As much as I enjoy Loren Feldman’s work I think I enjoy people’s reactions even more.  Or at very least am more fascinated by them.  That came to mind when reading this rather glowing piece entitled “Loren Feldman is the jester in the court of web 2.0”.  In it Tom Foremski lays out why he enjoys the puppet shows (and other related antics) that come out of 1938 Media. 

But while I enjoyed the piece what interested me more was this sentence…

(I’ve been blocked and called names because of my re-tweets of Loren’s material but that won’t stop me. It’s a guy with a sock (puppet) on his hand — people need to lighten up.)

The people who do stuff like this baffle me because you have to abandon all self perception to act in such a way. 

I mean, there’s simply no way acting like that doesn’t come across as petty.  At the same time if you look at the real success stories of the past you find almost all were people who elevated their detractors.  People who took great pains to surround themselves with a system that empowered others to criticize them despite their status.  This is true of everyone from George Washington to Bill Gates. 

The true giants of our time have always been people who accepted criticism gladly. 

For good reason.  No matter how self aware a person is they can’t see themselves completely accurately.  It’s just not possible.  At the same time most people in the world are determined to avoid conflict (and most of those who don’t avoid conflict are people who are just out to start trouble for trouble’s sake).  Making it that much harder to get a true view of yourself.  So having someone who will tell you the truth about yourself and your world is actually a tremendous gift. 

And perhaps more importantly it’s a gift that people will admire you for accepting.

I’d been reading TechCrunch since very early on (probably the first 6 months) yet I didn’t really start to respect Michael Arrington as a person until he became friends with Loren Feldman.  Because while I enjoyed his posts it’s not a sign of greatness to spout your opinion.  Embracing your critics on the other hand shows someone striving to be more than they are and that’s profoundly admirable. 

(They’ve since had a falling out in what seems like a text book example of two people who do in fact care about each other getting upset over something that seems small and meaningless to everyone not emotionally involved and missing the fact that their hurt is a sign that they are still friends despite what they tell themselves.  But since I really don’t know either of them I’m obviously speaking out of school)

I guess this was kind of a tangent and I almost regret posting it because it does take away from the fun of the 1938 Media videos but I can’t help it.  As much as I enjoy his work I also find Loren Feldman has become synonymous in my mind with this troubling movement where people swear they’re in favor of free speech but then do everything in their power to destroy those who express anything they don’t agree with. 

It’s scary because no one wants to condemn them for acting that way but it’s those people you really have to worry about in society.  The flat out dictator is something everyone can see as bad but the guy with the dissonance to be a dictator while still fooling himself into thinking he’s not is the true danger. 

Dan Frommer of Business Insider wrote an interesting article comparing Google TV to Apple’s recently announced TV product.  Let me give you a few quotes.

First his take on Apple…

Apple made it clear today that it's trying to complement the gadgets that are already in your living room and hooked up to your TV. Apple TV is an add-on -- it's basically there to provide a few extra streaming features, in addition to your cable box and videogame console.

And Now Google…

Meanwhile, Google is trying to invade the living room and take over. Google TV is a huge, ambitious attempt to make Google the focal point of your TV experience. It sits between your cable box and your TV, tells your DVR what to record, searches the web, and seems to add a lot of complexity to your entertainment experience.

He then quotes Michael Gartenberg (an industry analyst) who backs up this theory by saying…

Analyst Michael Gartenberg sums it up nicely on Twitter: "Apple and Google taking two different approaches. Google wants input one. Will never get it. Apple wants input two and might."

The reason this caught my attention is because I think it’s completely backwards.  Apple’s the one trying to take over while Google’s the one playing along.  Let me explain…

Apple TV

What Apple is trying to do is turn TV into a per unit consumer transaction.  Much like they did with the CD.  CDs used to be packaged in a way that forced the consumer to buy lackluster songs in order to get the songs you actually wanted.  In this way the music industry pumped up their profits by forcing you to pay the same price for each song no matter what the quality of the song was.

iTunes changed all that by giving consumers the ability to buy products on a per song basis and Apple reaped huge benefits (while the Music Industry saw huge losses)

Cable, with its $149 per month charge, is pulling the same trick on any household that doesn’t watch 149+ unique hours of Television per month.  They’re taking a bunch of lackluster shows and tying them together so you must buy them all to get the few you want (ever hear the phrase “1000 channels and still nothing good on TV?”).

That’s what Apple TV seems designed to change.  So Apple’s goal really is to take over the industry it’s just a long term strategy.

Google TV

Google on the other hand is latching on to the existing Cable experience.  They’re trying to enhance the experience in the same way a surround sound stereo would enhance a TV broadcast but they aren’t trying to change it.  More importantly they aren’t trying to deprive the existing players of revenue as much as they’re trying to use their own overlay to generate even more revenue from advertising. 

The Comparison

To conclude I’d put it this way.  In a future dominated by Google TV you still need a cable box while a future dominated by Apple would kill the Cable companies off completely (their Cable TV divisions at the very least).  So it’s really Apple that’s playing to rule the world.

As far as each product’s chances of success I’d say this…

Google’s success depends on their interface.  If they can make it compelling enough (and they aren’t anywhere near that yet) they could succeed in becoming another component of your average living room (like Surround Sound has in most households).

Apple has a much harder road ahead of them.  The fact that they could only snare one other TV network is not promising (ABC is owned by Disney whose largest share holder is Steve Jobs so it really doesn’t count). It shows that the TV Networks are aware of the power Apple now has in the music industry and are wary of making the same mistake.  That will be hard to overcome and I’m honestly not sure if Apple can do it or not. 

I’ll be honest here.  Through contacts of mine I knew that Apple was going to release an iPod Touch with a camera in it.  So I made the mistake of writing this post in advance.  Now the event has happened and this post requires some edits.

Why?  Because the camera sucks.  0.7 megapixels at 960x720 to be specific.  That stinks. 

But it’s a beginning.  A first step to the iPod Touch starting a revolution in Digital Cameras in the same way it’s doing with gaming now (Apple claims the iPod Touch ”outsells Nintendo and Sony portable game players combined” though I haven’t had time to look into those numbers).  

Because There's never been a fully programmable camera (much less a camcorder). One where the individual developer could write programs that actually incorporate the camera into applications and Web Sites.  Imagine being able to hand your Grandma an iPod Touch that allows her to upload photos to the web without touching a computer. 

This is big.

Of course there was already a camera on the iPhone but saying that misses the point.  The point here is how cheap the iPod Touch is as a solution.  It's bringing the software revolution that started on the PC to the Digital Camera with no contract required. 

Let me give you an example that demonstrates the impact of this…

A while back I had a consulting job with a construction company.  They had 37 foreman positions that monitored various projects and they wanted a way for those foreman to take onsite pictures, annotate them and then get them to the corporate office in real-time. Back then there was no easy way to do it.  We eventually used a netbook solution but it was inconvenient to carry around and required the company maintain a bunch of netbooks (viruses, malware, etc...). 

With the new iPod Touch we could create the same solution but it would fit easily in the pocket and would require no administration.  Not to mention being over $100k cheaper than buying each employee an iPhone ($118,511 to get each person an iPhone and pay for the contract vs $8,473 to get each person an iPod Touch).

See the point now?

So while the poor quality of the iPod Touch’s camera is disappointing I’m still excited.  I can’t imagine Apple leaving the camera untouched in the next generation.  Meaning 1 year from now we’ll be looking at an iPod Touch with a 5 megapixel camera and a boat load of applications to enhance it.  When that day comes Digital Cameras might just find themselves obsolete. 

Leo Laporte has discovered no one’s listening to his social feed. 

It seems a technical error prevented his updates from reaching Twitter for the last two weeks yet no one seems to  have noticed.  This caused him to become a little disillusioned…

It makes me feel like everything I’ve posted over the past four years on Twitter, Jaiku, Friendfeed, Plurk, Pownce, and, yes, Google Buzz, has been an immense waste of time. I was shouting into a vast echo chamber where no one could hear me because they were too busy shouting themselves. All this time I’ve been pumping content into the void like some chatterbox Onan. How humiliating. How demoralizing.

I think he hits the nail on the head but I’d like to offer a corollary to his point which is that anyone who looks at social media logically can plainly see it’s incapable of working.   

First there’s little chance that people could even keep up with most of their Social Media contacts. 

A survey taken a few years back claimed people spend about 1 hour and 40 minutes of their leisure time per day on the Internet.  I remember this survey because it’s time estimate is the highest of any survey I’ve seen on the subject. 

Now a tweet is generally around 144 characters and assuming an average word length of 6 characters (5 character word + space) you get about 29 words per tweet.  

Compare that to the international average for reading speed which is around 250 words per minute.  What that means is if the survey quoted above is correct and if that person spent their entire online time reading twitter they’d be capable of reading about 862 tweets per day. 

So someone like Leo Laporte (Who is following 1,347 people on Twitter) would have to spend more hours than the average person spends on the Internet just to keep up. 

Of course these are simplifications but the point is a valid one.  If you look at the  average output of most power user’s social media profile (a.k.a. Twitter + Facebook + Whatever else) I think you’ll find it’s not logically possible for them to keep up with it. 

Which brings me to my second point…

In every study that I’ve ever seen the #1 complaint among people in the western world is they don’t have enough free time.  That’s been true for decades.  So even before all this Social Media popped up people didn’t have a lot of time on their hands. 

Which means you have a constriction of resources.  People only have so much time available to them so they’ll inevitably have to forgo some of the things they want to do. 

That in mind what order of importance do you logically think the following items will fall into…

• Spending actual time with friends and family
• Consuming media that’s designed to be entertaining like TV and Music
• Consuming media that will educate you like reading a book or news item
• Reading the random observations of people in your social media circle

Obviously it’s subjective but I think most would rank Social Media as last among that list. 

In the end it comes down to people without enough time trying to keep up with an information source that is generating way too much content.  That’s not a system that logically works and Social Media won’t work until someone devises a way to dramatically raise the signal to noise ratio. 

For the record, I’m as shocked to be writing that title as you are to be reading it. 

But as I read this article at Ars Technica I started to realize something.  His point was that Windows “Slates” would be inferior to iPads which I agree with.  But then the author (Peter Bright) makes  a leap that I don’t think is supported by his conclusion…

Tablets are, like smartphones, another growth market that Microsoft is going to fail to capitalize on, thanks to a failure to understand the company's past failures, and a stubborn refusal to recognize that not everything is a PC. The company has, belatedly, woken up to the realities of the smartphone market and will, at last, produce a phone operating system that works properly with fingertips, and this fall will produce a credible, if imperfect, smartphone platform. When will it do so for tablets?

Tablets are not like smartphones.  Smartphones appeal to consumers as much as they do corporations because they replace something that consumers already have.  Tablets appeal to high end consumers willing to spend money on yet another device but not to the majority (at least not yet and assuming they ever will is a huge leap of faith). 

On the other hand tablets have huge appeal to Corporations who have increasingly mobile workforces and IT budgets to spend.  So the question of who will eventually win the tablet market boils down to….

What does a corporation need from a tablet?

1.  It needs to be able to customize the environment.  If I want to turn a tablet into a specialized computing device I don’t want people to see the underlying OS.  I want the system to boot straight into my application.  Windows can do that, iOS can’t. 

2.  It needs to allow for global setting changes.  Apple restricts what an application can do to influence the running environment and that’s  a great choice in a consumer device.  But not in an enterprise one.  I want to be able to install Dragon NaturallySpeaking on my tablets and have it work in EVERY application.  I want to allow applications to interact with each other.  And so on…. 

3. It needs to be manageable.  To a certain extent this is a cheat because it’s largely included in point #2 but the fact is you can’t manage an iPad.  A Windows machine can run applications in the background that monitor and change system settings as needed.  Things like Internet Filters, Patch Management Software, Backup software, and others require this ability.   

4.  It needs to support many development types.  You can develop for Windows using C++, C#, Visual Basic, Python and many others.  This is a big difference between Apple and Microsoft and one that hurts Apple in the end.   Even the most Anti-Windows Python Developer can jump into Windows and use their preferred language to develop multi-touch native apps in less than a day.  Corporations standardize on one environment so being able to slip seamlessly into that environment is a big plus.

5.  It needs to be expandable.  I don’t even necessarily mean peripherals here just memory expansion.  All the mobile devices at my organization have a memory card in them to backup vital data in case of an accident which is what I’d consider the bare minimum for a mobile device.  Ideally a tablet should be able to plug peripherals into it (and given that ability peripheral manufacturers will line up to build devices for them).  A Windows device has the potential to build an ecosystem around it and that’s a big deal as well. 

Truthfully I’m sure there are more points but those are the ones I could think of off the top of my head.  In the end they all boil down to one macro point…

Enterprise needs the OS to get out of the way and give them control and that’s something Apple’s never been willing to do. 

I don’t doubt Apple will build better devices and I’ll probably continue to use an iPad at home.  But as a person responsible for the IT of an organization I can see myself ordering hundreds of Windows based tablets in the future all going to people who would never buy a tablet for their home. 

That is how Microsoft will win the tablet battle with an inferior device.

A Few Follow-ups…

The TabletPC: One of the main points in the Ars Technica article is that Microsoft failed with the TabletPC which used the same “Windows With Touch” strategy.  That doesn’t really hold water though because TabletPCs were convertible laptops with all the weight that comes along with that.  In addition they used a Pen interface which is much clunkier than touch.  Those factors are why they failed.

The Android Factor:  Android could obviously change this equation.  It doesn’t match all 5 criteria right now but Google is iterating quickly and it is Open Source.  If Android targeted the corporate market I suspect they’d make significant in-roads.  Bottom line: Microsoft is foolish to dismiss Android at this point.

The iPad Revolution: I think it’s at least possible that the iPad could replace the consumer PC for a lot of people.  I personally know a lot of people who prefer a curated environment over the choices offered by PCs and Macs.   That could change the equation as well (though in honesty I still think Apple would lose out in sales once all was said and done). 

Business Insider points out some depressing numbers for Amazon’s Kindle device…

AT&T said yesterday that it activated 400,000 to 500,000 3G-enabled iPads in the U.S. last quarter.

How many Amazon Kindles and 3G-enabled Barnes & Noble Nooks did it activate?

Fewer than "roughly 900,000."

That comes from a press release from wireless carrier AT&T, which announced today that it activated "roughly 900,000 connected devices" in Q2, including the Amazon Kindle, 3G-enabled Nook, and around 850 other devices, "such as eReaders, netbooks, digital photo frames, personal navigation devices, home security monitoring and smart grid devices.

Let me say upfront that I don’t think these numbers are good.  Even if all 900,000 are Kindles that’s not a lot considering it’s prominent spot on the Amazon home page.  But at the same time if the Kindle disappears tomorrow I think it will have served it’s purpose. 

By jump starting Amazon’s digital efforts it allowed Amazon to extend its dominance into e-books and that’s a big deal.  Try this: Name the companies that have managed to beat Apple in the world of digital distribution of content. 

If you came up with a company other than Amazon you’ve thought of one more company than I have.  Apple has been on a role since the original iPod debuted.  Music, Movies, and TV have all been dominated by Apple despite the best efforts of their competitors.  But in books it’s all Amazon.

(It is beside my main point but I’d like to point out that Amazon is even dominant in audio books since iTunes uses Audible’s content and Audible is owned by Amazon)

This is important for two reasons.  First, as stated above, Amazon needs to hang on to it’s core business (printed media) when that business transitions into the digital age.  Kindle allows it to do that.

But the second reason is perhaps even more important.  This keeps Amazon in the digital game.  Amazon has not given up on its digital media aspirations and dominance in e-books makes people accustomed to buying digital content using their Amazon account.  If Amazon’s smart they’ll do everything in their power to ride Android’s success and become the dominant digital media provider for those devices.  If Amazon can become the “iTunes for everyone else” they’ll be in a very good position in the future.

So while the Kindle Device itself might fade into history Amazon will owe much of it’s future digital success to it and it that sense it may very well have saved the company as a whole. 

So this Old Spice Responds to Questions Thing is getting a little out of hand.  Apparently even Google’s CFO felt the need to interrupt a conference call to say it was “a glimpse of where the world is going”. 

I want to make a couple points on this but just so there’s no misunderstanding let me be very clear: The campaign was brilliant.  It was as perfect as I could imagine an ad campaign being.  They knew when to be funny, knew when to be human and most importantly knew when not to wear out their welcome.  But at the same time I think it’s spawned some false conclusions. 

This Wasn’t Social Marketing

I disagree that this was a  “social campaign” as many have said.

The character didn’t have a conversation with these people he simply used what they said as a jumping off point to be funny.  It was an amazing act of improv on the part of the writers and Mr. Mustafa but it was a performance.  It was aimed at a larger audience than just the person being spoken to.  So it really wasn’t “social” by the commonly accepted definition. 

This Wasn’t a “New Kind of Ad”

What the ad agency (Wieden+Kennedy) did was the same thing that any great ad agency would do: They used the tools available to them to make ads that didn’t feel like ads. 

But that’s what great advertising has always been.  If you’ve ever listened to the radio you’ve heard one of those contests that says “be the [whatever number] caller and win tickets to [some event]” .  In the back of your mind you probably realized that was advertising but the fact that it’s a contest obscures that fact.  Which is exactly what makes it great advertising. 

The person who first thought that strategy up was no different than Wieden+Kennedy are now.  They had a radio station and a phone and they used creativity to mold them into great advertising.  Just as the Old Spice Ads used YouTube, Twitter, et al. to do the same thing today. 

Conclusion

The point I’m trying to make here is you have to focus on the real lessons .  The lesson isn’t “do what the Old Spice Guy did” it’s “Be Creative”.  It’s not “Twitter is the future of media” it’s “know the tools available to you and use them”.  These are all old rules and they still apply.  Which leads me to my last point.  Because anyone who knows advertising knows one of the cardinal rules is this…

Brilliant ad campaigns are amazing. Those who do direct copies of those campaigns are Lame. 

So unless you can come up with a new spin or you actually WANT TO BE the “lame copy of the Old Spice Guy” I’d put this whole thing out of your head and rely on your own creativity.   

I read a lot of blogs.  A LOT.  So trust me when I say these are the biggest complaints regarding Google Android’s App Store

1.  It’s Hard to find Applications

2.  The quality of the applications are lower than what you find on the iPhone

Given those points I find this move by Google odd…

App Inventor is a new tool in Google Labs that makes it easy for anyone—programmers and non-programmers, professionals and students—to create mobile applications for Android-powered devices. And today, we’re extending invitations to the general public.

So Google is essentially going to flood the market with even lower quality apps?    Really?!? Doesn’t seem wise to me.

But there is one good argument for this tool in the post and that’s the educational angle. 

One student from Professor Wolber’s class told us: “I used to think that no one could program except CS people. Now, I've made dozens of applications for the Android phone!” Another student, who struggles with dyslexia, was inspired by App Inventor to take more computer science classes and is now learning Python.

I’m all for getting kids interested in programming and Google should be applauded for doing that.  But there’s a better way and this is the last thing Android needs right now.

Anyone who has studied Apple knows the main problem they had for the 5 years before Steve Jobs came back was strategic vision.  Apple’s always been a company people are passionate about and they could always draw engineering talent because of that.  But without someone to pull it all together and focus it they turned into a company that couldn’t get all their great technology into a coherent product.

Google needs to learn that lesson here.  They have a strategic goal which is to empower the web and their focus should be to very slowly pull Android into the fold.  That means allowing professional developers to create apps so Android is competitive with the iPhone while slowly making the web app experience richer. 

So while the goal of educating people on how to make simple apps is great it would be much better if focus was put on the web and not on Android native apps.

One Last Point… A valid counter point to the argument I lay out above is that web apps require someone to know how to host their own server, deploy to it, etc…  I’d disagree with that.  Google could allow people to deploy these apps easily (and for free) on their already existing cloud host Google App Engine.  Or if they wanted to avoid connectivity problems they could have the tool create locally hosted web apps (Android’s supported HTML5’s offline abilities since the “eclair” release).

I love numbers.  I think they’re the quickest path to truth.  But numbers can be misleading if used that way and I think that’s what Microsoft’s Corporate VP of Communications is doing in his post entitled Microsoft By The Numbers.

This isn’t a full refutation of his points and I even skip over a few for time but this should at least tell you that his overall theme is misleading.  He’s using numbers out of context to make Microsoft look a lot stronger than it actually is. 

Getting Started…

150,000,000
Number of Windows 7 licenses sold, making Windows 7 by far the fastest growing operating system in history.

Yes, but Vista sales were lack luster by Microsoft’s own admission and people need to upgrade after 9 years (XP original release date was 2001).  So what Windows 7 sales indicate is that (a) there was pent-up demand for a decent OS and (b) Windows still doesn’t have any viable competitors (if you don’t want to deal with Apple).  Neither of those facts are Microsoft specific strengths.

7.1 million
Projected iPad sales for 2010.

58 million
Projected netbook sales in 2010.

355 million
Projected PC sales in 2010.

Again the PC number is related to the above point.  But it should be pointed out that he used “Projected” sales from IDC.  What he doesn’t say is that IDC initially projected a 5.6% increase in IT spending for 2009 but that IT spending actually fell by 4.5% (which isn’t a criticism of IDC whose predictions were in-line with all the other firms).  So projections don’t mean much.

On the Netbook issue he fails to mention that the growth of netbooks has been at the expense of Notebook PCs.  Notebook revenue was down 7% in 2009 and that’s bad for Microsoft (who wants to sell full versions of Windows 7 not the starter version loaded on netbooks).  Also his iPad source is from April 2nd and doesn’t take into account the products explosive initial sales.

<10
Percentage of US netbooks running Windows in 2008.

96
Percentage of US netbooks running Windows in 2009.

This is a somewhat fair point but netbook sales were only 11.4 million in 2008 so it was really a niche market.  The bigger point is again that Microsoft is making 1/4th of the profit off netbooks as it would off a full scale PC or Notebook

0
Number of paying customers running on Windows Azure in November 2009.

10,000
Number of paying customers running on Windows Azure in June 2010.^[source]

700,000
Number of students, teachers and staff using Microsoft’s cloud productivity tools in Kentucky public schools, the largest cloud deployment in the US.^[source]

Well Azure wasn’t a product in 2009 and we don’t know what a “paying customer” is so the first two points don’t mean much.  I tested Azure a few weeks back just to get a feel for how it works which would make me a paying customer but not an ongoing one (or one who paid more than $20 thus far)

As for the third number I notice there’s not a point for  “2 Million” Zoho customers or “25 million” Google Apps Users.

9,000,000
Number of customer downloads of the Office 2010 beta prior to launch, the largest Microsoft beta program in history.

Office has a lot of users.  That’s not news.  The fact that the Office 2010 beta program was big only reflects that Microsoft allowed it to be that big.

21.4 million
Number of new Bing search users in one year. [Comscore report – requires subscription]

Again “Users” is a meaningless statistic.  I try Bing every time they announce something new so I’m likely counted in that number but I use Google primarily.  If anything this number is low because it means most of the billion users going to Google aren’t even giving Bing a chance.

24%
Linux Server market share in 2005.

33%
Predicted Linux Server market share for 2007 (made in 2005).

21.2%
Actual Linux Server market share, Q4 2009.

Again this is a meaningless number.  If you look at the source it’s based on an IDC report on server hardware revenue.  But anyone who understands basic computing knows that more expensive hardware is cheaper per user.  On that note the majority of the $799 small business servers are running Windows while the majority of the $50,000 web servers are running Linux.   So hardware revenue share does not equate to usage share

8.8 million
Global iPhone sales in Q1 2010.

21.5 million
Nokia smartphone sales in Q1 2010.

55 million
Total smartphone sales globally in Q1 2010.

439 million
Projected global smartphone sales in 2014.

Yes but Microsoft’s platform isn’t even in the market yet and when it gets there it will find itself facing a superior platform (Android) that’s cheaper than Microsoft’s offerings.  There’s a lot of potential in smartphone growth but Microsoft isn’t poised to take advantage of it right now.

$5.7 Billion
Apple Net income for fiscal year ending  Sep 2009.

$6.5 Billion
Google Net income for fiscal year ending Dec 2009.

$14.5 Billion
Microsoft Net Income for fiscal year ending June 2009.

But these are companies of vastly different size and comparing revenue without looking at size is misleading.  Let’s look at the numbers with size taken into consideration.

Number of Employees

Microsoft: 93,000

Google: 20,621

Apple: 35,000

Net Income per Employee

Microsoft: $155,913

Google: $315,212

Apple: $162,857

So Google and Apple are much smaller companies making much more money per employee. 

$23.0 billion
Total Microsoft revenue, FY2000.

$58.4 billion
Total Microsoft revenue, FY2009.

Yes but Microsoft has acquired at least 85 sizable companies since 2001 so the question is what was the combined revenue of all those companies vs. Microsoft’s revenue today?

Brad Burnham of Union Squared Ventures puts forth an interesting theory.  He basically lays out the idea that platform companies like Apple and Facebook are like governments…

A lot of people have begun using the term ecosystem to describe these big platforms. That captures their decentralized, emergent character, but ecosystems do not have a central point of control. Apple decided to eliminate third party analytics between one release and the next. That doesn't happen in an ecosystem. The right analogy is a government.

Facebook is a government. Facebook's users are citizens, and Facebook's applications developers are the private companies that drive much of the economy. Apple. Twitter, Myspace, Craigslist, Foursquare, Tumblr and every other large network of engaged users (including some services of Google) plays a similar role.

He then suggests we view these companies through that lense in the future…

So as you watch the large web services evolve, think about how they are balancing the relationship between the state and the private sector? What does Facebook's introduction of Facebook Credits say about its monetary policy? What is Apples foreign policy? Do they act unilaterally promoting their own proprietary standards or do they act multilaterally embracing international standards? What is Twitter's industrial policy? Do they invest in state owned services or encourage decentralized economic development? The choices these platforms make reveal a lot about who they are, and ultimately how well they serve the companies operating in their economies and the citizens who live there.

The implied point here being that companies like Facebook, Apple, et al. should be mindful of this comparison and start to act like responsible governments would and not like dictators.  I don’t agree with this. 

Mr. Burnham’s analysis certainly has some truth to it.  But in my opinion that makes it more dangerous than helpful and I want to explain why.  To do that let me make two points…

All Successful Companies are Dictators…at first.

When I was a kid there was a company named 3Dfx (or 3dfx depending on when you ask).  They had a graphics chip called Voodoo and a proprietary API for that chip called Glide. 

They also had the coolest logo ever….

…but that is beside the point.

Almost every developer hated 3Dfx’s creation of Glide.  The argument was always that their time would be better spent helping along abstraction layers such as OpenGL which wouldn’t force developers to write programs specifically to 3Dfx hardware. 

Eventually that’s exactly what 3Dfx did.  They stuck with their proprietary solution as long as they could but when companies like nVidia became able to compete at the same hardware level 3Dfx abandon their proprietary API and embraced a more open solution. 

This is a cycle that plays itself out over and over again in the technology industry and it’s a successful one.  Because it allows companies to make a bunch of money by being proprietary and then to use that money to stay successful once they can’t maintain that anymore.  Microsoft is alive today because they made a bunch of money during their proprietary phase and are living off it now. 

In the case of 3dfx they had so much money that they were able to buy a video card company called STB and start manufacturing not just the chips but their own video cards.  A move that could have allowed them to dominate the entire video card industry and it’s a move they could only afford because of the money they made during their proprietary days.

(What actually ended up happening is the move distracted them from making better graphics chips which allowed nVidia to leap frog them at which point their company died)

Edit: Kindle Review has a great post on this that points out how companies are entitled to this advantage because of all the effort it takes to build a platform.  Read it here: http://ireaderreview.com/2010/06/12/do-users-own-the-company-whose-products-they-use/ 

Companies Come and Go but Governments are for ev…much longer.

The reason dictatorial governments aren’t acceptable is because the residents of a country can’t choose another government.  At least not without leaving their entire identities behind.

A dominant company can look like a government at the height of its dominance because you don’t seem to have a choice to leave it.  Everyone’s on Facebook right?  So how can a user really leave? 

But that ignores the fact that no company stays dominant for very long.  Who could be more dominant than Microsoft was in the 90s?  Yet even they could only hold on to that dominance for a little over a decade.  Less than 15 years after Windows ‘95 they’re struggling to enter new markets because they see their primary business eroding. 

Compare that to the longevity of countries where even the most backwards government (I’m looking at you North Korea) can easily survive half a century.  That longevity is what makes a dictatorial country so horrifying.   

Conclusion

As I said from the outset there is definitely some truth to Mr. Burnham’s analysis.  But insight is only helpful if it provides you with a prescription for successful future behavior.  This advice does the opposite.  It tells you to abandon a successful strategy based on a flawed analogy.  It suggests you abandon the very strategy that has worked time and time again in the business world. 

Addendum: I write this blog with one central value in mind and that value is truth.  I tell the truth as I see it and while it means I get some very nasty emails and I’ll never be as popular as Scoble that’s the line in the sand I’ve chosen to draw.  Which of course makes me look like a jerk much of the time and I accept that.

But occasionally I chicken out and this is one of those occasions.  So please pretend this paragraph was in the first point above (where I initially deleted it from)…

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What about the users?  

As much as I hate to say it the users don’t matter in the very limited scope of this discussion. If you’re dominant enough to be having this discussion than the users don’t really have a choice to leave you just yet. 

Moreover users don’t really care about openness.  They’ll scream about it but in the end they’ll pick the product with the best features not the open one.  Your users might think you’re a jerk but as millions of Apple fans have proven they’ll stick with you if you continue to create a great product. 

Deciding when to open up is completely dependent on your competition.  When they mature enough to start drawing away early adopters that’s when you open up.  At which point your users will accuse you of bending to competition and they’ll be right but if you still have a better product they won’t abandon you and if you open up enough they'll eventually forget you were closed in the first place (does anyone remember how proprietary Netscape was back in the day?) 

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