not be possible on someone else’s phone. It also doesn’t want to share the data it’ll collect with any other phone vendor (especially not one allied with Google), since that could be the key to the future of the whole company. <br />
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From this perspective, the rest of the Fire Phone announcement makes more sense. You need to toss in a few sexy features, like the semi-3D screen, to attract some users. The price doesn’t have to be low because Amazon doesn’t want to sell a gazillion phones. One carrier in one country is enough because Amazon’s not pushing for world domination yet. It needs just enough users to give it a robust experimental base. Then it’ll observe, and it’ll learn, and it’ll tweak the experiment, and it’ll learn some more.<br />
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And then, when it gets the formula right, we’ll see the real Amazon phone. I’d expect it to be more aggressively priced and much more broadly available. I wouldn’t be surprised to see Amazon also release Firefly apps for other phones at the same time. By that point Amazon’s priority won’t be secrecy, it’ll be rapid domination.<br />
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Or maybe the experiment will fail. Maybe Amazon will learn that there is no magic way to turn a smartphone into a store. In that case it’ll quietly make the phone disappear, write off the losses, and move on to other priorities. Hey, it’s just money, and we all know how Jeff Bezos feels about that.<br />
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<b>What it means for the rest of us</b><br />
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Do you remember back when Google was just getting started in smartphones, and there was widespread speculation that Google would give away a phone with free wireless service? The idea was that the things Google would learn from the user were worth more than the cost of a phone service plan. That idea faded away as Google focused on co-opting rather than destroying the mobile industry, and as it realized that it couldn’t make enough money from phone users to pay for the service.<br />
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It might be time to revisit that scenario. If anyone can figure out how to make a free phone pay for itself, it would probably be Amazon. Even if it can’t give away a phone for free, it might be able to offer steep discounts, putting the rest of the phone industry at a huge disadvantage. If you’re Google or Apple, you don’t have the sort of retail back end that Amazon does, so you can’t directly match that strategy (although Google might try). A better option is to team up with the other companies threatened by Firefly. Perhaps you create a Firefly-equivalent app and open it to connectivity with anyone else’s online store in exchange for some sort of revenue sharing.<br />
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That approach requires heavy skills in alliance building. Apple might be able to pull it off, but they tend to work exclusively with a small number of subservient partners. Google could try for a broad alliance -- it likes to do everything big -- but I doubt it has the focus and consistency to create a lasting partnership of equals with large numbers of companies. (In that vein, it’s meaningful that Google started on a path similar to Firefly back in 2010 with Google Goggles, but killed the product a few weeks before the Fire Phone announcement because it was “a fun feature, but also a feature of no clear use to too many people” <a href="http://en.wikipedia.org/wiki/Google_Goggles" target="_blank">link</a>).<br />
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So Amazon’s potential strategy plays to the weaknesses of its biggest competitors.<br />
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I wonder if Apple might be willing to build a long-term partnership with Amazon, instead of competing against it. In addition to cooperating on mobile commerce, Amazon could help Apple with its portfolio of online services, a constant weakness of the company. Steve Jobs would not have done it; I think Tim Cook might.<br />
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<b>If you’re an e-commerce company,</b> you should investigate the Firefly APIs. It looks like you can plug into the Firefly system to make your own offers when a user scans an object. You’ll still need to convince users to install your plugin, but at least this will give you options. Besides, you need to learn how this new shopping paradigm works.<br />
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<b>If you’re a bricks-and-mortar retailer,</b> I think you shouldn’t waste time worrying about people using your store as a showroom for Amazon. You can’t stop that anyway. Instead, look at how you can enhance the shopping experience by embracing smartphones. To give one example, what if every product in your store had a QR code that took a smartphone user to your page for that product, with additional information, FAQs, and special offers? I’d love to have that in one of the box box retail stores where you can never find a sales rep. You’d enhance the shopping experience and maybe intercept shoppers before they turn to Amazon. Plus you’d get data on what people actually do inside your store.<br />
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I’m kind of surprised that Apple and Google haven’t already built a QR scanning app into their mobile platforms. It’d be a logical way to partner with retailers and get leverage against Amazon.<br />
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<b>If you’re another mobile phone vendor</b>, such as Samsung, you should talk with Amazon about integrating Firefly into your phones in exchange for a cut of the revenue. Better to embrace the company now than to risk competing against a heavily-subsidized Amazon phone in the future. <br />
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<b>And for anybody who deals with mobile, </b>the Fire Phone is a reminder that we’re just getting started. Although we talk of smartphones as a maturing market, we’re barely beginning to learn how mobile devices will change our lives. We stand in the foothills of the Himalayas. The biggest mobile opportunities, and the biggest disruptions to today’s businesses, are still ahead of us. <br />
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<a href="http://www.gettyimages.com/detail/187768233" target="_blank"><img alt="http://www.gettyimages.com/detail/187768233" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSF4pU26ZBxRCVU3RRaBCgmojkkY9HHwtbmbH2jH6ADtXQH_s8VXQXkiD7StHmqxLYeBrsD35Z4t_Dbctv1ZHnnpEAL6H0BTn-iBplYFh0ptkrBY6Y4HD6C7OvPGySkmPlbja-/s1600/Himalayas+photo.png" /></a></div>
<br /><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com16tag:blogger.com,1999:blog-17898384.post-80839751963690020462014-05-22T23:50:00.000-07:002014-05-22T23:50:10.290-07:00What Happened to the Surface Mini?Well, that was disappointing.<br /><br />Microsoft’s heavily-rumored mini-tablet (<a href="http://mobileopportunity.blogspot.com/2014/05/is-microsoft-about-to-announce-info-pad.html" target="_blank">link</a>) was a no-show at the Surface event this week. If this had been an Apple announcement, I’d just say the Internet got carried away with itself. But the source of the rumors was the very reliable Mary Jo Foley at ZDNet (<a href="http://www.zdnet.com/what-microsoft-didnt-announce-today-an-arm-based-surface-mini-7000029664/" target="_blank">link</a>), who’s almost a house organ for Microsoft official leaks. So what happened?<br /><br />It’s possible that Microsoft leaked the rumors deliberately in order to smoke out Foley’s sources, but I don’t think Microsoft would have put Qualcomm in the story if that were the case. Most likely the product was real, and the announcement was canceled just recently.<br /><br />Bloomberg says Microsoft execs Stephen Elop and Satya Nadella lost confidence in the product and decided to pull it at the last minute (<a href="http://www.bloomberg.com/news/2014-05-20/microsoft-said-to-back-off-plans-to-debut-smaller-surface.html" target="_blank">link</a>). That would be a typical move for a new management team – you always look to kill a few of your predecessor’s projects to put your own stamp on the organization. The reasoning that Bloomberg gave didn’t make sense, though. The report says the mini-tablet was canceled because it didn’t have enough differentiation. A tablet optimized for note-taking and equipped with a stylus would have been heavily differentiated, so that doesn’t wash. <br /><br />More believable would be if the company is leery of launching any new product that depends on Windows RT, the ARM-based version of Windows that can’t run normal Windows apps. RT has failed to achieve significant momentum in the market, and I could see Elop and Nadella being very cautious about risking another RT-based product flop. More prudent to pull it now, ship the Intel-based jumbo Surface tablet, and do a minitablet later, if at all, based on Windows Phone. The jumbo product won’t change the world, but at least it won’t embarrass Microsoft.<br /><br />If that was the call, it’s a prudent decision that totally misreads the market for mobile devices. RT was a bad choice for full-sized Surface tablets because they are too close in price and size to notebooks. No Windows user wants a notebook that won’t run Windows apps. But a minitablet could have been sold as an information appliance, for which full Windows app compatibility is much less important. <br /><br />This situation illustrates why the tech industry has so much trouble creating truly new device categories. Small startups have trouble scraping together the money necessary to do a really different product. Doing it right often takes on the order of $20 million, more than you can easily raise from VCs or Kickstarter. Big companies have that sort of money, but they’re usually risk averse and would rather stick to established categories of product. Which is what Microsoft just did.<br /><br />Ah well, the net impact is that Microsoft has now whiffed twice on the minitablet market, once with the twin-screen Courier product and now Surface mini. I wonder if they’ll get a third chance.<br /><br />I’ll also be interested to see what the last-minute cancellation costs Microsoft. If they were close to launching, there will be parts and manufacturing contracts with big cancellation fees. Presumably Nadella will be doing some sort of restructuring of the company in the near future – new CEOs always do – and the writedown, if any, can be buried in that.<br /><br />Meanwhile, someone at Microsoft is probably sitting on a roomful of Surface Mini prototypes that are headed to a shredder. I have one humble request: Could you please slip one of them to me?<br /><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com6tag:blogger.com,1999:blog-17898384.post-6090408012691718182014-05-19T11:20:00.000-07:002014-05-19T11:20:00.006-07:00Is Microsoft About to Announce an Info Pad?The reports leaking out of Redmond are intriguing. Tomorrow (May 20, 2014) Microsoft will reportedly announce a “Surface Mini” tablet, a touchscreen device in the same size class as an iPad Mini but equipped with a stylus and note-taking software (<a href="http://www.zdnet.com/microsoft-ceo-nadella-expected-to-preside-over-new-york-city-surface-mini-rollout-7000028838/" target="_blank">link</a>).<br /><br />Most of the press reports have focused on the chip vendor (<a href="http://www.bloomberg.com/news/2014-05-06/microsoft-said-to-use-qualcomm-chips-in-smaller-surface.html" target="_blank">link</a>) and comparisons to the iPad Mini, but what most of them seem to miss is that this may be a new category of mobile device. The Surface Mini as described in the reports sounds very much like an info pad, a tablet optimized for managing business information and taking notes in meetings. <br /><br />That product opportunity has been evident for at least ten years. It has a very distinct customer base that is more interested in business productivity than in playing games or listening to music. When I was at Palm, we studied the market closely, and later I tried to pull together a startup to build one (that evolved into <a href="http://www.zekira.com/" target="_blank">Zekira</a>, the software startup I’m working on now).<br /><br />Although you can use an iPad for business functions, a device optimized for notes and business productivity could be far more compelling than an iPad for that particular usage and for those particular customers. But the price has to be right and a ton of little features have to be done correctly. And you have to market it properly, so it looks like the ultimate replacement for the paper notepad rather than a debased iPad. The right product is an appliance for business info, not an iPad that happens to have a stylus.<br /><br />I’ve written about the info pad opportunity in the past. You can read about it <a href="http://mobileopportunity.blogspot.com/2011/02/info-pad-creeps-closer.html" target="_blank">here</a>.<br /><br />Is this the vision Microsoft’s shooting for? Will it get the details right? I’m more intrigued by this announcement than by anything else Microsoft’s done in years. Stay tuned.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com8tag:blogger.com,1999:blog-17898384.post-59701347398174978442014-05-08T23:49:00.000-07:002014-05-08T23:58:02.900-07:00The Uncomfortable Truth at the Heart of Mobile GamingI was at a developer conference earlier this year, and the discussion came around to a certain very popular pattern-matching game. I was surprised by how much hostility I heard. “That thing,” one developer fumed, “is just a slot machine.”<br />
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At the time I chalked it up as jealousy. Sure, many mobile games have random elements, but the best ones also require a lot of thought. That’s nothing like a slot machine.<br />
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But as I learn more about mobile gaming, I start to see the developer’s point. Most people outside the game industry don’t realize that free-to-play games, by far the most successful mobile game category, are often supported financially by a very small number of users who pay extravagantly for power-ups, extra lives, and in-game currency. The whole point of many successful free-to-play games is to identify these “whales” and extract as much money as possible from them. <br />
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The discussion of this process at mobile conferences is sometimes uncomfortable. Non-paying players (the great majority of a game’s users) are often dismissed as meat to be fed to the whales. An intense amount of thought goes into not just identifying the whales, but determining their individual psychology and the best techniques to pull more money from that particular type of person. Players are tracked in as much detail as possible, including exactly which promotion they responded to, what their purchasing pattern is, and any other details the developer can glean from them. Every aspect of the game is crafted to maximize revenue extraction, including minute changes in graphics, button designs, and subtle changes in game play. Anything that creates even a small fraction of one percent change in a conversion rate can mean the difference between a successful and unsuccessful game, so the pressure to constantly refine everything is immense.<br />
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At its recent F8 developer conference, Facebook gave a great overview of this process. You can view it <a href="https://www.youtube.com/watch?v=sJD60NtkeKw&list=PLb0IAmt7-GS188xDYE-u1ShQmFFGbrk0v&index=23" target="_blank">here</a>.<br />
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At several recent conferences, I’ve heard developers say they’re starting to realize that there seems to be no upper limit on the amount of money you can extract from some users. Do you think offering a bundle of power-ups for $50 is outrageous? Create a bigger offer at $100 and you’ll make even more total revenue.<br />
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This process of systematically designing games to extract revenue, and targeting offers at the biggest whales, makes many game developers uncomfortable. In an excellent essay on <i>Gamasutra</i>, Mike Rose wrote, “Free-to-play games aren't after everyone for a few dollars -- they're after weak people in vulnerable states for hundreds, if not thousands.” (<a href="http://www.gamasutra.com/view/feature/195806/chasing_the_whale_examining_the_.php" target="_blank">link</a>)<br />
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Many game developers take issue with that statement. They point out that there’s nothing wrong with accepting money from people as long as they’re in control of their actions. Some people just plain like playing mobile games and are happy to spend money for a better gaming experience. What’s wrong with letting them pay? Besides, if a console gamer buys an Xbox for $300 and a bunch of games worth $700, we wouldn’t call the console industry exploitative. Why should mobile games be any different?<br />
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But the discussion at the conferences sometimes sounds a lot like gambling executives trying to talk their way around the problem of compulsive gambling. And sure enough, there are efforts to create an ethical code of conduct for free-to-play game developers, defining how far they can and cannot go to pull money out of a customer (<a href="http://www.gamasutra.com/view/feature/207779/ethical_freetoplay_game_design_.php" target="_blank">link</a>). You don’t usually get a code of ethics for an industry unless it has a potential ethics problem.<br />
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Meanwhile, what’s very clear is that successful free-to-play game development is much more about science than art. I think many game developers were drawn to the field for the art -- they want to create the most engrossing, glorious game experience they can; the game equivalent of a blockbuster movie. I think about the awesomeness that was Marathon and Myst on the Macintosh, or the surreal weirdness of Badland on iOS (<a href="http://www.insidemobileapps.com/2013/09/30/insider-qa-badlands-johannes-vuorinen/" target="_blank">link</a>), and that’s the sort of pure mind-bending joy that I want from a mobile game. The idea of systematically altering that experience to extract another purchase from 0.5% of the users feels fundamentally wrong, and probably explains some of the developers’ complaints.<br />
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But rather than dismissing their complaints as frustrated idealism, I think it’s a good idea to listen and think about where the industry is going. I think the code of conduct is a very good idea; without it, we could easily end up with government regulation of free-to-play gaming, and I can’t imagine how that could be effective without destroying the category altogether. It would also be a very good idea to develop other new revenue streams to support mobile gaming. That’s why I’m always interested when someone like Facebook claims they can fix mobile advertising. You may not love the idea of mobile games becoming like commercial television, but I think we’d all be a lot more comfortable pushing an occasional ad at every user rather than trying to extract $1,000 from 0.5% of them.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com1tag:blogger.com,1999:blog-17898384.post-61776428217753704082014-05-04T22:33:00.000-07:002014-05-04T22:33:15.914-07:00It’s Time to Pay Attention to FacebookConsidering how big and successful Facebook is, it gets surprisingly little respect in Silicon Valley. Although everyone acknowledges the company’s size, it’s usually viewed either with hostility (among the small but intensely vocal group that cares deeply about privacy) or mild indifference (by everyone else). It’s not usually seen as a leader capable of changing markets, let alone driving the cutting edge of anything. The widespread dismay over Facebook’s purchase of 3D goggle maker Oculus VR was a great example of this attitude: the company’s not viewed as a good home for innovation.<br /><br />So I was very interested when Facebook laid out a strategy for mobile last week that is not just adequate, but actually sounds quite smart, and could potentially make a big difference in the mobile industry. Of course the success of any strategy depends on how well it’s implemented; the history of the Valley is littered with cool-sounding strategies that failed or were never seriously tried (<a href="http://mobileopportunity.blogspot.com/2011/11/lessons-from-failure-of-flash-greed.html" target="_blank">link</a>). But if Facebook’s actions match its words I think it could change the competitive dynamic in the mobile industry, and in the process make life a lot better for independent app developers.<br /><br /><br /><b>Facebook’s problem</b><br /><br />The mobile tech world is dominated by proprietary platforms. Apple and Google both run controlled ecosystems in which they decide the key features and reserve the right to remove other companies from the field of play. Apple is a bit more controlling than Google, but they both manipulate their platforms to maximize their profits and prevent other companies from becoming too powerful.<br /><br />This is nothing new in computing history. On personal computers, Windows and Macintosh are both proprietary platforms. In fact, one of the few recent examples of a huge open platform in tech is the web. No single entity controls the features of the web or who can play on it. This helped produce a host of big web companies, like Google and Facebook and Amazon, and a wide array of customer choice. The downside has been poorly coordinated user experiences, and platform innovation that moves at a glacial pace because it has to go through standards committees. <br /><br />The proprietary mobile platforms have been great for users and developers in many ways. Apple and Google push each other to add new features and device categories, and the app stores on both platforms have led to an explosion of third party software. However, there’s a downside, especially for developers. They have to spend heavily to adapt their products to iOS and Android. Their apps are commoditized by the structure of the app stores. Apple and Google both take an excessive cut of the revenue the apps do get. And if an app category starts to become too popular, there’s a very good chance that Apple or Google will build it into the platform and crush the third parties.<br /><br />As a result, the app economy in mobile is far smaller and weaker than the web economy on the desktop. To a big web company like Facebook, that’s very threatening. Facebook’s business on the web depends on it being the hub of your social interaction, which it analyzes to target advertising customized for your interests. On mobile, Google is working hard to build its own social features into Android, and the whole idea of a single social hub is threatened as social features are built into a wide range of mobile apps. Although Facebook’s latest apps on mobile have been far more successful than its first efforts, it’s still at risk of being walled off by the platform vendors on one side while it is nibbled to death by a hoard of developers on the other side.<br /><br />So the question for Facebook is what its fundamental role will be in mobile. Can it find new ways to capture social information for use in ads? Can it create standards that give it a stable power base against the platform companies? And can it find a way to leverage the swarming strength of the little app companies? <br /><br /><br /><b>The Facebook Platform</b><br /><br />At the F8 developer conference last week, the company announced a series of new services and APIs for mobile developers that could give it a much deeper role in the mobile app ecosystem. The announcements included:<br /><br />–<b>The Audience Network</b>, an ad network that’s supposed to let developers tap into Facebook’s mobile advertising revenue stream. App developers are hungry for revenue, so this could be very important if it works. I’ll come back to this below.<br /><br />–An API called <b>AppLinks </b>that makes it easy for mobile apps to pass commands and data between each other, and to and from web servers. I’m still learning all the API can do, but I think it has the potential to let mobile apps work together in a variety of creative ways. As some others have pointed out, it also lets Facebook’s mobile apps integrate more seamlessly with other social sharing apps, potentially positioning Facebook as a hub for mobile social activity (<a href="http://pando.com/2014/04/30/facebook-builds-a-mobile-web-with-itself-at-the-center/" target="_blank">link</a>).<br />
<br />–A <b>mobile Like button </b>that developers can easily integrate into their apps. This will help developers publicize their apps, but it also gives Facebook data on what sort of apps you use. That can be mined to target advertising (are you seeing a pattern here?).<br /> <br />–<b>Hosted developer services</b>, under the brand name Parse, that help developers store data, compute, and process notifications in the cloud. Parse offered those services before, but the free tier has been expanded, in some cases by as much as 70x. It would be great for developers if Facebook set off a wave of price competition among back-end service companies.<br /><br />–A promise of <b>API stability</b>, which would make developers more willing to invest in Facebook technologies. <br /><br />–<b>Expanded user controls </b>over the information that is shared when someone uses Facebook Login. This may reduce the number one fear that users have of Facebook Login: fear that the app will post unwanted messages on your behalf.<br /><br />–A big, no-obligations offer of <b>free services for small developers</b>, with free ad credits and other services from Facebook plus other services from several third party companies. (Full disclosure: one of those free offers is from UserTesting, where I am the mobile strategy guy.) If you’re a small developer I think you’d be foolish not to take advantage of it. To learn more, go <a href="https://developers.facebook.com/products/fb-start/" target="_blank">here</a>.<br /> <br />The overall message was developer love from Facebook. As Mark Zuckerberg put it, “my goal for our culture over the next ten years is to build a culture of loving the people we serve....We want to build a platform that's reliable for you.” (<a href="http://www.latimes.com/business/technology/la-fi-tn-at-facebook-developers-conference-its-a-mobile-mobile-mobile-world-20140430,0,7802023.story" target="_blank">link</a>)<br /><br /><br /><b>Will it work?</b><br /><br />Taken as a whole, the announcements are a coordinated effort to make mobile developers more successful, and at the same time give Facebook a much more central role in mobile computing. But that’s just a story at this point. I’ve seen many great tech strategies fail utterly in implementation. What matters is the details of how Facebook will pursue its plans, and how hard it will try to make them work. Here are four key issues to watch:<br /><br /><b>How well will the Audience Network work?</b> Facebook claims that its mobile advertising is double the effectiveness of other mobile advertising. Basically, Facebook knows you better than anyone else, so it can target ads more precisely, making advertisers pay more money for them. The new Audience Network will let third party developers place those targeted ads in their own applications. So if a Facebook member uses an app that’s in the Audience Network, he or she will see Facebook-selected ads in that app. Developers can also customize the look of ads to match their applications, making the ads less jarring for their users.<br /><br />In the desktop world, many websites and web apps succeeded because there was enough advertising money available to support software and content companies. That hasn’t generally been the case for mobile, because the payments per mobile ad are low and because overall spending on mobile advertising has been depressed. If Facebook can change that dynamic – a huge if – it might change the economics of mobile apps fundamentally.<br /><br />I cannot overstate how important that would be for mobile developers. Today they struggle with commoditization in the app store, and freemium pricing policies that too often feel like bait-and-switch schemes. A stable, substantial advertising revenue base could change everything. But it depends on many unknowns: Can Facebook convince advertisers to pour more of their ad budgets into mobile? Will the targeting work? And most importantly, how much of that ad revenue will Facebook share with developers? Facebook wouldn’t answer that question at F8, so I can’t tell if the Audience Network is a potential breakthrough or a tease.<br /><br /><b>Will Facebook stay committed? </b> Facebook’s execs said all the right things about supporting developers – we’ll maintain our APIs, help you grow your business, meet with you regularly, and so on. It’s everything a developer could wish for: a big powerful company that’s agnostic about OS and wants third party developers to thrive.<br /><br />It all sounds great, but hearing Facebook talk about developer commitment is a bit like hearing a French president swear loyalty to his wife. Facebook embraced developers once before, when it encouraged them to build games and other apps on top of its desktop platform. The resulting surge in Facebook apps helped to crush MySpace. But once that battle was over, Facebook gradually lost interest in developers. The company didn’t even hold developer conferences in 2012 and 2013.<br /><br />So it’s reasonable to ask: Is Facebook committed to the long term this time, or is this a tactical maneuver that’ll end as soon as Facebook is more established in mobile? I think in this case Facebook’s long-term interests are more closely aligned with developers. But does Facebook itself understand that?<br /><br /><b>Will Facebook become a predator in apps?</b> Microsoft once had an incredibly vibrant third party app economy on Windows. But in its drive for revenue growth, the company eventually turned predator, trying to take over almost every major app category: graphics, antivirus, accounting, etc. That strangled application investment on Windows, and drove developers into the web. In many ways, you can trace the decline of Windows to the time when Microsoft turned against its own developers.<br /><br />Here’s Mark Zuckerberg on his attitude toward developers, in a conversation with <i><a href="http://www.wired.com/2014/04/zuckerberg-f8-interview/" target="_blank">Wired</a>:</i><br /><br /><i>“We’ve always believed that there were going be a lot of different ways to share content, and that we were never going to build all of them ourselves. We try to build the most important ones. But on top of that, you’re going to see dozens of other apps that developers build that each use the Facebook login, Facebook to share, the mobile “like” button, push notification from Parse, app installs through Facebook, and Facebook monetization tools in order to turn their apps into businesses.”</i><br /><br />I would feel so much better if he’d said “hundreds of thousands” of developers instead of “dozens.” But maybe he doesn’t want to sound threatening to Apple. Which brings me to the fourth issue:<br /><br /><b>Can Facebook walk the tightrope with Apple? </b>Google and Facebook are mortal enemies. The Facebook Audience Network reinforces that; both companies want to be the dominant ad supplier on mobile, and only one can win. But Facebook’s position relative to Apple is much more ambiguous. Today Apple is willing to cooperate with Facebook, allowing it to operate more or less freely on iOS, and partnering with it when appropriate. Mostly the two companies stay out of each-others’ way. With Facebook now advocating cross-platform APIs and positioning itself as a powerful hub for mobile advertising, will Apple continue to take a benign view of the company, or will it start to systematically restrain Facebook on iOS? If that happens, it’ll be much harder for Facebook to establish standards. To use a military analogy, Facebook really shouldn’t get itself into a two-front war. It needs Apple as an ally, or at least a neutral.<br /><br />I think there’s a good case for Facebook and Apple to work together against Google, but that would require both companies to restrain their egos. That’s not easy to do in Silicon Valley. Mark Zuckerberg’s next big test may be his diplomatic skills.<br /><br /><br /><b>The bottom line: Will Facebook be a facilitator or a predator in mobile?</b><br /> <br />What is Facebook’s vision for its long-term role in mobile? Does it want to be like Amazon Web Services, facilitating a robust ecosystem with lots of apps, and taking a small revenue cut from many of them; or does it favor the Windows model, in which it treats developers like a field of vegetables, to be harvested as soon as they start to ripen? We can’t tell today, and Facebook itself may not know yet. So it’s too early to judge what Facebook’s new strategy will mean for the industry. But I think one thing is clear: what Facebook’s doing in mobile is important, and it could change the rules. The company can’t be ignored.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com12tag:blogger.com,1999:blog-17898384.post-59583320404805507112014-04-01T00:45:00.002-07:002014-04-01T01:03:41.756-07:00Introducing iPierceConfidential documents obtained from Apple indicate that, despite all the rumors, the company’s first entry into wearable computing will not be a watch. Instead, Apple plans a line of intelligent body piercings, collectively known as iPierce. <br />
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The first iPierce devices will be an eyebrow ring and a navel barbell (which Apple calls a stud). Both include a microphone, speaker, Bluetooth LE, WiFi, motion sensor, GPS, 4 MP camera, four gigs of RAM, and a lithium ion battery. The ring also includes a small low-power laser (more on that below), and the stud has a USB connector that enables it to be tethered directly to a smartphone or Mac. The eyebrow ring weighs one ounce, and the navel stud two ounces. The small size and light weight of the devices was made possible by a custom A7 processor, designed by Apple, that incorporates the CPU, memory, and radio controllers on a single die.<br />
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The iRing, as Apple calls it, will come in a single model, but can be customized with interchangeable colored gemstones created at Apple’s new sapphire factory in Arizona. There will be three models of iStud: a star, an Apple logo, and an adorable little kitty playing with a ball. All were designed by Jonathan Ive and each is carved from a single piece of surgical steel.<br />
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The iRing can also be installed in the ear or other fleshy appendage, but the iStud unfortunately cannot be worn in the tongue due to interference between the low-power radio and a user’s dental fillings. In early testing there were three cases of minor burns caused by inductive heating of the user’s fillings when they coupled with the radio frequency of the WiFi transceiver. Apple is researching ways to implant a small external antenna that would enable iStud to safely operate inside the mouth.<br />
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One of the breakthrough features of iPierce is that the devices don’t need to be charged. Special piezoelectric chips in the device convert the user’s body motions into electricity and trickle-charge the battery. In most cases, that is enough to keep the device charged, but if power becomes low the devices can also digest the user’s blood cells to produce additional energy. This will not have a noticeable effect on the user unless they use a lot of WiFi, in which case they might become slightly anemic. For this reason, each iPierce will come with a bottle of iron pills. The pill bottle was designed by Jonathan Ive and was carved from a single piece of brushed aluminum.<br />
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<b>The software</b><br />
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All iPierce devices come bundled with the standard applications you’d expect: messaging, notifications, ringtones, relational database, and an app store. iPierce is controlled through a combination of Siri speech recognition and gesture recognition (for example, raising your eyebrow is equivalent to a swipe up on iPhone).<br />
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The iStud includes a color-changing LED that illuminates when the user receives a call or message. It flashes red for text messages, green for phone calls, and blue for App Store updates. The other colors are reserved for use by developers. There is also a vibration mode for use for use in libraries and other quiet settings.<br />
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The low-power laser in iRing can be used to display a screen image directly on the user’s eyeball (since the name Retina Display was already in use, Apple calls this technology iEye). One interesting application of this technology is that if a user has two iRings (one for each eye) they can automatically superimpose an image over anything that the user doesn’t want to see. For example, a large Hibiscus plant can be superimposed over an overflowing trash dumpster. Apple has written software that automatically detects any social media post that has a spoiler to a television show listed in the user’s Preferences, and replaces it with a quote from Hunter S. Thompson.<br />
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Apple says third party developers are working on iEye apps that will completely replace the user’s surroundings with synthetic environments. For example, a user could choose to live in a Lord of the Rings environment, with his or her friends replaced by characters from the movie, licensed through the App Store. For an extra fee, you can even make Siri talk like Gollum. ("Nasty little hobbitses wants to find a restaurant, do they? Siri never gets invited to eat at restaurants. All the hobbitses say is 'Siri calculate the tip.' Next time Siri sends you to a Taco Bell with a dirty bathroom.")<br />
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<b>Availability</b><br />
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iPierce devices will be sold and installed only at Apple Stores. Apple has quietly trained more than three thousand store employees in how to install iPierce, assisted by a custom piercing device that I’m told resembles “a highly instrumented staple gun.” The staple gun was designed by Jonathan Ive and was carved from a single piece of titanium.<br />
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Like the iPhone battery, iPierce devices are not removable. But users will be able to buy screw-on upgrades.<br />
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<b>Background and future plans</b><br />
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The iPierce project originated in 2009, when a super-secret team at Apple working on a smart watch presented their first prototype to Steve Jobs. I’m told by a contact at Apple that Jobs was aghast. “He shouted, ‘That’s the stupidest idea I’ve ever heard. Nobody wears watches anymore. I’d rather have a nail driven through my head than wear a watch.’” <br />
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When the team returned to its confidential off-campus location in Sunnyvale, CA, it realized that no one was sure if Jobs’ last comment was hyperbole or an instruction on the product they should build. The team decided it was safest to assume it was an order, and switched their work to body piercings.<br />
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"We leaked the plans for a watch as a decoy," my Apple contact told me. "We figured we could probably get Google and Samsung to waste $50 million each working on a clone. I've got a bet with a friend that if we plant a
rumor that we're working on a smart airplane we can make Google buy Boeing." <br />
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Now that iPierce is finally near completion, Apple's next wearable initiative will be iTat, a line of touch-sensitive LED tattoos. When paired with an iPierce, these tattoos could be programmed to display photographs, movies, games, and of course could also be used as a flashlight.<br />
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<div style="text-align: right;">
<i>Posted April 1, 2014 </i></div>
<br />
<i>Eight other April Firsts on Mobile Opportunity: </i><br />
<a href="http://mobileopportunity.blogspot.com/2013/04/the-real-story-behind-googles-street.html" target="_blank">2013</a>: The truth about Google Street View<i> </i><br />
<a href="http://mobileopportunity.blogspot.com/2012/03/twitter-at-gettysburg.html" target="_blank">2012</a>: Twitter at Gettysburg <br />
<a href="http://mobileopportunity.blogspot.com/2011/04/five-most-colossal-tech-industry.html" target="_blank">2011</a>: The microwave hairdryer, and four other colossal tech failures you've never heard of<br />
<a href="http://mobileopportunity.blogspot.com/2010/04/dissenting-view-on-yahoo-new-york-times.html" target="_blank">2010</a>: The Yahoo-New York Times merger<br />
<a href="http://mobileopportunity.blogspot.com/2009/04/thoughts-on-tech-industry-bailout.html" target="_blank">2009</a>: The US government's tech industry bailout<br />
<a href="http://mobileopportunity.blogspot.com/2008/04/some-other-things-you-didnt-know-about.html" target="_blank">2008</a>: Survey: 27% of early iPhone adopters wear it attached to a body piercing<br />
<a href="http://mobileopportunity.blogspot.com/2007/03/early-look-at-ultimate-social.html" target="_blank">2007</a>: Twitter + telepathy = Spitr, the ultimate social network<br />
<a href="http://mobileopportunity.blogspot.com/2006/04/implications-of-google-sprint-merger.html" target="_blank">2006</a>: Google buys Sprint<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com2tag:blogger.com,1999:blog-17898384.post-74565588305752683752014-03-27T10:21:00.000-07:002014-03-27T10:21:08.262-07:00More Thoughts on Facebook/OculusIn yesterday’s post on the Oculus acquisition (<a href="http://mobileopportunity.blogspot.com/2014/03/facebook-ego-and-oculus-rift.html" target="_blank">link</a>), I focused on the idea that Facebook sees virtual reality as the future of social networking. I was skeptical of the Oculus deal because I see VR as a more fundamental change with much broader implications to the industry. <br /><br />There is an alternate view, as a commenter on the post pointed out. Let’s assume for a minute that Mark Zuckerberg actually does understand the potential for VR to be far more than a communication technology. As I wrote last year (<a href="http://mobileopportunity.blogspot.com/2013/05/its-time-to-reinvent-pc.html" target="_blank">link</a>), I think 3D displays combined with 3D printing and gesture interfaces can be the foundation of sensory computing, the next big computing revolution as important as the graphical interface revolution of the 1980s. Maybe Mark sees that, and the deal is really about him buying Oculus to remake computing, with Facebook just the vehicle he used to make the deal.<br /><br />If so, bravo.<br /><br />The companies that should be driving this new revolution are Microsoft and Apple, but computing incumbents are usually too wrapped up in their existing businesses to spot the next generation. Maybe it takes a relative outsider like Mark to see the potential. And in this case, it’s an outsider with oodles of money. Which is good news, because the new world of sensory computing will need a lot of investment to get it started. <br /><br />When building a computing platform business, you have to hit a very careful balance between creating infrastructure that no one else can build, and leaving opportunity on the table so that others will invest. A successful computing platform is not a singular entity; it’s an ecosystem that wraps the platform vendor, developers, partners, and users into a network in which everyone invests and everyone benefits from the synergy between the parts.<br /><br />In this world, the platform vendor is a bit like the conductor of an orchestra. You don’t play the instruments yourself; you make sure they all come together to make beautiful music.<br /><br />To make sensory computing happen, Oculus will need to focus on four areas: technology standards, interface, economic model, and management.<br /><br /><b>Technology standards.</b> Someone needs to define how the apps, software extensions, and accessories in the sensory computing world will communicate with each other. For example, how does a gesture recognition tool like Leap Motion communicate with the Oculus hardware and with applications built for it? Oculus needs to take the responsibility for creating the communication standards and APIs, and needs to write the sample code that will make it easy for developers to integrate them. This can’t be left to committees or the open source crowd. Committees are too slow, and open source is too chaotic.<br /><br />Oculus also needs to write drivers. Lots and lots of drivers, to integrate its systems with the rest of the computing world. Most engineers hate writing drivers; they are boring and difficult and no one ever comes up to you and says, “killer keyboard driver, dude.” As a result platform vendors usually try to leave that detail to the open source community. But that doesn’t work, because volunteer open source developers are even less likely to do unsexy work. Building a platform without drivers is like building a city without sewer pipes. Mark, this is where your money will come in handy. Hire a bunch of good driver developers and put them to work interfacing Oculus with everything.<br /><br />Some of the first drivers you need are 3D printer drivers. Make it easy for people to create in 3D and bring their creations into the real world.<br /><br /><b>Interface.</b> Imagine the Mac without menus and windows and icons. A new computing paradigm needs new interface standards: how do we grab objects in a virtual world, how do we control the device, how do we move ourselves around, and how do we do all of that without inducing motion sickness (one of the biggest complaints from early users of the Oculus Rift hardware)? There’s some very subtle and challenging work to be done here. Oculus and its software partners have made a good start in the area of gaming (for example, how do you separate where you’re looking from where you’re shooting from where you want to move?) That same level of thinking needs to go into all aspects of sensory computing.<br /><br /><b>Economic model. </b>The platform vendor needs to make sure that the people creating accessories and apps for the new platform have a reasonable chance to make money. The platform does not need to guarantee profit for everyone, but the good apps and accessories must have a reasonable chance to rise to the top and be rewarded. The App Store, for all its flaws, accomplished this on iOS. Facebook failed very badly in this area with its platform; it’ll have to do much better for sensory computing to succeed.<br /><br />To go along with that economic model, you need evangelists: marketing/business managers who know how to recruit and motivate partners and developers. If Oculus had a staff of evangelists in place, they would have fanned out yesterday to explain the deal with Facebook and make sure it didn’t cause developers like Mojang to turn away.<br /><br /><b>Management.</b> To run all of this, Oculus needs experienced people who have created platforms before and know how to avoid all the mistakes you can make along the way. This is a specialized area of knowledge, and not something you can learn on the job. Platform management is a skill set that doesn’t exist in either Facebook or Oculus today, and it’s also not available in Irvine, where Oculus is based. But it is available in Silicon Valley, 300 miles to the north. <br /><br />The biggest challenge of all is figuring out how to make all of these changes and additions without overwhelming Oculus and losing its beautiful energy and vision and focus. I watched Palm turn from a spunky innovator into a bloated bureaucracy, and I don’t wish that fate on Oculus.<br /><br />Some of the work, like driver creation, can be done in parallel without too much disruption to the core of Oculus. But many of the other changes reach into the heart of the company. It’ll take unusually skilled and patient management to implement all these changes. Mark Zuckerberg doesn’t have the time to do this, and I think Oculus doesn’t have all the bench strength it needs today. One of Mark’s key moves in growing Facebook was hiring experienced managers to supplement his skills. I think Oculus needs the same thing. <br /><br /><br /><b>The big question</b><br /><br />What does Mark Zuckerberg really want to do with Oculus? At this point there is enough contradictory information out there that you can read anything into the deal. But the most hopeful quote came from Oculus CEO Brendan Iribe, who described the early discussions with Zuckerberg (<a href="http://time.com/39577/facebook-oculus-vr-inside-story/" target="_blank">link</a>):<br /><br />“We showed him some of the internal prototypes, and he got so excited about the vision of what we were doing and about the potential that this is truly the next computing platform. He actually said that to us. And it’s like, ‘Wow! We are looking at this whole thing being just that gaming platform. But tell us more, Mark.’ And he started to describe it, and we started to believe it too. And we started to relate it to a lot of the experiences we were having.”<br /><br />I’m still very skeptical about the risks in the deal, but computing desperately needs new leadership and ideas, and I hope the combination of Oculus and Zuckerberg will deliver them. I want to believe.<br /><br /><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com5tag:blogger.com,1999:blog-17898384.post-73660158732595670552014-03-26T23:03:00.000-07:002014-03-27T10:24:21.067-07:00Facebook, Ego, and Oculus RiftWhen a big company is still controlled by its founders, its greatest strength is that it has the resources and the freedom to do almost anything, regardless of the shortsighted fears of investors. That’s also its greatest weakness. Case in point, Facebook.<br />
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I can rationalize reasons why Oculus VR is a good fit for Facebook, but I think the official explanation for the deal is pretty thin. To me, it says more about Facebook’s ego than it does about a coherent long-term strategy. Deals like this between dissimilar companies have a long history of failure in Silicon Valley; to make it work, Facebook will need to be skilled in some areas where it has little experience. The company is also creating important new competitors to itself, in ways that echo Google’s Motorola acquisition. I’m a huge fan of Oculus Rift, so I hope the deal ends better than the Motorola one. But history makes me skeptical.<br />
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<b>Why Facebook wanted Oculus</b><br />
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Facebook’s explanation is that virtual reality is a new platform that, like mobile, could revolutionize social interaction. Facebook says it wants to be at the leading edge of that 3D social revolution, rather than trailing it the way it did mobile. That makes sense superficially, but the more you think about it, the shakier it sounds as the reasoning for this particular deal.<br />
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First of all, if you believe VR is a new platform, it’s not clear why you need to buy a hardware goggles company. It’s not like Oculus Rift is the only pair of 3D goggles in development. With Facebook’s market strength, it could have set a set a software standard and easily gotten it adopted by all the 3D vision companies. A small minority investment in Oculus would have been enough to secure their support. If you wanted a play in social VR, why not snap up SecondLife? Linden Lab has invested more than a decade in building software infrastructure for social VR, and would have cost a lot less than $2 billion.<br />
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Maybe you feel that the hardware and software have to be developed together. That’s a very Apple-like attitude, and therefore trendy in Silicon Valley. There have been persistent rumors that Facebook was working on its own phone. Maybe Facebook decided that it was too late to join the phone business, but it could get a jump on everyone else 3D.<br />
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But if hardware-software integration is the key, you’d want to drive deep integration between Oculus and Facebook’s software. You wouldn’t promise to run Oculus as a separate company, which is what Facebook claims it’ll do.<br />
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I think the real reason not to buy something like SecondLife is that it’s no longer trendy. Nothing smells worse in Silicon Valley than a company that failed to live up to its over-the-top hype, and the hype for SecondLife was astonishing about seven years ago. Oculus, on the other hand, is still at the takeoff stage in the hype cycle. It is the subject of a cult in the PC gaming community. The company promised to hit a sweet spot of affordability and quality for VR, and hardcore gamers embraced it enthusiastically through one of the first blowout Kickstarter campaigns. Although Oculus wasn’t mainstream news, there are literally millions of Oculus Rift-related videos on YouTube, most of them from enthusiasts drooling over the prototypes.<br />
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<b>The cool factor. </b>So by buying Oculus, Facebook makes itself cooler. The trouble is, it makes Oculus less cool. The enthusiasts who embraced Oculus because of its perceived authenticity and deep ties to the gaming world are appalled at the thought of it being owned by Facebook, which is seen as the poster child for lame low-res social gaming. It’s as if Motel Six bought the Ritz-Carlton. The Verge has a nice roundup of the angst <a href="http://www.theverge.com/2014/3/26/5549108/will-facebook-ruin-oculus-kickstarter-backers-voice-concerns" target="_blank">here</a>. My favorite quote: “even Microsoft would have...been better than Facebook.”<br />
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<b>Fear of missing out.</b> I wonder if another motivation behind the Oculus purchase was the fear that if Facebook didn’t act, someone else would buy the company. If you feel VR is important and if Oculus is a leader, then maybe you buy it just so you don’t get closed out. The big VCs who invested in Oculus have a playbook for acquisitions, and it usually involves creating competitive bids, or the fear of them, to drive up the price. If Facebook was afraid that a competitor might buy the company, it might have felt the need to make a deal fast at an aggressive price.<br />
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<b>Fighting Google. </b>I think the primary motivation for the Oculus purchase was competition with Google. Both companies are led by ambitious technophile founders, and both have more money than they can count. Google has a cool new thermostat company, lots of neat special projects, and a very strong play in mobile that it is leveraging to push its own services, to the potential detriment of Facebook. Google also has a smart glasses initiative. Now Facebook has its own headgear, and the hottest new technology in gaming. The social aspect is important, but I think Facebook just wanted to be a bigger, more dynamic player. As Harry McCracken put it over at Time, “the world's biggest social network is no longer satisfied with just being a social network.” (<a href="http://time.com/37920/facebook-buys-oculus/" target="_blank">link</a>).<br />
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Isn’t it interesting how companies impose their own mental paradigms on technologies? Google looks at glasses and sees a way to search and consume web services on the go. Facebook looks at goggles and sees a new means for social communication.<br />
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That’s exactly what scares the fans of Oculus. They wanted the next great gaming experience, not a communication tool.<br />
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<b>Risks of the deal</b><br />
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That brings us to the dangers in the Oculus deal. Let’s start with the thing not to worry about: the money. Facebook has more cash than it can possibly spend. An acquisition like this is just a way of recycling some of it. It’s kind of like Japan Inc. buying golf courses in the US in the 1980s. They had to do something with the money.<br />
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What I’m worried about are the odds that the deal won’t live up to Facebook’s lofty expectations. Let’s start with the risks to Oculus.<br />
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<b>Loved to death.</b> Whenever a big company buys a little one, there’s a big risk that the acquiring company will smother its new acquisition to death with enthusiasm. Everyone in the parent company is excited about the sexy new partner and has great ideas on how they can work together. There’s no way for the acquired company to deal with even a small fraction of these new ideas; usually it was working flat out just to do the basics prior to the deal and has no bandwidth for anything else.<br />
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Often the acquirer will be aware of this mismatch, and authorize the acquisition to hire a bunch of new employees to deal with the overload. But then the acquisition finds itself consumed by the hiring process, and its capacity for work actually goes down while the new employees are hired and trained. Usually first hiring priority has to be given to the parent company’s own employees, meaning the acquisition gets flooded with the parent company’s culture and business practices, and loses much of the distinctiveness that made it valuable in the first place.<br />
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To avoid smothering the acquisition, senior management in the parent company has to rigorously limit contact with the acquisition, and allow it to gradually staff up and grow into its new role. Does Facebook have that sort of discipline? So far it’s saying the right things, but the proof will be in actions, not words.<br />
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<b>Arrested evolution.</b> I’ve seen this happen over and over again. New device paradigms, if they succeed at all, usually create their own new usage patterns that nobody can predict in advance. To put it another way, we don’t know what the killer app for VR will be yet. Oculus is still in early beta on its first product, so it hasn’t had much opportunity to learn from the market. Chances are that when it ships, it’ll find that customer reactions pull it in directions it didn’t expect. Features that the company expected to be hot will go by the wayside, while something they casually tossed in at the last minute will turn out to be the biggest differentiator. A nimble startup can usually pivot to follow these discoveries. Will Facebook be open enough to let Oculus find its own way in the market, even if that leads it away from Facebook’s core business? If so, it would be a rare big company indeed.<br />
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<b>Dealing with developers.</b> Although Oculus and Facebook agree that its long-term future extends beyond gaming, I think it’s fair to say that unless the company is successful in gaming it may not be able to branch to those other markets. Success in gaming means recruiting developers to support Rift. Oculus had a lot of momentum prior to the acquisition, but we’ve already seen one developer (Mojang, the creator of Minecraft) decommit because of the Facebook deal (<a href="http://notch.net/2014/03/virtual-reality-is-going-to-change-the-world/" target="_blank">link</a>).<br />
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I don’t think Mojang is necessarily an opinion leader among hardcore gamers, but Facebook’s history with developers worries me a lot. At one time, in the race to defeat MySpace, Facebook embraced developers enthusiastically. It made itself a welcoming platform for them, and many companies, especially game creators, jumped in enthusiastically. But although Facebook offered a lot of technical support for developers, it never put much effort into helping them make money. It was almost as if the company lost interest in developers once MySpace was out of the way.<br />
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I’m not saying that Facebook deliberately mistreated developers, but I think it never understood that a successful platform has to be both technically cool and financially rewarding to developers. Facebook never made the economics of its platform work, and as a result its developer base withered way. Some of the survivors switched to mobile instead and became leaders in the new generation of mobile games. To this day if you get them talking in private they’ll tell you about their lingering distrust for Facebook.<br />
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Facebook seems a lot more comfortable evangelizing developers to use its login and advertising APIs, rather than creating an economic and technology platform that makes them successful. But that won’t be enough to make Oculus a winner. If Facebook is serious about VR as the next big paradigm, it needs to change itself to embrace VR developers and help them succeed as businesses. Will Facebook learn how to take care of a platform business? Or will it take orders from tiny little Oculus in this area? To me, that’s one of the most important unknowns in the Oculus deal.<br />
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<b>Indigestion.</b> My other concern is that Oculus could create internal and external problems for Facebook. Working on VR may pull Facebook’s attention away from other, more pressing competitive threats. To me, the most important near-term challenge to Facebook is the rise of the Asian messaging networks that combine free short messaging with games and other online services. The acquisition of WhatsApp was meant to counter that, but Facebook still has to figure out how it’ll be integrated with the core company. Do Mark Zuckerberg and his management team have enough time and brain juice to figure out how to integrate both WhatsApp and Oculus?<br />
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Buying Oculus also creates potential new enemies for Facebook. Until the acquisition, companies like Sony and Microsoft had good reasons to view Facebook as a potential partner in their struggles against Google (remember, Microsoft owns about 1.6% of Facebook). But Oculus founder Palmer Luckey has been outspoken in his criticism of both PS4 and Xbox, saying they don’t have the power to do proper VR. And he has speculated about building mobile wireless chips into the Rift goggles, making them a long-term competitor to the smartphone (<a href="http://www.techradar.com/us/news/gaming/oculus-rift-creator-xbox-one-and-ps4-are-far-too-limited-for-what-we-re-planning-1198420" target="_blank">link</a>). How will Apple feel about Facebook buying a company that says it’s going to make the smartphone obsolete?<br />
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When Google bought Motorola Mobility in 2012, I saw the shock and fear it generated in the Android licensee base. Even though Google eventually sold off most of Motorola, those companies will never again fully trust Google. I don’t think Oculus is the same level of shock to Facebook’s allies, but I suspect they’re now asking themselves whether they can trust Facebook as a partner in the future. That could hurt Facebook in ways it doesn’t even imagine today.<br />
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So I’m hopeful because I believe in the potential for VR, but I’m also very worried. For the Oculus deal to work, Facebook needs to understand developers much more deeply, exercise self-restraint organizationally, and navigate a very tricky landscape of allies who are now also competitors. None of those skills are particular strengths of Facebook today.<br />
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I hope they can learn quickly.<br />
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_____<br />
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<b>Edit:</b> There's an alternate view of the deal: What if Mark Zuckerberg really does want to make Oculus into the next generation of computing, not just a social extension? That creates another set of challenges, which I discuss <a href="http://mobileopportunity.blogspot.com/2014/03/more-thoughts-on-facebookoculus.html" target="_blank">here</a>. <div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com3tag:blogger.com,1999:blog-17898384.post-42160289787199126762014-01-16T11:02:00.001-08:002014-01-16T11:02:38.508-08:00Google the Conglomerate: After Nest, No Industry is SafeI’ve spent many hours trying to puzzle out Google’s product plans. What’s the logic behind Google Drive, how does Motorola fit in a software company, and on and on (<a href="http://mobileopportunity.blogspot.com/2013/07/google-logic-why-google-does-things-it.html" target="_blank">link</a>). But with the acquisition of Nest, I think I’m going to stop looking for a single product strategy. I believe Google’s mission statement to “organize the world’s information” is no longer a meaningful guide to its actions. To me, the company looks less and less like a unified product company and more and more like a post-modern conglomerate.<br /><br />The idea behind the “Internet of Things” is that network connectivity is moving into almost everything. If that’s Google’s investment thesis, it could rationalize an investment in almost any industry. Appliances? Absolutely. Shipping and logistics? You bet. Phosphate mining? OK, maybe not that. But any category of products that have electronics in them is fair game, as are any services that rely on data management. That’s going to be most of the economy.<br /><br />You’re left with no grand product plan, other than the strategy of any conglomerate: Move into hot categories where we can apply our skills and expertise.<br /><br />If that’s the case, we’ll need to evaluate Google’s strengths and weaknesses differently. We should worry less about the overall grand plan, and more about the management structure of its businesses, the skills of its general managers, and the efficiency of the support staff behind them. In other words, will Google be more like GE or like HP?<br /><br />
Here’s the key question: Does Google know how to manage itself this way? Does it have the right culture, processes, and team strength to run a conglomerate? Does it understand its weaknesses, and have a plan to fix them? For example, maybe the acquisition of Nest is less about its products and more about getting a team that knows how to apply high technology to a low-tech device category (<a href="http://daringfireball.net/2014/01/googles_acquisition_of_nest" target="_blank">link</a>).<br /><br /><b>No industry is safe. </b>The answers are crucial to many people. Investors obviously need it to understand whether Google stock is a good buy. VCs need to understand what categories of companies Google might buy. Competitors need to anticipate what Google might do next. And more broadly, the leaders in most industries should ask whether Google is now a competitor to them. <br /><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com14tag:blogger.com,1999:blog-17898384.post-10636501176915854122014-01-13T21:26:00.000-08:002014-01-13T21:26:17.839-08:00Wearability is Not EnoughI want to believe.<br /><br />The forecasts for wearable computing are remarkable. The headline in <i>Wired</i> declared, “Wearable Tech Will Be as Big as the Smartphone,” but the article went even further:<br /><br /><i>“We’re...seeing an explosion of these devices on the market.... A new device revolution is at hand...wearable devices are poised to push smartphones aside.” (<a href="http://www.wired.com/gadgetlab/2013/12/wearable-computers/" target="_blank">link</a>)</i><br /><br />So wearables aren’t just a new market, they’re the replacement for the smartphone.<br /><br />The article acknowledges that may seem like an outlandish prediction, but argues:<br /><br /><i>“It may seem laughable to suggest that people will soon neglect their iPhones in favor of amped-up watches, eyeglasses, rings, and bracelets. But then again, 10 years ago it seemed laughable to think that people would use their smartphones to email, surf the web, play games, watch videos, keep calendars, and take notes.”</i><br /><br />Just for the record, ten years ago the PalmOne website told people they could use their Treo smartphones to do e-mail, surf the web, play games, watch live TV, keep calendars, and yes, take notes. It didn’t work as well then as it does now, of course, but people weren’t just thinking about doing those tasks on smartphones ten years ago, they were doing them.<br /><br />It makes you wonder if <i>Wired</i>’s editors are all under age 25 or stricken with a tragic case of group amnesia. But I digress.<br /><br />I’m a gadget guy. I love devices, and I especially love the emergence of a new computing platform, because it creates so much opportunity for developers and so much innovation for customers. So the idea of getting in on another new platform is incredibly enticing to me. If you work in technology, it should be exciting to you too.<br /><br />But precisely because a wearable revolution would be so enticing, we should be super-careful that we don’t get swept away by optimistic groupthink. For every computing revolution I’ve lived through, I’ve seen several others that arrived decades late or fizzled out entirely.<br /><br />So while my heart wants to drink the wearable Kool-Aid right now, my head says to step back, think about it, and ask if the foundations really exist yet for a new computing revolution.<br /><br />So far, my head is winning. I do believe wearable computing has a bright future, and in some vertical markets it’s already taking off. But is it the successor to the smartphone? Not now, and maybe not ever. Here’s why.<br /><br /><br /><b>Two fatal flaws</b><br /><br />I think there are two big problems with wearable computing today. First, the term is a catch-all, not a category. Second, even if you get the definition right, I think we haven’t yet found the killer app.<br /><br /><b>What is wearable computing, really?</b> The term is kind of self-referential: wearable computing is computing gear that you wear. It attaches to your body or clothing, like a pair of glasses or a watch or a brooch. But those are extremely different form factors. I’m a Google Glass user and I’ve followed smart watches ever since Fossil worked on its late, lamented Palm OS watch in the early 2000s. Watches and glasses are completely different beasts, with different usage patterns and very different strengths. Grouping watches and glasses together in a single category makes as much sense as grouping together missiles and cargo planes and calling them flyable devices. The label is factually correct but meaningless in terms of predicting how the market will develop.<br /><br />So rather than talking about a wearable revolution, we should be asking if there’s a smart watch revolution or a smart glasses revolution coming. When you look at the world that way, it gets a bit less exciting, because you see the weaknesses in each category of product.<br /><br /><b>Will wearables eat the smartphone?</b> The tech industry is always full of predictions that some new type of device is about to swallow another one. It’s called convergence, and I’ve been hearing about it ever since the late 1980s, when Apple strategist Ken Lim started talking about it.<br /><br />But there are always many more convergence predictions than actual convergence events. In an example of successful convergence, home stereo systems used to consist of separate modules: disc player, amp, tuner, etc. They eventually converged to a single unit for many buyers.<br /><br />On the other hand, for decades many computer manufacturers predicted the imminent merger of the printer and personal computer. Converged computer/printers were promoted heavily in Japan, and several prominent efforts were made to bring them to Europe and the US. They all failed. Today PCs and printers are still separate devices.<br /><br />Why do tech products sometimes converge and sometimes not? The general pattern is that devices converge only when the merged product is a fully-functional substitute for the devices being replaced. So smartphones rapidly killed the PDA because they could do everything a PDA could. Printers and PCs never converged because making a combined PC and printer required some pretty heavy compromises on the quality of the printer. Instead, printers merged with scanners and fax machines, which did not require major compromises. The only place where converged PC-printers got serious traction was Japan, where desk space is sometimes at such a premium that people were willing to accept a lower-quality printer in exchange for a smaller footprint.<br /><br />So, for smart glasses or smart watches to replace smartphones, they have to be able to take over all of the functions of smartphones, without a major loss in functionality. Can they do that? Absolutely not. The screen is too small on a watch to browse, and smart glasses lack the touch controls that would let you control a browser or sophisticated app. <br /><br />Even more importantly, neither device has the battery power needed to function as your full-time phone. In fact, today most of them rely on the smartphone to give you wide-area connectivity when you’re on the go. In other words, they are smartphone accessories, not replacements.<br /><br />I can imagine a future wearable product that could do a lot more. You could browse the web or run a complex app if the glasses or watch had a full gesture-driven interface (something like Leap Motion, not the awkward stem-swiping interface of Glass). And eventually batteries will become powerful enough that a small one fitting in a watch or glasses could power a cellular radio for a full day. But that will require at least several years of development, plus a significant breakthrough in battery chemistry that can’t be forecasted. We’ve been waiting for it in smartphones for more than a decade; don’t hold your breath. By the time it happens, we’ll have bendable screens, and we’ll be able to create smartphones that collapse down to the size of a roll of LifeSavers candy.<br /><br />So the real competition to a smartphone-replacing watch or pair of glasses is probably a smartphone so small that you can wear it on a cord around your neck or wrist. Everything eventually gets small enough that it’s wearable, and yeah I guess you can call that a wearable computing revolution. But it won’t happen this year, it won’t happen next, and we may all be quite a bit older and grayer before it becomes practical.<br /><br /><b>Where’s the killer app? </b>If glasses and watches can’t replace a smartphone in the foreseeable future, the other way they’ll get broad adoption is if they do something else that a smartphone can’t do at all, or cannot do as well. This is the way most major computing platforms get started: They enable something new and compelling, people buy them for that purpose, and the devices then branch out into other usages. Mainframes started as military calculators. PCs started as word processing and spreadsheet machines, BlackBerry started as an e-mail pager, and the iPhone started as a phone that could also browse well and play music.<br /><br />What’s the compelling, broadly appealing usage that could drive adoption of a smart watch or glasses? So far I don’t think there is one.<br /><br />I’ve been playing with Glass for weeks now, and have put a lot of apps on it. It’s a bold experiment, I applaud Google for trying it, and there are some things I really like about it. I had tried camera glasses before, but without a screen you couldn’t tell where the camera was pointed. People often move their eyes rather than their heads, so a camera focused straight ahead often doesn’t show what the user is looking at. Because there’s a screen in Glass (and a surprisingly bright, readable screen at that), you can see exactly what you’re photographing. The sound playback also works surprisingly well (sound recording sucks in a noisy environment).<br /><br />But for me, the negatives outweigh the positives. Battery life is very short, and the user interface based on swiping the stem of the glasses is alarmingly nonintuitive and limited (it’s like trying to have a conversation where you can only say “yes” or “no”). The spoken commands work a bit better, but I’m not comfortable speaking to my glasses in public, and I doubt most other people will be either.<br /><br />But the biggest problem is that none of the apps I’ve seen so far makes me want to wear Glass on a regular basis. The apps are vaguely interesting, and the geek in me enjoys playing with them. But I’m not getting the sort of big revelatory feeling I had when I first used PageMaker on the Mac, or when I first browsed the web on an iPhone. <br /> <br />We have seen some traction for wearable devices in vertical markets, especially sports and health. Smart watches and other wearable fobs are a great way to track your exercise, and sports goggles are a cool way to make videos of your ski runs. It’s very telling that these devices have sold well on their own, without any need for hype or even a heavy marketing budget. That’s what happens when you find the right app -- it takes off on its own.<br /><br />Unfortunately, fitness is too narrow a vertical to carry a platform to the takeoff point. You may get nice sales for the company that made a device, but the installed base of devices won’t get big enough to attract a large group of third party developers who then create the apps that take the device horizontal. <br /><br />The main horizontal usage for wearables that’s being advocated today is notifications. You can configure Glass to show incoming messages, and most of the smart watches can display things like caller ID for your smartphone. The idea is to let you consume (and send) small amounts of text and images without taking out your smartphone. To save a few seconds per notification, you have to pay for a separate device, learn to use it, and remember to recharge it every night. Will the benefit exceed the cost and hassle for tens of millions of people? <br /><br />It’s been tried before. Does anybody remember Spot, the smart watch platform Microsoft promoted in the mid-2000s? You could configure the watches to give you notifications, headlines, and messages, and they didn’t even require a smartphone because they received notifications from sideband FM broadcasts. Despite a hefty Microsoft investment and several licensees building devices, Spot went splat in the market.<br /><br />That does not mean notification wearables are destined to fail forever. Many tech product categories fail repeatedly before they succeed. But Spot did prove, very decisively, that just adding notifications to a wearable device won’t drive demand. There’s some additional step of clever software, improved user interface, or integration with other products that’s needed to make the app a killer.<br /><br />If it can become a killer at all.<br /><br />So the reality is that today’s forecasts of a wearable explosion are based on faith, not analysis. If you believe a wearable killer app is coming, then it’s easy to convince yourself that many millions of these things will be sold. I want to believe that too. But I think I need to see the app first.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com15tag:blogger.com,1999:blog-17898384.post-55561328943802952582013-12-16T22:08:00.000-08:002013-12-16T22:09:17.870-08:00Has Microsoft Gone Nuts?The rumors floating out of Microsoft these days are remarkable:<br />
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—Microsoft’s Nokia business is working on an Android phone, and Microsoft might let them sell it (<a href="http://allthingsd.com/20131211/why-nokia-is-building-an-android-phone-and-microsoft-might-not-kill-it/" target="_blank">link</a>).<br />
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—Contrary to its entire business history, Microsoft may give away Windows phone and Windows RT for free (<a href="http://www.theverge.com/2013/12/11/5199446/microsoft-considers-free-versions-windows-phone-windows-rt" target="_blank">link</a>)<br />
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—The Start menu will be restored in at least some versions of Windows 8.1, and it will be possible to run Metro apps in floating windows inside the traditional Windows interface (<a href="http://winsupersite.com/windows-8/further-changes-coming-windows-threshold" target="_blank">link</a>)<br />
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Those are just rumors, of course, but they’re coming from multiple reporters who have strong ties to Microsoft, which means they’re probably genuine plans or at least serious trial balloons. Taken together, the reports give a picture of a company that’s laudably willing to revisit its assumptions, but that also seems to have lost track of what it’s trying to accomplish. Specifically:<br />
<br />
—Making Windows Phone free is a nice idea and would have been a clever response to Android six years ago. Back then, the idea of a free mobile OS was appealing to handset companies, which are at heart surpassingly cheap. Faced with rampant iPhone sales and no good alternative, the phone companies were very willing at that time to give a try to the low-cost Google-backed approach.<br />
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But today, Android has huge market momentum, so a phone vendor switching off it would be abandoning most of the available customers, something they are extremely reluctant to do. Besides, getting a free OS is not currently the main concern for most handset companies – the big worry is finding a way not to be crushed by the dominant Android vendor, Samsung. Windows Phone has its own dominant vendor, Nokia, so it has all the negative aspects of Android without the customer base. <br />
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Nice idea, Microsoft, but you’re closing the barn door not only after the horses left, but after the barn burned down.<br />
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—I think a more interesting licensing strategy for Microsoft would be forking Android: Take an open source version of it and add your own services on top. That’s apparently the idea behind Nokia’s OS plan, in which Nokia would supposedly replace its low-end phone OS, Series 40, with a modified version of Android. Those phones could then tap into the Android app base, making them more attractive to low-end customers. (Heck, they might even be more attractive to high-end customers as well.)<br />
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But if that’s the right strategy for the Nokia business unit, it’s also the right strategy for Microsoft’s OS licensing. If you’re giving away Windows Phone for free, the only way you’ll make money from it is through bundled services. You could just as easily bundle those services on a forked version of Android, save the expense of creating and maintaining all the low-level OS plumbing, and get access to the Android customer and app base. That sounds like a much more appealing licensed OS than Windows Phone, even though you still have the problem of Nokia competing with your other licensees.<br />
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But that’s not the roadmap we’re hearing from the Microsoft OS team. Instead, they’re talking about creating a single Windows code base that runs across all types of devices, something that’s technically appealing if you’re a Microsoft engineer but thoroughly uninteresting to customers. <br />
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So the various parts of Microsoft appear to be working at cross-purposes. The Nokia unit has a nicer mobile OS plan but no intent to license it, and the OS group has a licensed mobile OS with almost no customers. Something’s got to give.<br />
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<b>—</b>Meanwhile, the rumored changes to Windows 8 are, to me, a mix of sensible ideas and bizarre improvisation. The word is that Microsoft’s going to offer three versions of Windows (<a href="http://www.zdnet.com/more-on-microsofts-sku-morphic-windows-vision-7000024092/" target="_blank">link</a>):<br />
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<b>A phone/tablet version</b> that runs Metro-style apps. Although I’m sure Microsoft will save money by unifying development, customers don’t care about that. They care about features. Unless there’s some dramatic change in functionality that we haven’t been told about, I think this new product will have as much appeal to licensees and customers as the current version of Windows Phone. So you can think of this as the version of Windows that no one wants.<br />
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<b>A “consumer PC” version</b>, which may or may not be able to run existing Windows 32 applications. If it can’t, I think it will sell as well as Windows RT did.<br />
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<b>An “enterprise PC” version</b>, which would run today’s Windows 32 applications in addition to “modern” (Metro-style) touch apps. The Start menu would apparently be restored in Win32 compatibility mode, and you’d be able to run Metro-style touch apps in windows inside the Win32 interface.<br />
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The only configurations likely to sell in volume are the ones that let customers run their familiar Win32 apps. I think reviving the Start menu in these configurations is smart; it makes it easier for current Windows users to move up to the new OS. That’s such a no-brainer that Microsoft should have done it in the first version of Windows 8. The question is not why they’re doing it but what took them so long.<br />
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On the other hand, running Metro apps in a traditional Windows frame is...I don’t even know what word to use. Bizarre? Crazy? I’d even say frightening, because it implies that Microsoft has lost track of why it did Windows 8 in the first place. The idea behind Windows 8 was to build a full-function PC that could also switch to work as a no-compromises tablet. I don’t think a lot of customers actually want that, but at least it’s a clear direction. <br />
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Mixing the two metaphors on the same screen completely undercuts Microsoft’s basic idea. Instead of switching between tablet and PC mode, you’re mixing two totally different usage paradigms on the same screen. How does the user know when to touch and when to click? It’s like driving a car that has both a steering wheel and a joystick. Instead of giving users a tablet and a PC that you can jump between, Microsoft is at risk of giving users an awkward combination of the worst of both worlds. <br />
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It feels like the people who were responsible for the original Windows 8 vision and strategy have left the scene, replaced by folks who are tactically tweaking the products they inherited, with no sense of where they’re going long term. <br />
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The focus on rationalizing code bases feels symptomatic of this. It’s a sensible thing to do and will cut Microsoft’s costs, but it does nothing to increase demand. In the tech industry we overuse the phrase “rearranging deck chairs on the Titanic,” but in this case it really seems to fit.<br />
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<br />
<b>What it means</b><br />
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<b>New CEO needed.</b> It’s important to remember that Microsoft is in the middle of its biggest business transition ever. It’s simultaneously getting ready to merge with an enormous Finnish phone company, and hiring its first CEO who wasn’t a cofounder. That sort of situation typically encourages bizarre behavior. For example, groups will try to lobby for their favorite projects by leaking information about them, trying to build up public support that will influence the new CEO. <br />
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Think about it, why would Nokia possibly want to leak the news that it’s replacing the OS in its low-end phones? That’s very likely to stall sales of the current phones, driving down revenues. Nokia just made that mistake with Symbian, and now it’s repeating it? Somebody in the Nokia business apparently feels it’s more important to lobby for its OS vision than to protect current sales. It’s a triumph of business politics over short-term business sense.<br />
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Another behavior we should expect to see is business managers pushing forward aggressively with their plans, looking to prove that they’re dynamic leaders who don’t need to be replaced. It doesn’t matter if those plans contradict company strategy; the point is to look dynamic. The strategy’s going to change anyway. And what’s Ballmer going to do, fire you?<br />
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We should expect to see more odd behavior until MS picks a new CEO. Then it’ll be several months of strategic reviews, followed by ritual bloodletting and reorganization. So Microsoft is likely to continue to be confused for at least the first half of 2014, and that’s assuming they can choose a new CEO quickly, something they may not be able to do to do (<a href="http://www.mondaynote.com/2013/12/08/microsoft-ceo-search-stalemate/" target="_blank">link</a>).<br />
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<b>Windows Metro = OS/2.</b> The big bet in Windows 8 was that Microsoft could re-ignite sales growth for Windows by tapping into the tablet market. A PC that could also work as a tablet, Microsoft reasoned, would be more attractive to customers than either product alone. I think it’s pretty clear that the Windows 8 bet is failing. Windows 8 is being pre-installed on a lot of PCs, but that’s because Microsoft is pushing it through the OEMs. Microsoft could ship a hamster wrapped in duct tape, label it Windows, and a lot of OEMs would bundle it. What hasn’t happened is Microsoft’s promised explosion in user demand for convertible Windows computers, followed by an explosion in developer activity that might drive future demand. <br />
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I think it’s increasingly likely that the tablet interface formerly known as Metro will be more or less stillborn as a development platform. It will linger for a long time as Microsoft’s software for touchscreen devices, but I don’t see it being embraced by the leading-edge developers who can drive new demand to a platform. Instead, it’s kind of the third option for developers who have already built for iOS and Android. <br />
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I think most PC users will stick with the traditional Windows interface, most Windows developers will follow them, and most people who want tablets will get iPad or Android or Kindle.<br />
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So the challenge for Microsoft’s new CEO is the same one Steve Ballmer has tried and failed to answer for years: Demand for Windows is declining because the platform hasn’t done anything new for a decade, while Microsoft doesn’t control the fast-growing segments in tablets and smartphones. Microsoft tried to use Windows 8 to take over tablets. That failed. What do you do now?<br />
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The traditional answer would be to break up the company and try to salvage parts of the business that can grow on their own. It’s the kind of big deal that consulting companies love to recommend and investment firms love to broker. Besides, it looks bold, even though it’s actually the path of least resistance. So I wouldn’t be at all surprised if the new CEO chose that path.<br />
<br />
The alternative to a breakup is to actually fix the product problem: to offer new functionality for Windows that’s more attractive than the competition. That would mean new mobile software that’s substantially better than iOS and Android, and/or new PC features that will give people a compelling reason to recommit to personal computing. There are plenty of opportunities to create that sort of innovation (<a href="http://mobileopportunity.blogspot.com/2013/05/its-time-to-reinvent-pc.html" target="_blank">link</a>), but Microsoft doesn’t have a great record as that kind of product leader.<br />
<br />
So if Microsoft is to stay together, the new CEO needs to be either a product visionary or know where to find one. I wish them luck.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com52tag:blogger.com,1999:blog-17898384.post-83095803554940892852013-09-02T23:50:00.000-07:002013-09-03T00:09:05.217-07:00Microsoft + Nokia: Now We’re All Like AppleTen years ago, everybody in the tech industry — and I mean <i>everybody </i>— was convinced that the best way to dominate a technology market was to create an operating system and license it to a bunch of other companies. “The key to success is creating a standard,” said the experts. “If you write software for only your own hardware, you’ll never achieve the economies of scale of a licensed OS, and you’ll never be able to dominate the market without a wide range of licensees selling your hardware.”<br />
<br />
The case for licensing seemed obvious because of the success of Windows. Apple had kept MacOS to itself, while Microsoft had licensed Windows. Microsoft won. Therefore licensing was the best way to go.<br />
<br />
But then Apple transformed the phone market with the iPhone, and created the tablet mass market from scratch with the iPad. Suddenly the proprietary approach started to look a lot better.<br />
<br />
Ten years later, the idea of an independent operating system licensed to all comers is a fading ideal. The two leading operating system licensors in mobile have now bought major hardware companies: Google with Motorola and Microsoft with Nokia. Both companies continue to license their software, of course, but clearly they don’t feel that’s enough. They need to also create hardware.<br />
<br />
When you look at it in terms of tech history, this is a stunning change. I’m having trouble thinking of another industry that changed its basic assumptions so thoroughly in such a short period of time. I’m still trying to sort out what this all means for the rest of us, but here are some preliminary ideas:<br />
<br />
<b>Are they fighting the wrong war? </b> Since the experts were supposedly all wrong about licensed OS ten years ago, we should ask whether they might all be wrong again today. The standard assumption behind buying a hardware company is that by combining hardware and software you can produce the sort of fantastic user experiences (and fantastic margins) that Apple does. There are a couple of potential problems with that reasoning:<br />
<br />
<i>1. There already is an Apple. </i>You can make a good argument that Cupertino has already used up most of the customers who are willing to pay extra for a value-added smartphone or tablet, and that the remaining customers are mostly buying on price. That creates the possibility that Microsoft (and the Motorola part of Google) will end up with the worst of both worlds: an Apple-like expense structure but with commodity margins. Google can afford that since it has the web advertising business to subsidize it. Microsoft, with restless shareholders and all of its cash cows under threat, has much less room to maneuver.<br />
<br />
<i>2. Does combining hardware and software really work?</i> Other than Apple, how many integrated hardware-software companies have succeeded wildly in mobile? Let’s see, there’s Palm, BlackBerry, Danger... Apple starts to look like the exception rather than the rule. I start to think the real lesson is that no strategy will work if you execute it poorly. Perhaps Microsoft would have been better off fixing the flaws in its licensing model rather than totally changing strategy. But it’s too later for that, so we should ask why Apple succeeded where so many other companies failed.<br />
<br />
Maybe it’s because Apple has a culture in which product managers, rather than engineers, take the lead in defining products. If that’s the case, Microsoft will need major cultural changes, and Google, well, forget about it.<br />
<br />
Or maybe you just need to have a supernaturally brilliant CEO leading the whole thing. Which brings me to my next point...<br />
<br />
<b>Microsoft’s next CEO will need to be Superman.</b> Here’s the mess Steve Ballmer will leave for his successor: <br />
–Windows 8 has failed to produce a turnaround in Microsoft’s gradual decline.<br />
–The Surface tablets have more or less died in the market.<br />
–The company’s just been through a massive top-level organizational change. Those things typically take a year to trickle down through the organization, as the lower levels of management get resorted and reassigned. That process will be disrupted while everyone waits to see if the new structure will stick with the new CEO (unlikely; new CEOs almost always want to change things).<br />
–And now Microsoft needs to mesh the Nokia and Microsoft businesses. There’s a cultural challenge: Nokia’s is a collectivist Finnish hardware company while Microsoft is a dog-eat-dog hypercompetitive software business. There are also operational challenges. As I learned when I worked at Palm, it’s incredibly difficult to manage an operating system to please both your in-house hardware team and your licensees. They always want conflicting things. Microsoft claims it can both license Windows Phone and run Nokia. I hope that’s just bluster, because I don’t think it will work in practice.<br />
<br />
It’s an almost ridiculously complex situation. Who could make all of it work? Who has an ego big enough to even try? To me, it feels like a job for a mad cartoon genius rather than a human being. Megamind would be perfect, or maybe Gru from Despicable Me.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvWopfF6Z8GtUVnOq3-B-5ZCAJvyvLqO3Tz_3ukjfK0LOObtToFtkbmLm0p-toUE4X7_vktWsI4cqcx_x6-Hbxcvjy5oCh0Zexjn_xcKIKz0Epu5Fup7q47SuIzu8c6pUnJYnA/s1600/Megamind+and+Gru.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="296" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvWopfF6Z8GtUVnOq3-B-5ZCAJvyvLqO3Tz_3ukjfK0LOObtToFtkbmLm0p-toUE4X7_vktWsI4cqcx_x6-Hbxcvjy5oCh0Zexjn_xcKIKz0Epu5Fup7q47SuIzu8c6pUnJYnA/s400/Megamind+and+Gru.png" width="400" /></a></div>
<i>Either one could do the job</i><br />
<br />
I’m only joking a little bit. The CEO hire at Microsoft is going to be pivotal, and it’s difficult to imagine anyone who has the qualifications to make it all work.<br />
<br />
<b>Microsoft needs to find a new measure of success.</b> In its presentation on the deal, Microsoft bragged about how it’s “outselling BlackBerry in 34 markets” (<a href="http://allthingsd.com/20130902/microsoft-explains-the-rationale-behind-the-nokia-deal/" target="_blank">link</a>). This is not the first time I’ve seen Microsoft use BlackBerry as its measure of success, and it needs to stop. It’s like bragging that you outran a dead guy in a marathon. <br />
<br />
<b>The conspiracy theorists will love this.</b> Even before the purchase of Nokia’s phone assets, some Symbian die-hards had muttered that Nokia CEO Stephen Elop was a Trojan horse: a Microsoft exec sent to Finland with the hidden agenda of destroying the company’s value, so it could be snapped up by Microsoft. That’s certainly the outcome we got, so I’m sure the conspiracy buffs are boiling today. But for the record, I don’t think Elop was a Trojan horse — Nokia’s management was doing a very good job of destroying its value long before he arrived.<br />
<br />
<b>What happens next?</b> There are some interesting shoes that might drop next. Now that we have three big hardware + software players, will the other mobile hardware makers feel pressure to copy them? In particular, will Samsung decide that it needs a different operating system? Samsung already has Bada OS, which it reportedly plans to merge with the Tizen project it's driving with Intel. Maybe it’ll feel that's enough. Will the Chinese vendors feel pressure to act? If they do, there aren’t many other operating systems they could buy. Maybe BlackBerry? Would the Canadian government allow that?<br />
<br />
<i>That’s my quick take, but it’s a complicated situation and there’s a lot more to think about. What do you think it means? I’d love to see your comments.</i><br />
<br />
<i>[Thanks to Adalbert for the correction on Bada.]</i><i><!--[if gte mso 9]><xml>
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</xml><![endif]--></i><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com30tag:blogger.com,1999:blog-17898384.post-52393284331683311702013-07-07T23:43:00.000-07:002013-07-07T23:43:05.691-07:00Google Logic: Why Google Does the Things it Does<i>“What does Google want?” </i><br />
<br />
A favorite pastime among people who watch the tech industry is trying to figure out why Google does things. The Verge was downright plaintive about it the other day (<a href="http://www.theverge.com/2013/4/26/4271432/does-anyone-know-why-google-bought-motorola" target="_blank">link</a>), and I get the question frequently from financial analysts and reporters. But the topic also comes up regularly in conversations with my Silicon Valley friends.<br />
<br />
It’s a puzzle because Google doesn’t seem to respond to the rules and logic used by the rest of the business world. It passes up what look like obvious opportunities, invests heavily in things that look like black holes, and proudly announces product cancellations that the rest of us would view as an embarrassment. Google’s behavior drives customers and partners nuts, but is especially troubling to financial analysts who have to tell people whether or not to buy Google’s stock. Every time Google has a less than stellar quarter, the issue surges up again.<br />
<br />
As I wrote recently when discussing Dell (<a href="http://mobileopportunity.blogspot.com/2013/04/the-dell-buyout-storm-warning-for-tech.html" target="_blank">link</a>), it’s a mistake to assume there’s a logical reason for everything a company does. Sometimes managers act out of fear or ignorance or just plain stupidity, and trying to retrofit logic onto their actions is as pointless as a primitive shaman using goat entrails to explain a volcano.<br />
<br />
But in Google’s case, I think its actions do make sense – even the deeply weird stuff like the purchase of Motorola. The issue, I believe, is that Google follows a different set of rules than most other companies. Apple uses “Think Different” as its slogan, but in many ways Google is the company that truly thinks differently. It’s not just marching to a different drummer; sometimes I think it hears an entirely different orchestra.<br />
<br />
Google’s orchestra is unique because of three factors: corporate culture, governance, and personal politics. Let’s start with the culture.<br />
<br />
<br />
<b>Google culture: You are what you do</b><br />
<br />
The strategic thinking of most companies is shaped by the way they do business. For example, a farmer thinks in terms of annual seasons and crops; everything revolves around that yearly cycle. Manufacturing companies, the traditional foundation of a 20th century economy, plan in terms of big projects that take a long time to implement and require a lot of preparation. If you’re building a car or a plane or even a smartphone, you have to plan its features well in advance, drive hardware and software to completion at the same time, and arrange manufacturing and distribution long before you actually build anything. The companies that build complex physical things naturally plan their products in terms of lifecycles lasting at least 12 to 24 months, and sometimes much longer. <br />
<br />
That long planning cycle dominated big companies in the 20th century, and was driven into all our heads through generations of business books and business school classes. It’s how most of our brains were formatted.<br />
<br />
An internet company, like Google, works at a fundamentally different pace. Web software changes continuously. You don’t plan it rigidly; you evolve it day by day in response to the behavior of customers. The faster and more flexibly you evolve, the more successful your products will be.<br />
<br />
This evolutionary approach, and the Agile design processes that support it, is built into the fiber and psyche of web companies. They don’t think in terms of long-term detailed plans; they think in terms of stimulus and response.<br />
<br />
This is a dramatic change in the history of business. In the past, the nimble companies were always the little ones. The larger your company, the more it valued planning and the long-term view. Google is one of the first very large tech companies ever to pride itself on rapid response rather than rigid planning.<br />
<br />
On top of this quick-turn bias there’s the cultural training of Google’s senior management. Most big companies end up being run by professional managers who came up through business school or finance, where they get trained in the rhythms and personality of traditional big business. They learn a shared vocabulary and set of values that are very familiar and comfortable to investors. By contrast, Google is completely controlled by engineering PhDs. They speak the language of science rather than business, and they’re contemptuous of the vague directional platitudes and reassuring noises made by modern finance and marketing.<br />
<br />
I think most reporters and analysts don’t understand how fundamentally different the engineering mindset is from traditional business thinking. It’s a very distinct paradigm, unfamiliar to most people who haven’t studied science (<a href="http://mobileopportunity.blogspot.com/2006/05/wiki-society-as-designed-by-computer.html" target="_blank">link</a>).<br />
<br />
One key element of the engineering mindset is the use of scientific method: you encourage a Darwinian marketplace of ideas, you test those ideas through controlled experiments, and you make decisions based on experimental data.<br />
<br />
In its behavior and vocabulary, Google oozes scientific method. A couple of times recently I’ve heard Google executives say in public, “if you can’t measure it, you can’t improve it” (<a href="http://www.nytimes.com/2013/06/24/technology/venture-capital-blends-more-data-crunching-into-choice-of-targets.html" target="_blank">link</a>). It's an old quote, dating back at least to Lord Kelvin in the 1800s. It's also a subtle twist on the traditional mantra used in web design: “that which you measure, you can improve.” The web design version says you should measure everything you can; the Google executive version implies that nothing really matters unless you can measure it.<br />
<br />
That’s a very scientific, rational point of view, but I couldn’t help thinking that if you had said something like that to Steve Jobs, he would have taken your head off with a dull knife. The whole idea of vision at a place like Apple is that you pursue things you can’t fully quantify or measure; that great product design is an art, and the most important changes are the ones you intuit rather than prove in advance.<br />
<br />
But engineers are trained not to act on intuition. You are allowed to have intuition, of course, but you use it to make hypotheses, which you then test. You act on the results of those tests.<br />
<br />
There have been other big companies run by engineers, of course. HP in its glory days was a great example. But those companies were almost always wedded to traditional long-term planning cycles. What makes Google unusual is its combination of an engineer’s love of scientific method with the web’s rapid iterative development. Put those two characteristics together, and Google often behaves like a big bundle of short-term science experiments. <br />
<br />
<b>Why did you kill my favorite product?</b> Take Google’s bizarre practice of publicly killing products. To most companies, killing a product is a shameful thing. It disappoints customers, and it hurts your own ego because it’s an admission that you failed. Most companies hide their product cancellations: they try to disguise them as a “reallocation” or “new focus” or some other doublespeak.<br />
<br />
Google does the exact opposite – a couple of times a year it trumpets to the world that it’s terminating products and services that millions of people love and rely on. Google isn’t merely up front about these cancellations; it’s downright cheerful, as if turning off Google Reader or Google Desktop is an accomplishment to be proud of.<br />
<br />
And to Google, maybe it is. If you look at the world through the eyes of the scientific method, every Google project is an experiment, and experiments must be periodically reviewed. When an experiment is completed, you either choose to follow up on it, or you terminate it and move on to something else. A scientist doesn’t get emotional about this; it’s the way the system works, and everyone knows that it’s all for the best.<br />
<br />
By announcing its terminated experiments, I think Google isn’t admitting failure, it’s proudly demonstrating that scientific principles are in use. I think Google’s management views the cancellations as proof that it’s being focused and logical.<br />
<br />
<b><br />Google management: Who’s in charge here?</b><br />
<br />
The second unusual aspect of Google is its ownership structure. Never forget: Google is not really a public company. Sure, it has stock and all the other attributes of a normal public company, but 56.7% of Google’s voting shares are held by cofounders Sergey Brin and Larry Page (<a href="http://www.dailymail.co.uk/news/article-2129234/Google-stock-split-founders-Larry-Page-Sergey-Brin-lifetime-control.html" target="_blank">link</a>). As long as they remain friends, they can do whatever they want with the company, and they cannot be fired.<br />
<br />
I don’t have a problem with that. Google has always been up front about it, and besides I’ve seen many large public companies manage themselves into ruin in pursuit of quarterly returns. It’s refreshing to see a big company that doesn’t enslave itself to the quarterly report. As Page put it in 2004, “by investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me” (<a href="http://investor.google.com/corporate/2004/ipo-founders-letter.html" target="_blank">link</a>).<br />
<br />
How long term is that bet? I’m not sure Google’s senior management even thinks in terms of annual returns, let alone quarterly. Brin and Page are both about 40 years old as of 2013. They have a life expectancy of about 38 more years, to about 2050, and I have no reason to think that they plan to work anywhere else in their lives. So I think Google’s planning horizon goes to at least the year 2050. Page himself likes to talk about his 50-year planning horizon, so he may well be thinking out to the 2060s.<br />
<br />
To put that in context, some scientists predict that we’ll achieve superhuman machine intelligence well before 2050 (<a href="http://www.dailygalaxy.com/my_weblog/2010/01/artificial-intelligence-will-leapfrog-humans-by-2020-says-scifi-great-a-weekend-feature.html" target="_blank">link</a>). I’m not endorsing that timeline, by the way; I think it may be optimistic. But my point is, Google could be planning almost <i>anything</i>.<br />
<br />
Combine the first two unique things about Google and you get an interesting picture. Most companies have a long, detailed planning cycle in pursuit of quarterly goals. That often makes them very predictable. It also makes it hard for them to get anything done – when your planning cycle is longer than your goal cycle, you’ll often change goals faster than you can achieve any of them. <br />
<br />
Google does just the opposite. It has a short, unpredictable planning cycle in pursuit of very long-term objectives. It’s likely to pursue those objectives relentlessly, but its near term actions will look random, because they’re just Darwinian experiments along the way. <br />
<br />
In other words, there is probably a method to Google’s madness, but they’re not going to tell you what it is.<br />
<br />
But there’s one more factor about Google that we need to consider: it’s run by human beings. Larry Page is not Spock. No matter how logical and dispassionate he tries to be, he and the rest of Google’s managers have psychological needs and reactions that they cannot transcend. That means Google has corporate politics.<br />
<br />
<br />
<b>Google politics: The coming-out party of Larry Page</b><br />
<br />
I don’t think you can fully explain Google’s behavior over the last several years without looking at the relationship between its CEOs during that time, Eric Schmidt and Larry Page. Google’s first CEO, in its very early days, was Page. Investors convinced Page and Brin that they needed to bring in professional management to organize the company. Reluctantly they agreed, and supposedly Steve Jobs was at the top of their wish list. That raises some fascinating what-if scenarios, but Jobs was already occupied, and eventually they settled on Eric Schmidt, formerly of Sun. <br />
<br />
A video of Page from 2000 gives an interesting insight into his thinking at the time. It was recorded a year before Schmidt joined Google. A nonprofit called the Academy of Achievement recorded video interviews with Page and Brin. The videos are a fascinating window into the early thinking of both men. In one clip, Page is asked about the challenges of being a CEO at age 27 (<a href="http://www.achievement.org/autodoc/page/pag0int-2" target="_blank">link</a>). He replies:<br />
<blockquote class="tr_bq">
"If you manage people for 20 years, or something like that, you pick up things. So I certainly lack experience there, and that's an issue. But I sort of make up for that, I think, in terms of understanding where things are going to go, having a vision about the future, and really understanding the industry I am in, and what the company does."</blockquote>
<br />
So Page acknowledged his need for tutoring in management, but at the same time he went out of his way to call himself a visionary. I haven’t met Larry Page, but there’s one thing I know for sure: anyone who calls himself a visionary at age 27 does not lack for confidence. <br />
<br />
Schmidt arrived soon after, and for the next ten years Page served a kind of management apprenticeship under him. I don’t want to overstate Schmidt’s role; even then, Page and Brin had control of the company, and could have ousted Schmidt if they really wanted to. But even if Page agreed that working for Schmidt was necessary, it can’t have been easy.<br />
<br />
Early in Schmidt’s tenure, he and Page appeared together to address students at Stanford. The session was recorded on video, and Stanford posted it online here (<a href="http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1089" target="_blank">link</a>). The whole video is worth watching, but the segment I’ve embedded below is especially interesting because it shows the sometimes awkward interaction between Schmidt and Page. <br />
<br />
<script src="http://ecorner.stanford.edu/embeddedPlayer.html?mid=1089&width=500" type="text/javascript"></script><br />
Schmidt is the more articulate of the two. He interrupts to preface things before Page can make a comment, and sometimes comes back afterward to put a different spin on something Page said. In this clip, watch Page’s face when Schmidt interrupts him to deliver the punchline at the end. You should judge it for yourself, but to me Schmidt and Page look like one of those married couples who value each other but also get on each-other’s nerves.<br />
<br />
No matter how much Page appreciated Schmidt’s wisdom, no matter how fruitful their collaboration, it can’t have been easy for Page to be mentored like this for ten years. If I were in his shoes, I’d have compiled a long list of things I wanted to change as soon as I was in charge.<br />
<br />
That time came in 2011, when Page returned as CEO and Schmidt was kicked upstairs to be Google’s Chairman and chief explainer (<a href="http://online.wsj.com/article/SB10001424127887323717004578159481472653460.html" target="_blank">link</a>). <br />
<br />
Page acted quickly, reorganizing the company and accelerating the termination of projects (<a href="http://www.gwern.net/Google%20shutdowns" target="_blank">link</a>). I think that helped reinforce the use of the scientific method. It also helped Page assert his authority.<br />
<br />
Then Page bought Motorola Mobility for over $12 billion. I don’t think you can understand the Motorola deal without taking into account the management change at Google. It was Page’s first major business deal as CEO, a chance to finally spread his wings and put his distinctive stamp on the company. Any human being with Page’s experience and ego would want to do something like that. So I believe ego played a role in the Motorola deal. But I don’t think that was the only motivation.<br />
<br />
<br />
<b>My take on why Google bought Motorola</b><br />
<br />
Remember Google’s business situation in 2011. It still had huge economic resources, but it was no longer the dynamic new kid in the industry. That crown had fallen to Facebook, which was growing like a weed and which was not Google’s friend. At the time, Google was kicking itself for failing to recognize the threat earlier, and for responding to it so ineptly. I’m sure Page was adamant that he didn’t want to repeat that mistake.<br />
<br />
Like social networking, mobile was a critical growth area for Google. The threat in mobile was Apple, which was doing a great job of integrating hardware and software to produce superior products. Many people at the time felt Google was destined to play second fiddle to Apple in mobile forever.<br />
<br />
Then the opportunity came along to buy Motorola. Here’s how I think that parsed to Google:<br />
<br />
—If people are right about Apple’s power in system design, we may need to move much more aggressively into mobile hardware than we have to date. If that happens, owning Motorola gives us a head start.<br />
—Even if we don’t end up needing Motorola’s hardware business, we’ll learn an enormous amount from managing the company. Those skills and insights will help us manage our other hardware licensees.<br />
—We’re going to pay a bunch of money for the patents anyway, so why not buy the whole thing? We might end up writing off most of the purchase, but who cares about annual returns? It’s better to have a bad year than take the risk of being blind-sided the way we were by Facebook.<br />
<br />
I think the Motorola deal wasn’t just about the patents or about making a profit in device sales. It was about buying insurance against a surprise from mobile device manufacturers, especially Apple. If you think of Google as a company that sets long-term objectives and then runs experiments in pursuit of them, the Motorola deal is just an unusually large experiment along the road to mobile.<br />
<br />
Add to that chain of logic Page’s natural desire to exercise his new powers, and the Motorola deal starts to look very understandable to me.<br />
<br />
So was the deal worth the money? It’s too early to tell, but I doubt Larry Page is even asking that question. As long as Google learns from the purchase and doesn’t get blindsided in hardware, the deal served its purpose.<br />
<br />
<br />
<b>What happens next?</b><br />
<br />
If you’re an investor, you should expect more off-the-wall acquisitions and product cancellations from Google. They’re built into the system. But I think Google’s unusual culture and management structure give it some other fairly predictable weaknesses. Those are potential opportunities for competitors, vulnerabilities for Google to guard against, and issues for investors to consider.<br />
<br />
<b>Weakness #1: Wandering vision.</b> Google’s iterative development approach is very effective for pursuing a long-term goal when the company has a clear idea of its destination. The company’s development of self-driving cars is a good example: by relentlessly testing and tweaking the design, they’ve made much more progress than I believed was possible. Like most people in Silicon Valley, I’ve had the experience of driving on the freeway alongside those Google cars, and it’s very impressive (except for the fact that they adhere rigidly to the speed limit, but that’s a subject for a different post).<br />
<br />
Google is much less effective when its original goal in a market changes. Because of its quick-reaction nature, Google frequently launches projects that seem very important at the time, but later turn out to be not so critical after all. The market evolves, priorities change, maybe a competitor becomes less prominent. When that happens, the Google projects are in danger of cancellation, and nobody likes working on a canceled project. So the teams frequently start iterating on their goals the same way they would on their features. Usually they end up chasing the latest trendy issue in search of a revenue stream and continued existence. <br />
<br />
That’s usually the road to hell. Once a project starts changing goals, it’s almost impossible to diagnose the cause of any problems it has with market acceptance. Did we choose the wrong goal, or did we execute poorly? It’s usually impossible to tell.<br />
<br />
To put it in scientific terms, it’s like running an experiment in which you have several independent variables. Good luck interpreting your results.<br />
<br />
Google Docs is a great example. It was launched to undercut Microsoft’s Office franchise. Over time as Microsoft became weaker, that was no longer a compelling reason for existence, and Docs was merged into Drive and repurposed as a competitor to the newly-trendy Dropbox. Feature evolution in the core applications moved at a crawl. <br />
<br />
Now there are two new challenges to Drive/Docs: Apple is turning iWork into a cross-platform web app, and Flickr has upped the stakes in the free storage race to a terabyte (yes, I know Flickr is photos only, but you don’t <i>really </i>think Yahoo will stop there, do you?) Which threat will the Drive team respond to? I don’t know, but because of the way they’ve been wandering there’s a very good chance they’ll end up below critical mass against all of their chosen competitors.<br />
<br />
<b>Weakness #2: Poor external communication. </b>Scientists aren’t generally knows as great public communicators, and there’s a reason for that. PR is the art of telling a story in a way that people are open to hearing. To the scientific mindset, that comes across like dishonesty and manipulation. A scientist wants people to believe things because they make logical sense, not because their emotions are engaged.<br />
<br />
Adding to that challenge, Google is very bad at anticipating how people and companies will react to its initiatives. Time and again, Google has taken actions that it tried earnestly to explain logically, and been surprised and hurt when people didn’t understand. I think Google views itself as a highly principled company pursuing the good of humanity; it expects people to give it the benefit of the doubt when there’s confusion, and to understand the good intent behind its actions. Google’s management doesn’t seem to understand that a hyper-rich company whose founders have private jumbo jets is automatically an object of jealousy and suspicion. Or if they do understand it, they aren’t willing to take the steps necessary to counter it.<br />
<br />
One prominent example of Google’s communication problem was book digitization. Google was trying to make out-of-print books more available to the public, a noble goal by almost anyone’s standards. But Google handled the process so clumsily and arrogantly that it frightened authors into allying with publishers, an outcome equivalent to getting wild cats and dogs to sit down together for tea.<br />
<br />
A second example was the backlash from the purchase of Motorola. It’s hard to overstate what a profound shock the Motorola deal was to Google’s Android licensees. Before the deal, the handset companies and operators viewed Google as a benign giant who could be trusted to champion mobile data without preying on its licensees. After the deal, they viewed Google as a villain little different from Microsoft.<br />
<br />
The irony of the deal is that the threat from Apple has receded somewhat, so the Motorola experiment probably wasn’t needed. The rising challenge to Google now is that an increasingly feisty Samsung has too much market power in the Android space, and there’s a rising Amazon-inspired movement to fork Android and take control of it away from Google. The Motorola acquisition made companies like Samsung much more likely to cooperate with a non-Google OS. In trying to prevent a Facebook-style breakout in mobile, Google actually weakened its position in the mobile market.<br />
<br />
Even casual public comments can create trouble for Google. In response to a question at the Google IO conference in 2013, Larry Page said of Oracle: “We’ve had a difficult relationship with Oracle.... money is probably more important to them than having any kind of collaboration.” (<a href="http://www.techhive.com/article/2038841/hello-larry-googles-page-on-negativity-laws-and-competitors.html" target="_blank">link</a>)<br />
<br />
There are several problems with this statement. First, if you want a cooperative relationship with Oracle, calling them a bunch of greedy bastards isn’t the way to get it. Second, public companies are <i>supposed </i>to put making money ahead of collaboration. That’s what their shareholders expect. This is a good example of how Google’s thinking is out of step with typical corporate governance. <br />
<br />
The third problem is that Page’s comments came across to some people as hypocrisy:<br />
<br />
Om Malik: “I think Larry (and all other technology industry leaders) should actually practice what they preach.” (<a href="http://gigaom.com/2013/05/16/google-ceo-larry-page-do-as-i-say-not-as-i-do/" target="_blank">link</a>)<br />
<br />
Slate: “Page criticized Microsoft for treating Google as a rival, blasted Oracle for caring too much about money, and then whined about everyone being so negative. Heck, if it weren’t for those other companies standing in the way, Google would have probably already solved world hunger. Well, except for all the laws and bureaucrats and journalists who are also standing in the way.” (<a href="http://www.slate.com/blogs/future_tense/2013/05/15/larry_page_io_keynote_google_ceo_blasts_microsoft_oracle_laws_and_the_media.html" target="_blank">link</a>)<br />
<br />
John Gruber: “Google is a hyper-competitive company, and they repeatedly enter markets that already exist and crush competitors. Nothing wrong with that. That’s how capitalism is supposed to work, and Google’s successes are admirable. But there’s nothing stupid about seeing Google being pitted “versus” other companies. They want everything; their ambition is boundless.” (<a href="http://daringfireball.net/2013/05/google_versus" target="_blank">link</a>) <br />
<br />
Gruber’s comments show the trouble that Google gets itself into when poor communication combines with its wandering product goals. Google doesn’t see itself as a predator eating tech startups, but when its internal projects start iterating on their goals, they inevitably target successful startups because that seems like the logical thing to do. The behavior is a natural outcome of the way the company works. Larry Page says he’s all about cooperation and I think he means it, but his product teams relentlessly stalk the latest hot startup. The result is a company that talks like a charitable foundation but acts like a pack of wolves.<br />
<br />
No wonder he gets labeled a hypocrite.<br />
<br />
Google’s trouble communicating its own intentions, and the mismatch between its words and behavior, becomes a serious problem whenever the company has to deal with big political or PR battles. Google’s competitors are often better at courting public opinion, and that opinion often drives the outcome of political processes. If you want an example, watch Google struggle with European Union regulators.<br />
<br />
<b>Weakness #3: Science vs. art in product management.</b> Google’s strength in science and quick response makes it very fast at incrementally improving the performance and reliability of its products. But that same process makes it almost impossible for Google to lead in features or product ideas that can’t be proved or verified through research. That’s why Google struggles in user experience, creating new product categories, and fitting its products to the latent needs of users: all of those are intuition-led activities in which it’s very hard to prove ahead of time what’s right or wrong. Even if there are people within Google who have extraordinary taste and vision, it’s very hard for them to drive action because their ideas can’t pass the science-style review process that Google uses for decision-making.<br />
<br />
That puts Google at a disadvantage when competing with vision-led companies. The most obvious example of this is Google vs. Apple. When Apple is implementing its strategy properly, it comes up with new product categories faster than Google can co-opt them, and executes them with more taste and usability. As long as Apple can keep moving the bar, Google is forced to play catch-up to Apple’s leadership.<br />
<br />
(The big question post-Steve is whether Apple can continue to move the bar. But that’s another topic for a separate article.)<br />
<br />
The exception to normal Google decision-making is the special projects run by Sergey Brin. In those projects, Google chooses a few long-term product goals that can’t necessarily be justified logically, but that look possible and would have a big impact if they succeeded. It’s a logical way for an analytical company to try to inject some vision into its business. <br />
<br />
What we don’t know yet about those special projects is whether Google can apply the smaller dashes of intuition that are needed throughout the development process to pioneer a new product category. The iPod wasn’t just a good idea, it was a long series of clever decisions that Apple made in the design of the device, software, store, and ecosystem. They all fit together to make a great music management system. Can Google make a similar series of great, coordinated decisions to create a compelling user need for Glass, or will its glasses just be a technophile toy? I don’t think we’ve seen the answer yet. Until we do, there’s a strong danger that Google is just doing the advanced R&D that some other company will use to make a successful wearable computing device.<br />
<br />
<br />
<b>Should Google try to change?</b><br />
<br />
Every successful company has weaknesses. The strengths that make it powerful always create corresponding blind spots and vulnerabilities. Google’s strengths are unusually well suited to its core business of search advertising. The Internet is so big that you have to use some sort of algorithmic process to organize it, and it takes a vast series of logical experiments to gradually tune search results and the delivery of advertising around them.<br />
<br />
The question for investors is if or when Google will run out of room to grow in the search advertising market. At that time, to maintain its growth (and stock value), it’ll need other substantial sources of profit. Can Google find other businesses in which its analytical, experimental culture will produce winners? Or can it adapt its culture to the needs of other markets?<br />
<br />
So far, the signs aren’t promising. Google is very good at giving away technology (Android, for example), but not very effective at making large amounts of money from it. Google’s product experiments have produced many failures and a few popular services, but very little in terms of major incremental profit. In fact, some financial analysts refer to two Googles – the search engine company that makes all the profit, and the other Google that sucks away some of that profit.<br />
<br />
It’s easy for someone like me to say that Google should change its culture to give it a better chance of success in other markets, but in the real world those culture-changing experiments often fail catastrophically. You end up destroying the source of your previous success, without successfully transitioning to a new winning culture. In that vein, I worry that even the Motorola deal is a risk for Google, as it brought into the company a huge number of employees trained in a very different, famously dysfunctional culture.<br />
<br />
For now, the search business is so strong that I don’t think Google is likely to make major changes in the way it works. Companies rarely change until they have to. Until and unless that happens, Google is likely to continue its scientific management, and competitors are likely to continue countering it through vision, public communication, and product management.<br />
<br />
If you’re a Google investor, I think the situation is still the same as it was at Google's IPO: You’ve made an unusual long-term bet on Page and Brin and their scientific approach to running a tech company. It’s quirky and it’s different from the way most other companies operate, but it does make its own logical sense, if you look at the world through the eyes of an engineer.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com17tag:blogger.com,1999:blog-17898384.post-76476429374678324762013-06-18T15:38:00.000-07:002013-06-18T15:38:24.236-07:00Style vs. Substance in Mobile SoftwareAlthough we’ve all been talking about mobile computing for years, the smartphone and tablet markets are still very young, and changing rapidly. Many app and web companies are struggling to figure out how mobile works and what makes it different from the more familiar world of websites and personal computers. <br />
<br />
The depth of the confusion became clear to me recently when, as part of a research project, I had the chance to watch a huge archive of videos of users trying out mobile-specific apps and websites. The results were surprising. Many users struggled to figure out even basic tasks, and I saw the same design mistakes repeated over and over by different developers.<br />
<br />
I’ve written a whitepaper on the findings, with many details and examples (you can download it <a href="http://info.usertesting.com/TheFourMobileTraps.html" target="_blank">here</a>).* In this post, I want to highlight the biggest problem I saw in the tests, and what I think it means for all of us.<br />
<br />
<b>The most common problem </b>I saw in the tests was users struggling with mobile apps and websites that prioritized beauty over usability. Too often, we as an industry equate an app that looks simple with an app that’s easy to use. Those are two entirely different things. Stripping all the text out of an app and hiding all of the buttons makes for a beautiful demo at TechCrunch, but a horrible user experience for people who are trying to get something done with an app.<br />
<br />
We tell ourselves that this is OK, relabeling confusion as “intrigue.” How many times have you see an expert online say something like this: “Users enjoy the process of discovering new functions in your app as they gradually explore its interface and learn its hidden features”? From watching real people use apps, I can tell you that’s lunacy. What delights most mobile users is getting things done. The only time they want to explore an app’s hidden nuances is if they’re playing. In a game or other entertainment app, cryptic Myst-like interfaces make for an engaging puzzle. In all other apps, puzzlement is a sign of bad design.<br />
<br />
Here are three examples of the trouble we're creating for ourselves:<br />
<br />
<b>Low contrast.</b> A trend in modern graphic design is the use of low-contrast graphics and text: light gray or blue text on a white background, or dark gray text on a black background. It looks sexy in print and on the web, but causes problems in mobile. Smartphones are often used outdoors, in situations where any screen image is hard to see. Low-contrast items can completely disappear in direct sunlight. Often companies don’t realize that this will be a problem because they test their apps indoors, or do design reviews by projecting screen images in a darkened room.<br />
<br />
If you think this is just an isolated problem, check out the weather app in iOS 7. I love the look of that white text that Apple superimposed over a pale blue sky with puffy white clouds. But can you read it? How will it look in the sun?<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiD64BDCrbyC8VpOjJArMM6LdpjMo4kHU99OX4rNji0ch7p03XiN-bBvW3x6LK2OMgneGrP-eAvacZu_uc89PvdlOXssLR3jikdNid402hHFRKpxEEPO3J7nrndPvJU73Qyr7-6/s1600/iOS+weather+app.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="381" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiD64BDCrbyC8VpOjJArMM6LdpjMo4kHU99OX4rNji0ch7p03XiN-bBvW3x6LK2OMgneGrP-eAvacZu_uc89PvdlOXssLR3jikdNid402hHFRKpxEEPO3J7nrndPvJU73Qyr7-6/s400/iOS+weather+app.jpg" width="400" /></a></div>
<br />
<br />
<b>Cryptic icons. </b>There are a few icons that mean the same thing on all mobile platforms. For example, the magnifying glass means “search” everywhere. But in most cases, the mobile OS players have used icon designs as a point of differentiation. The table below shows some conflicting icon designs in Android and iOS:<br />
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVcB6MWZUBrus4p3Lo4pVT_FAj3y76wfeIjXyxdpvX3WUrj5Lh5zvqOaH3i6x9vOwrOv4eW-FcNwuE1n1bXgVa5n5JdTqlkxq0Vhi6Cfonq_43diGGGtOdOns97GVEHTqGi8pA/s1600/Mobile+icon+conflicts.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVcB6MWZUBrus4p3Lo4pVT_FAj3y76wfeIjXyxdpvX3WUrj5Lh5zvqOaH3i6x9vOwrOv4eW-FcNwuE1n1bXgVa5n5JdTqlkxq0Vhi6Cfonq_43diGGGtOdOns97GVEHTqGi8pA/s400/Mobile+icon+conflicts.jpg" width="400" /></a></div>
<span style="font-size: small;"><i>The last two examples in the table show similar icons in iOS and Android that have different meanings.</i></span><br />
<br />
Some developers respond to this diversity by creating separate versions of their mobile app for each OS, with different icons in each version. But users are not as easily segmented. In the tests, I saw cases in which iOS users assumed the Android icon definitions, and vice-versa. The situation is even worse for a mobile web developer, who must use the same UI on all platforms. Which icon set should they use?<br />
<br />
When icon designs conflict, they cancel each other out and mean nothing. Many apps are studded with icons that the developers think make sense, but that actually are just tiny meaningless pictures in the eyes of many users.<br />
<br />
<b>Missing help.</b> I used to think the ideal mobile app would be so simple that everyone could figure out how to use it intuitively. I now realize that’s a fantasy. The tiny screen and other restrictions of a mobile device make it almost certain that people will sometimes be confused by your app. <br />
<br />
When mobile app users get confused, the first thing they do is search in the app for a help function. If help is available and properly structured, the user can usually resolve the problem and get back on task. Unfortunately, in most mobile apps and websites, help is minimal or totally absent. I don’t know why that is. Maybe developers feel adding help would be an admission that their app is hard to use. But that’s like saying you shouldn’t put seat belts in a car because it implies the car might crash. Plan for trouble and your users will be happier.<br />
<br />
<br />
<b>What it means.</b> The fixes to these specific problems are straightforward:<br />
<br />
—Use high-contrast text (black on white, white on black, or pretty close to it). And test your mobile app or website outdoors, in bright sunlight.<br />
—Label all buttons with text in addition to (or instead of) icons.<br />
—Add context-sensitive help to every screen in your app (the help can be as simple as an overlay saying what you’re supposed to do on this screen and what the buttons do).<br />
<br />
The harder part is dealing with the underlying design attitude that created these problems in the first place. I don’t know exactly when we went astray on design. Early websites were horribly cluttered, and in reaction to that we started to see a welcome move toward cleaner and simpler designs online (think of Mint.com, which took a complex subject like personal finance and made it feel accessible). The rise of the iPhone, with Apple’s strong emphasis on design elegance, reinforced this trend. But somewhere along the way, we lost track of the user’s needs. Instead of making things simple, we made them simplistic. We hid features for the sake of hiding them, rather than because the user didn’t need them. And we started designing software that would look beautiful to VCs and other designers, rather than being helpful to our users.<br />
<br />
If we’re going to permanently solve the usability problems in mobile, we need to readjust our attitude toward mobile design. The most beautiful app is not the one that looks most striking; it’s the one people can actually use. You should design your app to be usable first, and then make it as pretty as you can.<br />
<br />
The highest form of beauty is functionality.<br />
<br />
__________ <br />
<br />
<i>*Full disclosure: In addition to my startup role at zekira.com, I’m working on mobile strategy for UserTesting.com. They’re the leading “talk aloud” user testing service, and they gave me access to their test archive for the whitepaper. I controlled the content of the research and the conclusions. And the company had nothing to do with this blog post; I wrote it because I thought you’d be interested in the findings.</i><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com5tag:blogger.com,1999:blog-17898384.post-87007186252136157312013-06-12T17:23:00.000-07:002013-06-13T10:01:32.580-07:00Announcing "Map the Future," a Better Way to Create Business StrategyI wanted to let you know that my book on business strategy, <i>Map the Future</i>, is now available. <i>Map the Future </i>is a how-to book for business strategy. It teaches you how to combine information about competitors, customers, and technology trends to spot future opportunities and problems before they're obvious. That lets you grab opportunities before anyone else, and get ready for your competitors' responses before they happen. <br />
<br />
<b>This is not a theory or case-study book.</b> It’s a practical how-to manual, summarizing the things I learned in a couple of decades of doing this stuff in Silicon Valley. The book is designed to help anyone who works on strategy, from individual contributor to senior manager. That’s a broad audience, so different parts of the book will be relevant to different readers. To help you find what you need, I organized it like a cookbook. It starts with an overview that's written for everyone, and then dives into very detailed how-to instructions on strategy-related subjects, ranging from how to manage a competitive analysis team to how to assemble a long-term road map. <br />
<br />
The central idea behind <i>Map the Future </i>is that <b>most companies think about the future the wrong way</b>. Visionary companies (like Apple) try to impose their will on the future, like a military drill sergeant; analytical companies (like General Electric) try to predict the future in detail, like a weather report. Both approaches fail when there are changes we didn't anticipate. The reality is that you can neither fully predict nor fully control the future, because it hasn’t happened yet. But you can anticipate what <i>could </i>happen. What you need is a realistic map of the possibilities, like a highway map for the future, so you can see where you can and can't go, and then nudge events toward the future you want to create. <i>Map the Future </i>teaches you how to create the building blocks of that future roadmap (using competitive, customer, and technology information), and how to bring them together to drive strategy.<br />
<br />
<b>Topics covered include:</b><br />
—How to segment the market for a new product<br />
—How to create and use technology forecasts<br />
—How to analyze competitors and test competitive products<br />
—How to use market growth forecasts<br />
—How to recruit and manage competitive analysis and market research teams<br />
—How to manage third party researchers and analysts<br />
—How to do competitive analysis and market research if you’re in a small company with no budget<br />
—How to influence in a large company<br />
—How to guide Agile product development through strategy<br />
—How to read the adoption curve and tell when you’ve crossed the chasm<br />
<br />
One comment I’ve received from early readers is that the book has a lot of information on what works and doesn't work in large companies. That’s true; steering strategy at a big company is an especially tough task because of the politics involved. But I did my best to also highlight information and techniques relevant to small companies and startups. The sections relevant to small companies are labeled and hyperlinked, so you can jump straight to them if you want to. <br />
<br />
For more information on the book, and sample content, click <a href="http://mapthefuture.mikemace.com/" target="_blank">here</a>.<br />
<br />
At this time, Map the Future is only available electronically, at the e-bookstores below and through my website. I didn’t want to wait nine months for a print publisher, and besides I’ve spent years preaching the benefits of electronic publishing, so it’s time to eat my own dog food.<br />
<br />
<b>PDF & ebook bundle $14.99</b><br />
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(Includes the .mobi file for Kindle; .epub file for Apple, Android, Nook, and most other e-readers; and PDF files formatted for 8.5 x 11-inch pages, 10-inch tablets, and 7-inch mini-tablets.)
<span style="font-weight: bold;"> </span><br />
<br />
<span style="font-weight: bold;">Buy the ebook for $9.99</span><br />
<a href="http://mapthefuture.fetchapp.com/sell/ieyahpez"><img alt="" src="http://www.paypal.com/en_US/i/btn/btn_buynow_LG.gif" /></a><br />
(Includes .mobi file for Kindle and .epub file for Apple, Android, Nook, and most other e-readers. About 340 pages.)
<b> </b><br />
<br />
<b>PDF version $9.99</b><br />
<a href="http://mapthefuture.fetchapp.com/sell/alaerufi"><img alt="" src="http://www.paypal.com/en_US/i/btn/btn_buynow_LG.gif" /></a><br />
(For those who prefer to read PDF files. Includes PDF files formatted for 8.5 x 11-inch pages, 10-inch tablets, and 7-inch mini-tablets.)
<b> </b><br />
<br />
<b>Buy the ebook on Amazon</b>:
<br />
<a href="http://www.amazon.com/gp/product/B00BQ4778W/ref=as_li_tf_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B00BQ4778W&linkCode=as2&tag=wwwmikemaceco-20">Map the Future</a><img src="http://www.assoc-amazon.com/e/ir?t=wwwmikemaceco-20&l=as2&o=1&a=B00BQ4778W" alt="" style="border:none !important; margin:0px !important;" border="0" height="1" width="1" />
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<b>Buy the ebook on the Apple iBookstore:</b><br />
<a href="http://click.linksynergy.com/fs-bin/stat?id=6qBbadDoGTc&offerid=146261&type=3&subid=0&tmpid=1826&RD_PARM1=https%253A%252F%252Fitunes.apple.com%252Fus%252Fbook%252Fmap-the-future%252Fid628295727%253Fmt%253D11%2526uo%253D4%2526partnerId%253D30" style="background-image: url(http://linkmaker.itunes.apple.com/htmlResources/assets/images/web/linkmaker/badge_bookstore-sm.svg); background: url(http://linkmaker.itunes.apple.com/htmlResources/assets/images/web/linkmaker/badge_bookstore-sm.png) no-repeat; display: inline-block; height: 15px; overflow: hidden; width: 65px;" target="itunes_store"></a>
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<b><a href="http://www.barnesandnoble.com/w/map-the-future-michael-mace/1046238666" target="_blank">Click here to buy the ebook on Barnes & Noble (Nook)</a>
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</b>
<i> </i><br />
<br />
If you have problems ordering, contact me at the e-mail address <a href="http://www.mikemace.com/contact.php" target="_blank">here</a>.
<br />
<br />
If you have questions or comments on the book, feel free to contact me directly, or post them below. Meanwhile, here are a few comments from people who reviewed pre-release copies of the book: <br />
<br />
“Even before finishing the book, I had written a stream of emails to my professional colleagues, making suggestions for new approaches in our projects, based on the examples I had just read.”<br />
<i>—David W. Wood, Technology Planning Lead, Accenture Mobility</i><br />
<br />
“I wish all the business guidebooks I’ve read were as good as this one. Hell, I wish ANY of them were.”<br />
<i>—Matt Bacon, Deputy Director, Device Strategy and Communication, Orange-France Telecom Group</i><br />
<br />
“<i>Map the Future </i>will sit on my desk for years to come as an invaluable guide to help me make good decisions about the future.” <br />
<i>—Tom Powledge, VP and General Manager, Symantec Corporation </i><br />
<br />
“<i>Map the Future </i>is a landmark guidebook for forward-thinking executives and strategy consultants.”<br />
<i>—Martin Geddes, Founder & Principal, Martin Geddes Consulting Ltd.</i><br />
<br />
“<i>Map the Future </i>is your cookbook for developing a strong roadmap and strategy. I wish I'd had a guide like <i>Map the Future </i>when I started my career. ”<br />
<i>—Gina Clark, Vice President & General Manager, Integrated Collaboration Group, Cisco Systems, Inc.</i><br />
<br />
A big thank-you to the many Mobile Opportunity readers who offered advice and encouragement as I wrote the book. You helped a lot!<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com2tag:blogger.com,1999:blog-17898384.post-37446429232630947172013-05-05T22:49:00.002-07:002013-05-05T22:50:24.348-07:00It’s Time to Reinvent the Personal Computer<i>“In chaos, there is opportunity.”<br />—Tony Curtis, </i>Operation Petticoat <i>(and also Sun Tzu)</i><br />
<br />
“Chaos” is a pretty good word to describe the personal computer market in 2013. Microsoft is trying to tweak Windows 8 to make it acceptable to PC users (<a href="http://blogs.computerworld.com/windows/22086/windows-blues-start-button-no-it-wont-be-real-thing" target="_blank">link</a>), its Surface computers continue to crawl off the shelf (<a href="http://www.bloomberg.com/news/2013-03-14/microsoft-s-surface-tablet-is-said-to-fall-short-of-predictions.html" target="_blank">link</a>), PC licensees are reconsidering their OS plans and business models (<a href="http://mobileopportunity.blogspot.com/2013/04/the-dell-buyout-storm-warning-for-tech.html" target="_blank">link</a>), and Apple’s Macintosh business continues a genteel slide into obscurity (<a href="http://www.computerworld.com/s/article/9238621/Mac_sales_growth_stalls_here_s_why_Apple_doesn_t_care" target="_blank">link</a>, <a href="http://www.techradar.com/us/news/computing/apple/has-apple-abandoned-pro-users-1118130" target="_blank">link</a>).<br />
<br />
No wonder many people say the personal computer is obsolete, kaput, a fading figment of the past destined to become as irrelevant as the rotary telephone and steam-powered automobile (<a href="http://www.forbes.com/sites/sap/2011/08/11/personal-computers-becoming-obsolete-says-ibm-pc-architect/" target="_blank">link</a>).<br />
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I beg to differ. Although Windows and Macintosh are both showing their age, I think there is enormous opportunity for a renaissance in personal computing. (By personal computing, I mean the use of purpose-built computers for productivity tasks including the creation and management of information.) I’m not saying there <i>will </i>be a renaissance, because someone has to invest in making it happen. But there <i>could </i>be a renaissance, and I think it would be insanely great for everyone who depends on a computer for productivity.<br />
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In this post I’ll describe the next-generation personal computing opportunity, and what could make it happen.<br />
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<b>What drives generational change in computing?</b><br />
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Let’s start with a bit of background. A generational change in computing is when something new comes along that makes the current computing paradigm obsolete. The capabilities of the new computers are so superior that previous generations of apps and hardware are instantly outdated and need replacement. Most people would agree that the transition from command line computers to graphical interface (Macintosh and Windows) was a great example of generational change. <br />
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What isn’t as well understood is what triggered the graphical interface transition. It wasn’t just the invention of a new user interface. The rise of the Mac and Windows was driven by a combination of factors, including:<br />
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—<b>A new pointing device</b> (the mouse) that made it easier to create high-quality graphics and documents on a computer.<br />
—<b>Bitmapped, full-color displays</b> that made it easy for computers to display those graphics, pictures, and eventually video. Those displays also made it easier to manage file systems and launch apps visually.<br />
—<b>New printing technology </b>(dot matrix and laser printers) that made it easy to share all of those wonderful new documents and illustrations we were creating.<br />
—<b>A new operating system </b>built from the ground up to support these new capabilities.<br />
—<b>An open applications market </b>that enabled developers to turn all of these capabilities into compelling new apps.<br />
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All of those pieces had been around for years before graphical computing took off, but it wasn’t until Apple integrated all of them well, at an affordable price, that the new paradigm took off. The new interface and new hardware, linked by a new or rebuilt OS, let us work with new types of data. That revolutionized old apps and created whole new categories of software. <br />
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Windows and Mac took off not because they were new, but because they let us do new things.<br />
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Although later innovations, such as the Internet, added even more power to personal computing, it’s amazing how little its fundamental features and capabilities have changed since the mid-1990s. Take a computer user from 1979 and show them a PC from 1995, and they’ll be completely lost in all the change. Take a computer user from 1995 and show them a PC from 2012 and they’ll admire the improved specs but otherwise be feel very much at home.<br />
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Maybe this slowdown in qualitative change is a natural maturation of the market. After an early burst of innovation, automobiles settled down to a fairly standard design that has changed only incrementally in decades. Same thing for jetliners.<br />
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But I think it’s a mistake to look at personal computers that way. There are pending changes in interface, hardware, and software that could be just as revolutionary as graphical computing was in the 1980s. In my opinion, this would be a huge opportunity for a company that pulls them all together and makes them work.<br />
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<b>Introducing the Sensory Computer </b><br />
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I call the new platform sensory computing because it makes much richer use of vision and gestures and 3D technology than anything we have today. Compared to a sensory computer, today’s PCs and even tablets look flat and uninteresting.<br />
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There are four big changes needed to implement sensory computing.<br />
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<b>The first big change is 3D.</b> Like desktop publishing in the 1980s, 3D computing requires a different sort of pointing device, new screen technology, and a new kind of printer. All of those components are available right now. Leap Motion is well into the development of gesture-based 3D control. 3D printers are gradually moving down to smaller sizes and more affordable price points. And 3D screens that don’t require glasses are practical, but have a limited market today because we keep trying to use them for televisions, a usage that doesn’t work with the screen’s narrow viewing angle.<br />
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But guess what sort of screen we all use with a very narrow viewing angle, our heads perched right in front of it at a fixed distance? The screen on a notebook computer.<br />
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Today we could easily create a computer that has 3D built in throughout, but we lack the OS and integrated hardware design that would glue those parts together into a solution that everyone can easily use.<br />
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You might ask what the average person would do with a 3D computer. Isn’t that just something for gamers and CAD engineers? The same sort of question was asked about desktop publishing in the 1980s. “Who needs all those fonts and fancy graphics?” many people said. “For the average person Courier is just fine, and if I need to send someone an image I’ll fax it to them.” <br />
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Like that skeptical computer user in the 1980s, we don’t know what we’ll do when everyone can use 3D. I don’t expect us to send a lot of 3D business letters, but it sure would be nice to be able to create and share 3D visualizations of business data and financial trends. I’d also like to be able to save and watch family photos and videos in 3D. How about 3D walkthroughs of hotels and tourist attractions on Trip Advisor? The camera technology for 3D photography exists; we just need an installed base of devices to edit and display those images. And although I don’t know what I’d create with a 3D printer, I’m pretty sure I’d cook up something interesting.<br />
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Every time we’ve added a major new data type to computing, we’ve found compelling mainstream uses for it. I’m confident that 3D would be the same.<br />
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<b>The second big change is modernizing the UI.</b> User interface is ultimately about increasing the information and command bandwidth between a person and a computer. The more easily you can get information in and out of the computer, the more work you can get done. The mouse-keyboard interface of PCs, and the touch-swipe interface of tablets, were great in their time, but dramatically constrain what we can do with computers. We can do much better.<br />
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The first step in next-generation UI is to <b>fully integrate speech</b>. This doesn’t mean having everything controlled by speech, but using speech technology where it’s most effective. <br />
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Think about it: What’s the fastest way to get information in and out of your head? For most of us, we can talk faster than we can type, and we can read faster than we can listen to a spoken conversation. So the most efficient UI would let us absorb information by reading text on the screen, but enter information into the computer by talking. Specifically, we should:<br />
—Dictate text to the computer by via speech, with an option to use a keyboard if you’re in public where talking out loud would be rude.<br />
—Have the computer present information to us as printed text on screen, even if that information came over the network as something else. For example, the computer should convert incoming voice messages to text so you can sort through them faster.<br />
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We can do all of these things through today’s computers, of course, but the apps are piecemeal, bolted on, and forced through the funnel of an old-style interface. They’re as awkward as trying to do desktop publishing on a DOS computer (something that people did try to do for years, by the way).<br />
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Combine speech with 3D gestures and you’ll start to have a computer that you can control very richly by having a conversation with it, complete with head nods and waves of the hand. Next we’ll add the emerging science of <b>eye tracking</b>. I’m very impressed by how much progress computer scientists are making in this area. It’s now possible to build interfaces that respond to the things we look at, to facial expressions, and even to our emotional response to the things we see. This creates an incredibly rich (and slightly creepy) opportunity to build a computer that responds to your needs almost as soon as you realize them.<br />
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Once we have fully integrated speech, gesture recognition, and eye tracking, I’m not sure how much we’ll need other input technologies. But I’d still like to have the option to use a touchscreen or stylus when I need precision control or when a task is easier to do manually (for example, selecting a cell in a spreadsheet or drawing something). And as I mentioned, you’ll need a keyboard option for text entry in public places. But these are backups, and a goal of our design should be to make them options rather than a part of the daily usage experience.<br />
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<b>The third change is a new paradigm for user interaction</b> In a word, it’s time to ship cyberspace. The desktop metaphor (files and folders) was driven by the capabilities of the mouse and bitmapped graphics. The icons and panels we use on tablets are an adaptation to the touchscreen. Once we have 3D and gesture recognition on a computer, we can rethink how we manage it. In the real world, we remember things spatially. For example, I remember that I put my keys on my desk, next to the sunglasses. We can tap into that mental skill by creating 3D information spaces that we move through, with recognizable landmarks that help to orient us. Those spaces can zoom or morph interactively depending on what we look at or how we gesture. Today’s interface mainstays such as start screens and desktops will be about as relevant as the flowered wallpaper in grandma’s dining room. Computer scientists and science fiction authors have played with these ideas for decades (<a href="http://www.wired.com/business/2013/02/amazing-3d-desktop/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wired%2Findex+%28Wired%3A+Top+Stories%29" target="_blank">link</a>); now is the time to brush off the best concepts and make them real.<br />
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<b>The fourth change is to modernize the computing ecosystem. </b>The personal computer software ecosystem we have today combines 20-year-old operating system technology with a ten-year-old online store model created by Apple to sell music. There’s far more we could do to make software easy to develop, find, and manage. The key changes we need to make are:<br />
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—The operating system should <b>seamlessly integrate local and networked resources</b>. Dropbox has the right idea: you shouldn’t have to worry about where your information is, it should just be available all the time. But we should apply that idea to both storage and computer processing. We shouldn’t have web apps and native apps, we should just have apps that take advantage of both local computing power and the vast computational resources of the web. An app should be able to run some code locally and some on a server, with some data stored locally and some on the network, without the user even being aware of it. The OS should enable all of that as a matter of course.<br />
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In this sense, the advocates of the netbook have it all wrong. The future is not moving your computing onto the network; it’s melding the network and local computer to produce the best of both worlds.<br />
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—<b>Discovery needs work</b>. App stores are great for making apps available, but it’s very hard to find the apps that are right for you. Our next generation app store should learn your interests and usage patterns and automatically suggest applications that might fit your needs. If we do this right, the whole concept of an app store becomes less important. Rather than you going to shop for apps, information about apps will come to you naturally. I think we’ll still have app stores in the future because people like to shop, but they should become much less important: a destination you can visit rather than a bottleneck you must pass through.<br />
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—<b>Security should be built in</b>. The smartphone operating systems have this one right: each app should run in a separate virtual sandbox where malicious code can’t corrupt the system. No security system can be foolproof, but we can make personal computers far more secure than they are today.<br />
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—<b>Payment should be built in </b>as well. This is the other part of the software and content ecosystem that’s broken today. Although the app and content stores have made progress, we’re still limited to a small number of transaction types and fixed price bands. You can’t easily sell an app for half a cent per use. You can’t easily sell a software subscription with variable pricing based on usage. As an author, you can’t easily sell an ebook for more than $10 or less than 99 cents without giving up 70% of your revenue. And you can’t easily sell a subscription to your next ten short stories. Why? Because the store owners are manipulating their terms in order to micro-manage the market. They mean well, but the effect is like the worst dead-hand socialist market planning of the 1970s. The horrible irony is that it’s being practiced by tech companies that loudly preach the benefits of a free market.<br />
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It’s time for us to practice what we preach. The payment system should verify and pass through payments, period. Take a flat cut to cover your costs and otherwise get out of the way. The terms and conditions of the deal are between the buyer and the creator of the app or content. Apple or Google or Amazon has no more business controlling what you buy online than Visa has controlling what you buy in the grocery store. The free market system has been proven to produce the most efficiency and fastest innovation in the real world; let’s put it to work in the virtual world as well.<br />
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<b>Adding it up.</b> Let’s sum up all of these changes. Our next-generation computer now has:<br />
—A 3D screen and 3D printing support built in, with APIs that make it easy for developers to take advantage of them.<br />
—Speech recognition, gesture recognition, and eye tracking built in, with a new user interface that makes use of them.<br />
—A modernized OS architecture that seamlessly blends your computer and the network, while making you more secure against malware.<br />
—An app and content management system that makes it easy for you to find the things you like, and to pay for them in any way you and the developer agree to.<br />
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I think this adds up to a new paradigm for computing. It’s at least as revolutionary as the graphical computing revolution of the 1980s. We’ve opened up new usages for your computer, we’ve enabled developers to revolutionize today’s apps through a new interface paradigm, and we’ve made it much easier for you to find apps and content you like.<br />
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<b>Why can’t you just do all this with a tablet?</b> You could. Heck, you could do it with a smartphone or a television set. But by the time you finished adding all these new features and reworking the software to make full use of them, you would have completely rebuilt the whole device and operating system. You’ll no longer have a cost-efficient tablet, but you’ll still have all the flaws and limitations of the old system, jury-rigged and still adding cost and inefficiency. Windows 8, anyone?<br />
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It’ll be faster and cheaper just to design our new system from scratch.<br />
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<b>When will we get a sensory computer?</b><br />
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If you agree that we’re overdue for a new computing paradigm, the next question is when it’ll arrive. Unfortunately, the answer is that it may not happen for decades. Major paradigm changes in technology tend to creep forward at a snail’s pace unless some company takes on the very substantial task of integrating and marketing them. Do you think ebooks would be taking off now if Amazon hadn’t done Kindle? Do you think the tablet market would be exploding now if Apple hadn’t done the iPad? I don’t think so, and the proof is that you could have built either product five years earlier, but no one did it.<br />
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So the real question is not when we’ll get it, but who might build it. And that’s where I get stuck.<br />
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<b>Microsoft could do it, and probably should.</b> But I doubt it will. Microsoft is so tangled up now in tablet computing and Windows 8 that I find it almost impossible to believe that it could take on another “replace the computer” initiative. I think there’s a very good argument that Microsoft should have done a sensory computer instead of Windows 8, but now that the decision’s made, I don’t think it can change course.<br />
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<b>Google could do it, but I don’t think it will.</b> Google is heavily invested in the Chrome netbook idea. It’s almost a religious issue for Google: as a web software company, the idea of a computer that executes apps on the web seems incredibly logical, and is emotionally attractive. Google also seems to be hypnotized by the idea that reducing the cost of a PC to $200 will somehow convert hundreds of millions of computer users to netbooks. I doubt it; PC users have been turning up their noses for decades at inexpensive computers that force them to compromise on features. The thing they will consider is something at the same price as a PC but much more capable. But I don’t think Google wants to build that.<br />
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<b>One of the PC companies might take a stab at it. </b>Several PC companies have tried from time to time to sell computers with 3D screens. Theoretically, one of those companies could put together all the features of a sensory computer. I think HP is the best candidate. It already plans to build the Leap Motion controller into some of its computers, and I can imagine a beautiful scenario in which HP creates a new ecosystem of sensory computers, low-cost home 3D printers that render in plastic, and service bureaus where you can get your kid’s science fair design converted to aluminum (titanium if you’re rich). It would be glorious. <br />
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But it’s not likely. To work right, a sensory computer requires a prodigious amount of new software, very careful integration of hardware and software features, and the courage to spend years kick-starting the ecosystem. I don’t think HP has the focus and patience to do it, not to mention the technical chops, alas. Same thing for the other PC companies.<br />
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Meg, please prove me wrong.<br />
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<b>Apple is the company that ought to do it, but does it have the will?</b> Apple has the expertise and the market presence to execute a paradigm change, and its history is studded with market-changing products. I love the idea of Apple putting a big 3D printer at the back of every Apple store. Maybe you could let Sensory Mac users sell their designs online, with pickup of the finished goods at any Apple store, and Apple (naturally) taking a 30% cut...<br />
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But I’m not sure if today’s Apple has the vision to carry out something like that. The company is heavily invested in smartphone and tablet computing, with an ongoing hobby around reinventing television. There’s not much executive bandwidth left for personal computing. The company’s evolution has taken it steadily toward mobile devices and entertainment, and away from productivity. <br />
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Think of it this way: If Apple were really focused on personal computing innovation, would it be letting HP take the lead in integrating the Leap Motion controller? Wouldn’t it have bought Leap Motion a year ago to keep it away from other companies?<br />
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I think personal computing is a legacy market to Apple, an aging cash cow it’ll gently milk but won’t lead. I hope I’m wrong.<br />
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<b>We’re out of champions, unless... </b> At this point we’ve disposed of most of the companies that have the expertise and clout to drive sensory computing. I could make up scenarios in which an outlier like Amazon would lead, but they’re not very credible. I think the other realistic question is whether a startup could do it.<br />
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It’s hard. Conventional wisdom says that you need $50 million to fund a computer system startup, and that sort of capital is absolutely positively not available for a company making hardware. But I think the $50 million figure is outdated. The cost of hardware development has been dropping rapidly, driven by flexible manufacturing processes and the ability to rapidly make prototypes. You could theoretically create a sensory computer and build it in small lots, responding to demand as orders come in. This would help you avoid the inventory carrying costs that make hardware startups so deadly.<br />
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The other big barrier to hardware startups has been the need to get into the retail channel, which requires huge investments in marketing, sales support, and even more inventory. Here too the situation has been changing. People today are more willing to buy hardware online, without touching it in a store first. And crowdfunding is making it more possible for a company to build up a market before it ships, including taking orders. That business model actually works pretty well today for a $100 gizmo, but will it work for a $2,000 productivity tool?<br />
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Maybe. I’m hopeful that some way or another we’ll get a sensory computer built in this decade. At this point, the best chance of making it happen is to talk up the idea so one or more companies will make it happen. Which is the point of this post.<br />
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[Thanks to <a href="http://www.twostepsbeyond.com/" target="_blank">Chris Dunphy</a> for reviewing an early draft of this post. He fixed several glaring errors. Any errors that remain are my fault, not his.]<br />
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<i>What do you think? Is there an opening for a sensory computer? Would you buy one? What features would you want to see in it? Who do you think could build it? Please post a comment and share your thoughts.</i><div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com25tag:blogger.com,1999:blog-17898384.post-71467796695444821172013-04-17T10:13:00.000-07:002013-04-18T09:43:54.657-07:00The Dell Buyout: Storm Warning for the Tech IndustryMichael Dell is engaged in a lengthy struggle to take his company private, and if you’re focused on the smartphone and tablet markets, you probably don’t care. It’s hard to picture an old PC company like Dell pushing the envelope in tech, so from one perspective it doesn’t really matter who runs the company or whether it stays public or private. But I think Dell’s situation is important because it shows how the decline of Windows is changing the tech industry, and hints at much more dramatic changes that could affect all of us in the future. In this post I’ll talk about what’s happening to Dell, why it matters, and what may happen next.<br />
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<b><br />Why is Dell going private?</b><br />
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I should start with a quick recap of Dell’s situation: Michael Dell and tech investment firm Silver Lake Partners have proposed to take Dell private in a transaction funded in part by a $2 billion loan from Microsoft. The proposal has angered shareholders who believe the company is worth more than what was offered, and two competing proposals have emerged from Carl Ichan and Blackstone Group. Dell now apparently faces an extended period of limbo while the competing proposals are evaluated.<br />
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Given how messy this process could be, it’s reasonable to ask why Michael Dell started it in the first place. I’m surprised at how many conflicting explanations have surfaced:<br />
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<b>—The deal is largely a tax avoidance scheme</b>, according to <i>Slate </i>(<a href="http://www.slate.com/articles/business/moneybox/2013/02/dell_goes_private_leveraged_buyout_will_help_dell_pay_investors_while_minimizing.html" target="_blank">link</a>). Like many tech companies, Dell has accumulated a large pool of profit overseas which it can’t bring back into the United States without paying 35% income tax on it. If Dell takes itself private, it can use that money to pay off the interest from the buyout without paying tax on it.<br />
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<b>—It’s a financial shell game</b> according to some financial analysts, including Richard Windsor, formerly of Nomura. His scenario is that after Dell takes the company private, it will sell or spin out the PC half of the company to pay off the buyout. That will leave Michael Dell and his partners owning Dell’s IT services business at low cost (<a href="http://www.radiofreemobile.com/dell-what-now/" target="_blank">link</a>).<br />
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<b>—It’s a way for Michael Dell to get some peace.</b> In this scenario, Michael Dell is a sensitive man who’s grown tired of taking criticism from investors. The buyout is a way to get away from them. This explanation showed up in a large number of press reports immediately after the proposal. For example, here’s <i>PC World: </i>“Michael Dell apparently grew tired of running his company to the whims of a stock market that often favors immediate return over long-term investment.” (<a href="http://www.pcworld.idg.com.au/article/452862/dell_goes_private_bought_by_michael_dell_silver_lake/" target="_blank">link</a>)<br />
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<b>—It’s a necessary prelude to broad organizational changes at Dell.</b> <i>The Economist </i>put it this way: “Making the kind of wrenching operational changes Silver Lake typically prescribes would be tricky for a public company anxious not to panic shareholders.” (<a href="http://www.economist.com/news/business/21571425-michael-dell-plans-buy-out-firm-he-founded-will-it-work-dell-goes-private" target="_blank">link</a>)<br />
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<b>—Michael Dell did it to save his job.</b> According to <i>BusinessWeek</i>, Michael Dell was afraid that an activist shareholder might take over the company and force him out as CEO. So he proposed the deal as a pre-emptive strike. (<a href="http://www.businessweek.com/articles/2013-02-05/why-michael-dell-really-had-to-take-dell-private" target="_blank">link</a>).<br />
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The problem with analyzing a company’s motivations is that you tend to assume there’s a logical explanation for the things it did. Often there’s not. Company managers are frequently fearful or misinformed, and sometimes they just make dumb mistakes. It’s possible that’s happening with Dell. But if we assume a basic level of rationality, then we can probably discount some of the proposed explanations. For example, I personally doubt Dell can pay off the deal by selling the PC business, because I don’t think anyone would buy it. It’s not like there’s another Lenovo out there hungry to get into PCs, and Google already bought one floundering hardware company; I doubt it has the appetite for another. <br />
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I’m also skeptical that after a lifetime in business Michael Dell is so thin-skinned that he can’t stand shareholder criticism. If you have the ego and drive to build up a company from scratch to the size of Dell, you usually don’t care much about complaints from puny mundane humans.<br />
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And I find it hard to believe that Dell had to take the company private in order to reorganize it. If Dell took a machete to the PC business, I think most investors would cheer rather than panicking.<br />
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The explanation I lean toward is that Michael Dell was afraid he wouldn’t be left in charge long enough to finish transforming the company. You can make a case that as 15% owner and with a base of investors focused on long-term gains, his position was secure from takeover threats. But after I looked in more detail at the company’s finances, and some market trends, I started to suspect that he felt a lot less secure than you’d expect. There are big storm clouds on the horizon for Dell, and they’re darkening rapidly. Those trends also threaten the rest of the PC industry.<br />
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<b>A storm’s a-brewin’</b><br />
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Dell’s problems have been developing for years. The company’s power probably hit its peak in about 2005, when it was the world’s #1 PC vendor with about 17% of the market. Dell was the upstart beast that had dethroned the PC powers like Compaq, HP, and IBM. But after 2005, the PC industry adapted many of the flexible manufacturing practices that had made Dell so powerful. PC sales also shifted toward notebooks, which are much less customizable than the desktop computers that made Dell successful. The company’s market share started to erode. Dell tried for several years to turn around the PC business through innovation and new product categories, with no effect. Then in late 2008 it changed strategy and started evolving itself into an IT services company (like IBM, but supposedly aimed more at small and medium businesses). Starting with Perot Systems, Dell made a long series of IT services acquisitions, a process that has continued to this day.<br />
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Throughout this process, Dell gradually lost PC share, dropping to 12% by 2011. But because the PC market was growing, Dell’s actual PC shipments were more or less flat, giving the company a financial cushion to fund its transition to services. <br />
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Then in 2012, the situation changed. For the first time in years, overall PC unit sales shrank. What’s more, Lenovo (the new upstart beast in the PC market) was taking share from the other leaders. The combination of a shrinking market and a growing Lenovo caused a big drop in Dell’s PC sales.<br />
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<b>Worldwide PC (desktop and notebook) unit sales</b><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiL4qvKbvK7-6n3p6MDEbefcuGegJhYQNViU436-a2wrvgYr1tKOpi85m8oSiaibyhKGAXwLVFVcBRmfdh-FlScNS2EVNCE7JrfyJbGTUBYd7BLen4ytWA4CywJksxBC9YRgBMU/s1600/PC+unit+chart.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiL4qvKbvK7-6n3p6MDEbefcuGegJhYQNViU436-a2wrvgYr1tKOpi85m8oSiaibyhKGAXwLVFVcBRmfdh-FlScNS2EVNCE7JrfyJbGTUBYd7BLen4ytWA4CywJksxBC9YRgBMU/s400/PC+unit+chart.gif" width="400" /></a></div>
<i>This chart shows worldwide PC revenue for calendar 2006-12. Until 2012, PC sales were growing fairly steadily, and I'm sure the management of Microsoft and the big PC companies found that reassuring. But in 2012, total PC unit sales dropped while Lenovo (the green wedge) continued to grow. This combination put huge pressure on sales of the other PC leaders, including Dell. (Source: Gartner Group)</i><br />
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<b>Dell revenue (fiscal years)</b><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgloDGyR7ZQy580f8EmZlc6aEcEEVOZu5zKJzU_RPrlxvcKNuXphuEa-LR8Zebb731_ej4S8M56RIexn7PsTir6Aall3RZwEeN7u39HHtJdQEnU71nYNP2XzkzC3FNDGh_nqTMK/s1600/Dell+revenue+by+product+line.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="242" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgloDGyR7ZQy580f8EmZlc6aEcEEVOZu5zKJzU_RPrlxvcKNuXphuEa-LR8Zebb731_ej4S8M56RIexn7PsTir6Aall3RZwEeN7u39HHtJdQEnU71nYNP2XzkzC3FNDGh_nqTMK/s400/Dell+revenue+by+product+line.gif" width="400" /></a></div>
<i>This chart shows what that did to Dell’s revenue. The new parts of the company -- storage, services, and software -- were flat to slightly up last year. Servers grew as well. But they couldn’t grow quickly enough to offset the major declines in desktop and notebook computers. Dell’s total revenue dropped substantially. (The chart shows Dell’s financial years, which are about a year ahead of the calendar. So FY 2013 in this chart is roughly calendar 2012. Note that Dell did not break out its revenue by product line in FY 2010.) (Source: Dell financial reports)</i><br />
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I think the most disturbing thing for Dell about this revenue drop is that it happened in the face of the launch of Windows 8. Traditionally, new Windows launches have usually led to a nice uptick in PC sales as customers buy new hardware to go with the new software. Even the unpopular Windows Vista didn’t reduce PC sales. I’m sure Dell was expecting some sort of Windows 8 bounce, or at least a flattening in any decline. Instead, as we learned from the latest PC shipment reports, PC shipments dropped after the launch of Windows 8 (<a href="http://online.wsj.com/article_email/SB10001424127887324695104578414973888155516-lMyQjAxMTAzMDEwMDExNDAyWj.html" target="_blank">link</a>). That indicates that the channel was probably stuffed with new Windows 8 PCs that have not yet sold through.<br />
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People who live in the world of smartphones and tablets are probably saying “so what?” But I doubt that was the reaction at Dell.<br />
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If you haven’t worked at a PC company, you’ll have trouble understanding how profoundly disturbing the current sales situation is for Windows licensees. The PC companies married themselves to the Microsoft-Intel growth engine years ago. In exchange for riding the Wintel wave, they long ago gave up on independent innovation and market-building. In many ways, they outsourced their product development brains to Microsoft so they could focus on operations and cost control. They trusted Microsoft to grow the market. Microsoft is now failing to deliver on its side of the bargain. Unless there's a stunning turnaround in Windows 8 demand, I think it’s now looking increasingly likely that we’ll see a sustained year over year drop in PC sales for at least several more quarters. <br />
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This is an existential shock for the PC companies. It’s like discovering that your house was built over a vast, crumbling sinkhole.<br />
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Prior to the PC sales decline, I think Michael Dell probably assumed that his PC business could continue to fund its growth in services for the foreseeable future. He has probably now reconsidered that assumption. If Lenovo continues to grow and the market continues to shrink, Dell’s revenue will drop further, and the company could be in a world of financial trouble a year from now. It’s the sort of trouble that can get a CEO fired even if he does own 15% of the company. <br />
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So here’s the sequence of events: By fall of last year, the troubles with Windows 8 were already becoming clear to the PC companies (remember, the Windows licensees have much better information on customer purchase plans than we get from the analysts). Michael Dell must have realized that he was headed for a significant decline in revenue. At the same time, we now know, one of the company’s major shareholders approached Michael Dell to float the idea of a buyout. That was apparently the trigger that started the whole buyout process.<br />
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Put yourself in Michael Dell’s shoes: the shareholders are getting restless already, and you know the situation is likely to get worse in the next year. Proposing a buyout now would be a pre-emptive strike to keep control over the company you founded. That’s what I think happened.<br />
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<b>What happens next? </b>After more confusion, someone will eventually win the bidding Dell. All of the bidders seem to agree that Dell should continue to invest in services, so the real debate is over what happens to the PC business. Michael Dell says if he wins, Dell will re-engage with the PC market (<a href="http://finance.fortune.cnn.com/2013/04/01/michael-dell-lays-out-his-plan/" target="_blank">link</a>):<br />
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“While Dell's strategy in the PC business has been to maximize gross margins, following the transaction, we expect to focus instead on maximizing revenue and cash flow growth.”</blockquote>
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In other words, Dell will cut its PC prices. <br />
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It seems strange that Dell would want to refocus on PCs after treating them like a cash cow for years. If the business was unattractive when PC sales were growing, why would it be attractive now? Maybe Dell decided that it needs strong PC sales to get its foot in the door to sell services. That seems like a reasonable idea. But shouldn’t the company have known that years ago?<br />
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Or maybe Dell feels that the interest and principal payments on its buyout will be smaller than the profits required of a public company. That might allow Dell to compete more aggressively in PCs while it still invests in services. <br />
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Maybe that’s the purpose of Microsoft’s $2 billion loan, to let Dell stay in PCs while it also grows services. It says something sad (and alarming) about Microsoft’s business if it now needs to pay companies to stay in the PC market.<br />
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<b>What it means to the rest of us</b><br />
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I think the Dell deal is just the beginning of the Windows 8 fallout. There are several other, bigger, shoes waiting to drop.<br />
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<b>What will the other major PC licensees do?</b> If you’re working at a company like HP or Acer, everything about this situation feels ugly. Your faith in Windows has been broken, you’re losing share to Lenovo, and now Microsoft is subsidizing one of your biggest competitors. I’d be tempted to fly out to Redmond and demand my own handout. And I’d also be willing to look at more radical options. There are several possibilities:<br />
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<b>—Exit the PC market. </b>HP considered this in 2011, but backed away after a change in CEO. I wonder if the company will think about it again. Meg Whitman says no, that the PC business is important to HP’s other businesses, such as servers, because they buy many of the same parts. Exit PCs and you costs will go up because you won’t have the same purchase volumes. That’s a pretty backward endorsement of the PC business, but I guess it’s possible.<br />
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Acer doesn’t really have the option of dumping PCs. They make up most of its business, so it has to stay in computing hardware, one way or another.<br />
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<b>—Find a new plough horse.</b> In this option, you replace Windows with a platform that has better growth prospects. That lets you continue to use your clone vendor skills, but in a market that’s growing. Acer and HP are both dabbling in Chrome netbooks (<a href="http://blogs.computerworld.com/windows/21695/acer-president-windows-8-not-successful-chrome-notebooks-are-winners" target="_blank">link</a>) and Android tablets. I wouldn’t be surprised to see many more experiments along these lines. But it’s not clear how much market momentum Google can generate for its tablets and netbooks. HP and Acer could easily spend a lot of money for very few sales, and in the meantime create a rift with Microsoft that would be hard to return from if Windows 8 does eventually take off.<br />
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<b>—Reinvest in creating differentiated devices.</b> This is the other option: get off the clone treadmill and be more like Apple, a device innovator. The trouble with this is that many years ago, the PC licensees laid off the people who knew how to build new markets and new categories of computing device. Recovering those skills is like trying to grow a new brain – very slow, and hard to do when your head is stuffed with other things. You need to be incredibly patient during the learning process, and accept that there will be failures along the way. It’s hard for public companies to show that sort of patience.<br />
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So maybe you buy a company that knows how to make new-category devices. For example, you could have bought Palm. As time goes on, HP’s handling of that transaction looks more and more like a business Waterloo.<br />
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There aren’t many other hardware innovators that you could buy. RIM, maybe? Or HTC? But then you’re in a meatgrinder smartphone market dominated by Samsung and Apple. The PC market, even if it’s shrinking, might look more inviting.<br />
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Personally, I’d look at buying Nook. Not necessarily because I want to be in the ebook business, but to get a team that knows how to design good mobile devices and is familiar with working on a forked version of Android.<br />
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I don’t think any of these three options look very attractive, but the slower the takeoff for Windows 8, the more desperate the Windows licensees will get, and the more likely that they’ll try one or more radical “strategic initiatives” in the next year.<br />
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<b>What if Microsoft gave a party and nobody came?</b> The situation for Microsoft is becoming more and more complicated. Windows is not dead. It has an enormous installed base of users who are hooked on Windows applications and won’t go away in the near future. However, Microsoft faces some huge short-term and long-term challenges, and many of its possible responses could make the situation worse rather than better.<br />
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I think it’s pretty clear that we’ve entered a period of extended decline in Windows usage, as customers use tablets to replace notebooks in some situations and for some tasks. The tablet erosion may be self-limiting; I don’t think you can use today’s tablets to replace everything a PC does. If that’s the case, Windows sales may eventually stabilize and even resume growing once the tablet devices have taken their pound of flesh.<br />
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On the other hand, it’s equally possible that tablets and netbooks will continue to improve, gradually consuming more and more of the Windows market. That’s certainly what Google is hoping to do with Chrome. What would happen if Apple made a netbook and did it right?<br />
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Microsoft had hoped to head off all these problems with Windows 8. By combining the best of PCs and tablets, Windows 8 was supposed to stop the tablet cannibalization and also set off a lucrative Windows upgrade cycle. Unfortunately, at least for the moment, Windows 8 is looking like the worst of both worlds – not a good enough tablet to displace the iPad, but different enough to scare away many Windows users.<br />
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This puts Microsoft in a nasty dilemma. If it believes that Windows 8 sales will eventually rebound, then Microsoft should invest heavily in keeping its PC partners engaged. In that context, the $2 billion loan to Dell is a reasonable stopgap to prevent the loss of a major licensee.<br />
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On the other hand, if Windows sales are entering a long-term period of gradual decline, Microsoft should be doing the exact opposite. Rather than spending money to keep licensees, it should be allowing one or more of them to leave the business, so the vendors that remain will still be profitable and willing to invest. It’s better for Microsoft to have seven licensees who are making money than ten licensees who all want to leave and are investing heavily in Chrome or Android or other crazy schemes.<br />
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Microsoft also faces a difficult challenge with Lenovo. Even if Windows sales turn up, Lenovo has been taking share so fast that it will be hard for other Windows licensees to grow. At current course and speed, Lenovo is likely to end up the largest Windows licensee. In the past, Microsoft didn’t care if one licensee replaced another; they were interchangeable. But Lenovo has close ties to the Chinese government, which has repeatedly shown that it’s willing to lean on foreign tech companies. That has to make Microsoft uncomfortable.<br />
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In that case, the $2 billion investment in Dell starts to look like a defensive measure to get someone to compete against Lenovo on price. But if Microsoft subsidizes a price war in PCs, that might give the other licensees more reason to disinvest, enabling Lenovo to gain share even faster.<br />
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This is the true ugliness of Microsoft’s situation. It is in danger of falling into a series of self-defeating actions:<br />
—To combat tablets, it creates a version of Windows that accelerates the Windows sales decline.<br />
—To keep its licensees loyal, it makes Windows overdistributed, which increases licensees’ incentive to leave.<br />
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The situation is becoming more and more fragile. As I said above, I don’t expect Windows to collapse instantly. But many companies are reconsidering their investments in it, a process that is likely to eventually give customers second thoughts as well. We could end up with an unexpected series of events that combine to break the loyalty of Windows users and start a migration away from it that Microsoft couldn’t stop. <br />
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The key question is whether Google, Apple, or some other vendor can give Windows customers and licensees an attractive place to run away to. So far they haven’t, but the year is still young. I’ll talk more about the possibilities next time.<div class="blogger-post-footer">Copyright 2013 Michael Mace.</div>Michael Macehttp://www.blogger.com/profile/17966107280587843091noreply@blogger.com23