Who invented multi-media web?

Feb 8, 2012. Wired -- Michael Doyle, a low-profile Chicago biologist, claims that it was actually he and two co-inventors who invented — and patented — the “interactive web” before anyone else, while they were employed by the University of California back in 1993. Doyle argues that a program he created at the UC’s San Francisco campus, which allowed doctors to view embryos over the nascent World Wide Web, was the first program that allowed users to interact with images inside of a web browser window. The defendants hotly contest that, saying that it was programs like Pei-Yuan Wei’s pioneering Viola that first offered this functionality.

Several billion of dollars in royalties are at stake in the patent trial that starts this week in Tyler, Texas. The most important defendants are Google, Yahoo, Amazon and other internet giants. Remarkably, Microsoft, which got sued first in 1999, settled several years ago for the estimated $100M.

Of course, this patent trial doesn't threaten the future of the web, as some people would like us to believe. First, it's not about controlling the web or e-commerce. Rather, it's about getting a share of the profits companies make using the technology.

Second, as Wired wrote a year and a half ago, the web is dead anyway. The sooner we move past it, the better.

tags: patent, internet, business, model, innovation, invention, control point, web

Quote of the Day: Eclecticism.

Woody Allen once explained why eclecticism works:  "The 
real advantage of being bisexual is that it doubles your chances 
for a date on Saturday night."   

--- Warren Buffet. 1995 Letter to Shareholders.

Another quote from the same letter is relevant to Jerry Yang's resignation from Yahoo. It explains why, for example, Amazon would fail much faster with the same kind of chairman.

Winning in patent courts, by design.

Emphasizing design not only helps Apple convince consumers buy Apple products, but also allows the company to attack its competitors in court. Instead of using a more traditional IP litigation strategy based on utility (technology) patents, Apple leverages its cache of design patents to speed up court decisions. Litigating utility patents takes years, while showing similarity of design decisions makes infringement analysis very simple. Here's the latest from Apple's battle with Samsung:

Oct 13, 2011. San Jose, California. (Reuters) - Apple sued Samsung in the United States in April, saying the South Korean company's Galaxy line of mobile phones and tablets "slavishly" copies the iPhone and iPad

Koh [U.S. District Judge] frequently remarked on the similarity between each company's tablets. At one point during the hearing, she held one black glass tablet in each hand above her head, and asked Sullivan if she could identify which company produced which.

Additionally, at the hearing Koh said she would deny Apple's request for an injunction based on one of Apple's so-called "utility" patents.

So far, Apple is winning the battle.

tags: patent, strategy, integrity, control point

Edison's most important invention.

In 1890,  10 years after the introduction of his longer-lasting light bulb, Thomas Edison came up with the idea of a screw-in socket.  Before that, asking "How many engineers does it take to screw in a light bulb?" would make no sense whatsoever.
This basic socket design outlived all other light bulb technologies. Even today, 120 years later, the latest and greatest LED lights are manufactured according to the standard based on Edison's original idea.

tags: invention, problem, interface, control point, system, patent

Mobile stalemate: Apple vs Google vs RIM.

Half a year ago I wrote about data on smartphone market share, which looked like that:

Google Android - 43.6%
Apple iOS - 26.2%
RIM - 24.2%
Microsoft - 3%

9 months later, market share distribution didn't change much, except Google lost few points to Microsoft:

Google Android - 40.1%
Apple iOS - 26.6%
RIM - 23.4%
Microsoft - 5.8%

Google's growth of 5.4% over last quarter seems like a seasonal variation caused by different release schedule from hardware OEMs. It would be interesting to see revenue margins for those phones/subscribers. Google is not making any money on the OS itself, only on app sales, ads, and subscriptions. Apple is making money on phones, apps, ads, subscriptions, media - songs & video, and accessory licensing - cables, connectors, car interfaces, etc. In addition to that, Apple sells iPods and iPads, which are not included in the market share data.
Putting it all together, I think in the mobile space Apple is a much more dominant force than Google. I also wonder how the whole enterprise market is going to work out. Microsoft will probably make a big push for it, trying to grab a share from RIM.

tags: mobile, business, information, apple, google, microsoft, evolution, market, control point, software

Facebook Credits, the reserve currency of the future.

Facebook and Zynga are taking great strides in making social commerce a reality:

Because Facebook appears to favor Zynga more than other game developer, including through an unusual growth-target agreement, those two companies seem to be just about joined at the hip.

A year ago, Zynga’s chief executive Mark Pincus told employees that Zynga planned to expand beyond Facebook and start its own Zynga Live web site as a portal for its own social games. That never happened because Facebook cut the deal on Facebook Credits with Zynga.

Zynga already has enormous advantages over other developers on Facebook, with more than 264 million monthly active users on the social network, more than the top 15 other game companies combined.

If this partnership is a long-term cooperation game like the one Intel and Microsoft played in 1980-2000, Google will have a hard time catching up with this freight train. Facebook Credits represents a new transactions technology, which has a chance to become a platform for new commercial applications beyond games, e.g. video conferencing, content sales, etc. You can see Netflix's cooperation with Facebook as an example of a possible Zynga-like play in a different entertainment domain.

Can you finance a Facebook revolution with Facebook Credits? ;)

A couple of diagrams to illustrate the transition from social networking to social commerce.

tags: games, facebook, commerce, virtual, deontic, payload, platform, 4q diagram, social, control point, business model

Contrary to common beliefs about the picket-fence approach, a good patent portfolio doesn't really protect a technology. In business terms (see below), the technology doesn't matter. Instead, patents enable the portfolio holder to screw up create intolerable risks for the competition's business model.

What disrupts incumbent firms in Christensen's story is not their inability to conceive of the disruptive technology: like Amit and Zott, he identifies the root of the tension in disruptive innovation as the conflict between the business model already established for the existing technology, and that which may be required to exploit the emerging, disruptive technology. Typically, the gross margins for the emerging one are initially far below those of the established technology. The end customers may differ, as may the necessary distribution channels. As the firm allocates its capital to the most profitable uses, the established technology will be disproportionately favored and the disruptive technology starved of resources. Christensen quotes Andy Grove, former CEO of Intel, ‘Disruptive technologies is a misnomer. What it is, is trivial technology that screws up your business model’. The root of tension [is] the conflict between the business model established for the existing technology, and that required to exploit the emerging, disruptive technology.

Henry Chesbrough, Business Model Innovation: Opportunities and Barriers, Long Range Planning, Volume 43, Issues 2-3, Business Models, April-June 2010, Pages 354-363, ISSN 0024-6301, DOI: 10.1016/j.lrp.2009.07.010.
(http://www.sciencedirect.com/science/article/B6V6K-4X0MPJN-2/2/06b7077564ed4d7c6266cafac731df5d)

tags: technology, competition, system, business, model, control point, risk, quote, innovation,

Второй раз на те же грабли

The latest numbers on mobile software are in:

Google's Android platform was running on 43.6 percent of all the smartphones purchased in the United States in the third quarter. It was followed by Apple's iOS, which captured 26.2 percent market share, and Research In Motion's OS, which tallied 24.2 percent share. Microsoft's mobile OS held 3 percent market share in the quarter.

For the second time in its history Apple created a computing platform, PC being the first one, and for the second time they could not hold the advantage. Unbelievable.

tags: mobile, evolution, business, apple, google, microsoft, computers,  software, control point

What's good for shopping is good for Amazon.

Ian Freed, Amazon's VP in charge of Kindle:

First of all, with regard to the iPad, it's a totally different product. I mean, the product is a general-purpose tablet. We love that product because people use their iPads to buy a lot of products on Amazon. It's a tailwind for our e-commerce business.

But for book reading it's substantially heavier than a Kindle; the battery life is 10 hours versus 4 weeks on the new Kindle, and you can't read it outside in the sun. The Kindle is absolutely purpose-built for reading and it's a product that people consider a tool for reading. It's not something that's more of a gadget.

Amazon is the Wal-Mart of the Internet age. Within its shopping empire Kindle is just another gadget and book is just another piece of sellable content. Until a new format of the book, as a content wrapper emerges, Kindle ( device & app) will stay competitive with iPad and other tablets. It's the recommendations and reader reviews that matter.

tags: control, payload, control point, distribution, market, commerce, information, tool

AppStore economics

Like in any other Long Tail business models, iPhone/iPad applications seem to make money for the store owner, not the content developer.

The development of the typical app cost $35,000 and the median paid app earns $682 dollars per year after Apple took its cut. You see where this is going.. We get to break even on our App Development costs in... 51 years.

h/t marginalrevolution.com


tags: distribution, business, model, control, control point, mobile, apple

Winner-takes-all market in social media.

Another example of Prisoner's Dilemma playing out in the high-tech world:

If this is all true, I find it hard to believe that either side will actually pull the plug on a relationship that has generated most of the top-10 most popular applications on Facebook. Without Facebook, Zynga could lose easy access to millions of its most regular users, and without Zynga, Facebook would lose several of the applications that keep its users coming back to the site so often.

Earlier, I wrote about a similar situation between Google and Apple. Now, I am wondering whether Prisoner's Dilemma is endemic in relationships within high-tech industries.
In his recent book, The Nature of Technology, W.B.Arthur showed that most of technology innovations require concerted efforts from multiple companies and individual contributors. It's highly unlikely that all of them will get rewarded by the market proportionally to their contributions. Quite the opposite, over a period of time a dominant player emerges and gets into a position to dictate the pace of innovation, and as a result, collects a much higher return on its technology investment. Google dominates search advertisement market, Intel - PC-related semiconductors, Microsoft - PC OS, Apple - portable audio and smartphones, Facebook - social networking, and etc.
I suggest that on its path to domination, a high-tech player has to build a series of coalitions (just because the technology contains multiple parts), and then, in Prisoner's Dilemma terms, defect from the cooperation strategy in order to claim the top spot.

Related: Hal Varian's talk on technology where he discusses the role of substitutes and complementers.

The day the second shoe dropped.

Several months ago I used example of Google' Outlook plug-in to explain how to solve a typical dilemma. Today, by buying DocVerse, a "startup that allows people to edit Microsoft Office files online", Google provided another example of the same problem-solution pattern. What's the difference between the two cases? Last time, Google's target was Outlook; this time, it's the rest of MS Office. Last time, Google engineers built the software themselves; this time, Google business people bought the company that makes the desired software.

In an interview, Jonathan Rochelle, group product manager for Google Apps, said Google acquired DocVerse to make it easier for people to transition from desktop software to online software. The latter is an area where Google is trying to get a leg up over Microsoft, with its Google Apps service, which includes online word-processing and spreadsheet software.

Google is now involved in two strategic battles:

1. against Apple, to dominate mobile software with the Android/Chrome combo;
2. against Microsoft, to dominate server software with Google Apps.

The only question is, Will Google's search cash cow produce enough money to sustain the troops?

tags: dilemma, google, problem, solution, battle, apple, microsoft, course, example, control point

Thinking aloud

iPhone/iPod/iPad sw application approval process as it exists today is not compatible with enterprise IT practices. That is, to get an application deployed inside a company, the company would have to get Apple's approval. It's unlikely that companies, especially large ones, would go for it. Inserting Apple into the IT decision chain infringes upon internal governance model, creates IP/disclosure, and other issues.

This situation presents an opportunity for Google and Microsoft to aggressively pursue mobile enterprise business.

tags: apple, google, microsoft, infrastructure, tool, control, control point, evolution, process

Remarkable how the US still pays millions of dollars for a military technology that can be defeated with a $500 laptop and $25.95 worth of software.

WSJ. WASHINGTON -- Militants in Iraq have used $26 off-the-shelf software to intercept live video feeds from U.S. Predator drones, potentially providing them with information they need to evade or monitor U.S. military operations.

The Air Force has staked its future on unmanned aerial vehicles. Drones account for 36% of the planes in the service's proposed 2010 budget.

Today, the Air Force is buying hundreds of Reaper drones, a newer model, whose video feeds could be intercepted in much the same way as with the Predators, according to people familiar with the matter. A Reaper costs between $10 million and $12 million each and is faster and better armed than the Predator.

I would think that in the nearest future video feeds from police drones will be easily intercepted by hightech criminals.

From a 5-element analysis perspective, this is a very good illustration of how critical Payload packaging is for the overall system integrity and performance. The ability to handle the format of the video feed in question is deeply embedded into all relevant subsystems. Changing the format would require a technology overhaul that would cost the military billions of dollars.

tags: five element analysis, payload, control point, control, information, drones, transportation, 10X, constraint

99-cent digibacks on iTunes

With its new tablet, Apple is getting into the book distribution business:

Contacts in the U.S. tell us Apple is approaching book publishers with a very attractive proposal for distributing their content," Reiner wrote in a note to clients today. "Apple will split revenue 30/70 (Apple/publisher); give the same deal to all comers; and not request exclusivity. We believe the typical Kindle/publisher split is 50/50, rising to 30/70 if Kindle is given ebook exclusivity.

While Amazon built a whole new distribution system, for Apple ebooks will be just another content type on iTunes. Brilliant!

tags: payload, distribution, apple, book, information, system, control point

In this recession, smartphone market behavior contradicts conventional economic theories predicting that demand for expensive goods falls when consumer income falls (inferior vs normal good):

In Europe, smartphone sales are expected to rise 22% in 2009, defying the 21% slump in handset sales predicted by Pyramid Research. In the United States a poll by ChangeWave Research in June suggested that 37% of consumers already own a smartphone, while more than 14% planned to buy one in the next three months.

Microsoft predicts that in a few years smartphones will make up 30% of the volume and more than 50% of the value of the mobile phone market.

This is clear evidence that we deal with a new stage in S-curve, that doesn't conform to standard economics. Another important aspect of this phenomenon is that it's not about the phone itself (hardware), but about many new ways to use it (software):

Apple needed just two ingredients to be successful: ease of use and a wide range of "apps" - small software applications that allow owners to optimise their phone, whether it is Sudoku puzzles or sugar trackers for diabetes sufferers.
It is here where rivals like Samsung falter. With few apps to satisfy the whims of owners

iTunes is a critical control component in Apple's iPhone/iPod architecture. The software was originally built to help users manage thousands of songs, and now it seamlessly manages thousands of applications.

P.S. I would love to insert an annotated S-curve chart here, but my Mac doesn't have the tablet functionality. Damn.

system, mobile, apple, tool, control, control point, niche construction, 

Developers make money on iPhone/iPod applications by luck. Apple makes money by design.

(CNET) More than 100,000 apps are now available for download from Apple's App Store, making it the largest such retailer in the world.

The App Store launched in July 2008 with just 500 applications. The store is now available in 77 countries, which has contributed to what Apple said Wednesday is well over 2 billion downloads.

It also appears that Apple's business model is running into scalability problems:

Most notably, Apple's app approval process has caused frustration with developers, who are sometimes left in the dark about the reason an app is rejected.

As we discussed during the last session of the Model-based Invention/Innovation class, this is a hole that Google can exploit with its Android platform/distribution system. The AppStore situation can be compared to what happened to Yahoo, when they ran into problems while trying to catalog the web. Eventually, search replaced guided portal-based navigation. Most likely, AppStore will be replaced by a free distributed marketplace for mobile software.

tags: mobile, problem, 10x, apple, google, control point, evolution, distribution,  battle

Free Cheese!

An important step in Google Apps evolution:

Google officially rolled out its Apps Script functionality for enterprise users Wednesday, following a limited pilot release earlier this year.

Google Apps Script works mainly within the Spreadsheets app to automate various processes. For example, users can automate the sending of e-mails based on data held in a spreadsheet, or create scripts that communicate with other Web services.

Why is it important? Because scripting allows customers customize and connect their information, which makes Google Apps a lot more stickier within an enterprise. If Google Search disappears tomorrow, people will easily switch to Yahoo or Microsoft. Once Google Apps, with scripts and storage, take hold in the IT space, replacing them would be almost impossible.

According to VentureBeat,

Internal Google tests found that most users favored results branded with the Google logo, even when Google swapped logos with another search engine to serve supposedly inferior results under its own brand.

The highest switching costs are inside our minds.

Wired provides an insight into Google's sales leads (advertisement) generation machine:

... the quality score. This metric strives to ensure that the ads Google shows on its results page are true, high-caliber matches for what users are querying. If they aren't, the whole system suffers and Google makes less money.

It's not the client's money that controls ad placement. Rather, it's Google's own algorithm that determines the price of admission to the club of web advertisers. With so much traffic through its site, Google has the ability to experiment in real time with algorithms and sales strategies. Very clever, indeed. Advertisement is treated as just another piece of content that needs to be matched to the user's search request.