Invention of the Day - Instant Messaging

It's hard to imagine today's life without instant messaging. The service has become one of the Dominant Designs in the Internet era. As we write in Scalable Innovation (Chapter 13):

Dominant Design is an implementation of a new functionality that the market adopts as the prototype for future implementations. Simply put, the dominant design is what everybody thinks all products or services in the new category should imitate.

US Patent 6,449,344

Today's IT giants — Google, Facebook, IBM,  Microsoft, Yahoo, Alibaba, and others provide instant messaging services as a "must have" feature. Recently, Facebook paid $19B for Whatsup, a company that built its mobile service using the instant messaging ideas. 

The original technology was developed in 1996 by an Israeli company Mirabilis and released during the same year as ICQ chat software. The service was extremely successful, even despite being characterized as the world's "ugliest website." 

In 1998, AOL bought Mirabilis for $287M - a pitiful sum by today's Internet M&A standards. Eventually, AOL rebranded the service as the AOL Messenger. 

Instant Messaging had other important implications for the world of technology. First, ICQ influenced the development of other peer-to-peer (P2P) services, such as Napster, Gnutella, Skype, and others, which revolutionized content distribution and communications in the beginning of the 21st century.

Second, the business success of Mirabilis put Israel on the global map of Internet innovation and served as a catalyst for the creation of a thriving tech entrepreneurship culture in the country. 

Third, Instant Messaging helped initiate the Internet services era that exploded with the introduction of the iPhone and other smartphones.

Arguably, the invention of Instant Messaging is as important to the world as Graham Bell's invention of the phone in 1876. 

tags: invention, innovation, facebook, google, microsoft, dominant, design, 10x

The PC: How Steve Jobs created a huge market for Bill Gates' software.

If you believe Wikipedia, the story of the PC begins in the 1950s with IBM 610, a Personal Automatic Computer (PAC).

Rule #1: Don't believe Wikipedia when it comes to understanding innovation. Wiki editors know how to compile a myriad of data points — and I love them for that! — but they don't understand that for technology innovation the scale is all that matters. IBM 610 was a one-hand clap in the world of computer projects. Very few people heard about it, and even fewer people, if any, used it for practical purposes.

The first real Personal Computer was Apple II conceived by Steve Jobs and Steve Wozniak in 1977. Steve Wozniak put together the computing hardware part; but Steve Jobs turned the kit into a real innovation when he thought about incorporating the power supply and keyboard into one box. With the addition of the floppy drive, the box turned into a breakthrough innovation.

Source: Triumph of the Nerds. 

Rule #2. Don't believe people when they apply a modern technology term like "Personal Computer" retroactively. The Personal Computer became a major innovation when it took the shape of a consumer box that you use for running shrink-wrap software. Computing machines before Apple II were either hardware kits for hobbyists or closed microprocessor boxes with proprietary software for industry use .

Bill Gates and Paul Allen anticipated the era of the Personal Computer, but originally they thought about it as a machine for hobbyists. In 1976, Bill Gates even wrote a letter to hobbyists who, in Gates' words, were stealing his work:

.....

Before Apple II, the majority of users were hardware tinkerers. After Apple II, the majority of users were consumers who used the PC to run apps. The hobbyists became software developers interested in selling their apps to consumers, rather than stealing software from Bill Gates and Paul Allen. A new large market for software was born.

When IBM entered the PC market in 1981 they contracted Microsoft to write an operating system for their computer. The rest is history. Just as young Bill Gates had anticipated, the world of personal computing needed a lot of software. Steve Jobs of Apple Computers happened to create that world, helping materialize the Gates' business vision.

Why do we care today about the old PC? Because the same innovation pattern keeps repeating in Silicon Valley. Apple ][ eliminated the requirement for software enthusiasts to know a lot about hardware. Instead of tinkering with hardware components, they could now concentrate on writing cool apps to benefit consumers, while hardware engineers focused on driving the performance of the box.

Similarly, in the 1980s Sun Microsystems enabled developers to write ubiquitous UNIX software that powered the Internet server revolution of the 1990s and eventually migrated to the Linux platform.

Most recently, in the 2000s Google created the MapReduce technology that harnessed highly reliable, distributed, commodity hardware server systems to the purposes of the developers of networked data services. Another example would be the Android OS.

As we explain in Scalable Innovation, Chapter 4 (System Interfaces: How the Elements Work Together), the emergence of new interfaces between system elements decouples innovation cycles and leads to rapid growth. To innovate effectively, we should recognize the "PC moments" in major technology developments.

tags: invention, innovation, scale, machine1, machine2, microsoft, tgisv

Microsoft anti-trust timeline.

Source

Time showed that the government's anti-trust actions didn't make much difference in the course of technology developments. Google, Apple, Facebook, and others overtook Microsoft without any help from the US and EU regulation bodies.

On the other hand, should the US order Microsoft breakup, smaller Microsoft entities had to be more innovative to succeed in the market place.

tags: control, background, evolution, microsoft, technology

Google: Let's Do Some Evil!

VBeat complains about Google using its dominance in the search market to promote Google+. When Microsoft used a similar market dominance tactic to promote Office and other products on Windows, a lot of people in the developer community thought them to be evil. Now we see how corporate logic takes over good intentions on the Internet.

Jan 14, 2012. VBeat -- Google’s introduction of Google+ links into its search results is a big departure from the company’s previous more neutral approach to search, and it exposes the company to a huge risk.

By offering us only Google+ results, Google is forcing us to go outside of Google to find a fair representation for social results competitors like Facebook or Twitter. Those companies have larger usage, and therefore they have more relevant results.

Twitter is open, Facebook is semi-open, therefore, Google will be able to dominate search, including its social component. Will Facebook go the way Yahoo Maps went when Google started favoring its own mapping service? I don't think so. But the gloves are off in the social networking market. First, Google ripped off Facebook user interface, now they start favoring Google+ in search results. I won't be surprised if Android comes with Google+ as the default social option. Somehow they need to pay for this $12.5B Motorola acquisition. For all intents and purposes, Google is the new Microsoft.

Go 49ers!

tags: business, model, domination, commerce, platform, google, microsoft, social, networking

Patent battles. Microsoft vs Motorola - 1:0

Microsoft owns a fairly broad patent on email-based meeting scheduler for mobile devices. Windows CE wasn't great as an operating system, but at least it resulted in some quality IP. After the dust settles, Motorola and Microsoft will probably make a licensing deal similar to the one Microsoft and Samsung made earlier this year.

Dec 20, 2011. PCWorld - A U.S. International Trade Commission (ITC) judge on Tuesday ruled that Motorola Mobility infringed a Microsoft patent in making its Android handsets but did not violate six other patents for which Microsoft had made claims against Motorola.

Claims...

 9. A method of operating a mobile device, comprising:

providing a first object store on the mobile device;

providing a first application program on the mobile device;

maintaining objects in the first object store with the first application program;

intermittently synchronizing the objects in the first object store with objects in a remote object store;

receiving user input information indicative of a meeting request;

generating a meeting object with the first application program such that at least some of the user input information defines properties in the meeting object;

generating an electronic mail meeting request object based on the information in the meeting object; and

storing the meeting object and the electronic mail scheduling request object in the first object store for transmission.

Internet weather forecast: cloudy, with lots of smartphones.

Transition to Internet cloud is becoming unstoppable. One of the strongest indications of impending massive growth is concerted industry efforts to standardize a new technology. By standardizing, market players try to turn a unique technical solution into a commodity so that they can ship boatloads of cheap substitutes as well as complimentary products.

Today, the Open Virtualization Alliance, a standards consortium of companies focused on server-side virtualization, announced new membership numbers - 200 from 65 three month ago. According to CNet, the key issues they are trying to address:

• Economics--VMware [the dominant virtualization vendor] currently controls pricing. Having a credible choice gives customers an ability to negotiate with their vendors. An open alternative gives more leverage.
•  ...They [VMWare] are also seeing customers moving from testing private clouds to starting to deploy automated, standardized infrastructure at scale.

Even if the consortium does not succeed for a while - standards always take time - the standardization effort itself shows that:
a) the technology works and many people know how to produce it;
b) the technology scales, i.e. it can be deployed in a large number of instances;
c) the need to scale the technology is real.

In addition to that, Microsoft announced that Windows 8, its next generation OS will be more virtualization friendly than Windows 7, and [separately] the company is in discussions with Comcast and Verizon to enable video streaming to XBox. Again, the intent is to make the cloud cheap and scalable.

tags: cloud, system, s-curve, infrastructure, information, computing, 10X, growth, source, microsoft, internet

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

Ripping off. Take 2.

Dan commented on my post "Ripping-off for fun and profit":

The original Mac was partly a rip off from Xerox Park and the iPod was definitely not the first digital music player. Then again, Apple made significant improvements to the product rather than just straight copying.

I think it's important to address Dan's point in a separate post because his is a very common attitude, stemming from the difficulty to see the difference between invention and innovation. And it's not only about making improvements.

The slide below is from my lectures at "Principles of Invention and Innovation". It shows a chart with dimensions Nobody - Everybody (horizontal) and Idea - "It works" (horizontal). Invention is marked by the blue dot in the left bottom corner. It occurs when one person or a small group of people comes up with an idea. Opposite to Invention, in the upper right corner, is Innovation, marked by the red dot. The path between Invention and Innovation involves turning ideas into working products/ services and having a lot of people use them in real life.

This simple chart allows us to map companies' entry points into a particular market. For example, when Google ripped off Facebook's design and entered social networking with Goolge+, it was way to the right. That is, not only the idea was not new, but it was already implemented by Facebook on a massive scale – hundreds of millions of users. The same can be said about Microsoft when it entered advanced GUI PC market with Windows 95, or its Office and XBox products. All markets with working products built according to the same Invention had already existed and had millions of users. The goal for the company was to take these users away from existing competing implementations, either by offering a price/feature advantage and/or simply applying the marketing muscle.

In contrast, Apple's entry into the GUI PC space happened much earlier. At the time Wozniak and Jobs debuted their machine, the market for such PCs simply did not exist. Xerox machine was basically a lab demo, with no market traction whatsoever. Apple's goal was to create a market, with software, additional hardware, distribution channels, and etc. The same was largely true for Apple's iPod I and iPod Touch introductions. Google had a similar entry into the text ads/search market. The risks in those two types of entry, one to the left and another to the right on the chart, are totally different.

Even Facebook, with all the hoopla about Mr. Z stealing somebody else's idea, entered the market closer to Apple's or Google circa 2000 path. If they, Facebook, were smart enough and filed for patents at the right time, Google would be in the same legal trouble their Android customers are right now with regard to Apple's patent suits. Different market entry strategy entail totally different business risks, that is why it's important to understand at least the basic difference between Invention and Innovation.

tags: invention, innovation, market, patent, synthesis, s-curve, system, business, competition, apple, google, microsoft

Ripping off for fun and profit.

"Jobs was angry because he felt that Android was ripping off the key features of the iPhone."

Nowadays, Mark Zuckerberg probably feels the same. With Wave and Buzz, Google's home-grown attempts at social networking, Google tried to use gmail to get people into their user base. It didn't work because Wave and Buzz had interfaces and functionality very different from Facebook, a dominant design in the social networking space at the time. People decided not to move into an unfamiliar territory.

Now, with some tweaks, the new Google+ service is an obvious ripoff of Facebook, with a little bit of LiveJournal functionality - circles instead of friendlists - thrown in. It feels familiar, it looks familiar, it acts familiar. People seem to be moving in in millions.

Innovation by ripoff appears to be a winning business strategy for Google. They've done it with other major commercially successful products: Overture (text ads model - AdWords), Yahoo Maps (Google Maps), Youtube (acquisition after Google Video failed), iPhone (Android), and now Facebook (Google+). In many ways, this is similar to what Microsoft did in the 1980s and 90s - use their dominant operating system as leverage and a cash cow to rip off successful technologies: integrated software development tools, Windows PC interface, video gaming machine, office suite software, web browser, database/SQL solutions, and others.

No wonder Steve Jobs was angry about Android. It probably felt like a déjà vu, though this time it was Google, not Microsoft, ripping off Steve's ideas.

By the way, if you are into vintage bumper stickers, there's one for you on eBay right now:

tags: innovation, technology, business, model, platform, computers, history, microsoft, apple, google, facebook, social, networking, information

Open, as "with holes."

One of the biggest holes in the Open Innovation approach is its lack of a working Intellectual Property  model. For example, Google publishes its Android operating system as an Open Source project and mobile device manufacturers, such as HTC, Motorola, Samsung and others pick it up for free. But at the same time, the manufacturers are vulnerable to patent suits because Google does not indemnify them from patent infringement claims when they use Google's technology. Just a few days ago, ITC ruled that HTC infringes on two Apple patents and can be barred from exporting Android smartphones into the US. Similar suits are pending against Motorola and Samsung.

In contrast, Microsoft, which licenses its proprietary mobile OS to device manufacturers, provides a reasonable protection against such legal attacks. It's quite possible that for software developers the uncertainty surrounding Android's future becomes a factor in the decision about the go-to-market application platform. It could also become a barrier to the adoption of Android in the enterprise market.

At the same time, it's important to realize that in countries that don't enforce Intellectual Property rights all kinds of mobile devices can be put together at zero licensing cost. There's a whole cottage industry of youtube videos on how to run Android on iPhone. Further, you can freely buy one of those hybrid smartphones in China at a fraction of their US retail price.

tags: mobile, information, intellectual, property, business, model, control, innovation, technology, patents, google, apple, microsoft

Over the last month, Google and later Microsoft pulled out of the power meter business (thanks to John Kelly for the link).

I'm really tempted to say, Told you so!
Data-driven approach works only if you have the ability to change the situation. For example, you can easily calculate fuel efficiency of your car, but if you don't have the money to buy a new fuel-efficient car or if purchasing the car doesn't provide any savings, repeated calculations or metering won't help you at all.

The assertion that consumers will reduce their energy consumption by up to 15 percent has never really panned out in reality. It's been a favorite of PowerPoint presentations, but the actual savings are often far lower. OPower has some of the best results for reducing energy consumption via information and on average it gets consumers to reduce consumption by 3 percent or so. EcoFactor, which automates energy management, says it reduces power by around 17 percent more than demand response services: the key to EcoFactor's success is allowing machines, not humans, to handle many management tasks.

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

Web is dead (continued)

CNet reports:

[Google] is set to launch Google Place Search as a standalone search option, much the same way Google users can search for images, news, or products. It will bring the Google Places listings that business owners can claim into the main search results pages, rather than confining them to searches done within Google Maps as was the case prior to today.

Searching for places should be a separate application on a multi-touch display because place is a "zoomable" entity, which has many fractal aspects: map, history, people, menu (if it's a restaurant), reviews, contact info, etc. Unfortunately, Google is so tied to the web, the company can't break loose from its old platform, the browser, and the old user interface paradigm, clickable links on the page. Just like Microsoft, with its calcified roots in Windows OS, Google is becoming stuck in Berners-Lee's 1989 vision of the Internet.

Background reading: The Web is Dead (Wired).

tags: internet, information, platform, evolution, interface, google, microsoft

Recessions are great for entertainment companies because people have a lot of free time on their hands. Moreover, playing social games is much cheaper than even going to the movies, so we can expect a strong new industry emerge from this economic downturn.

TechCrunch: Google has quietly (secretly, one might say) invested somewhere between $100 million and $200 million in social gaming behemoth Zynga, we’ve confirmed from multiple sources. The company has raised somewhere around half a billion dollars in venture capital in the last year alone.
...
Zynga’s revenues for the first half of 2010 will be a stunning $350 million, half of which is operating profit. Zynga is projecting at least $1.0 billion in revenue in 2011.

Another quiet milestone along a similar path was reported by Bloomberg about a week ago:

Microsoft Corp.’s Xbox Live online video-game service probably broke the $1 billion revenue mark for the first time in the year that just ended, helped by sales of movies, avatar accessories and extra game levels.

tags: games, internet, business, industry, entertainment, economy, microsoft

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

Search by itself doesn't have a lot of staying power. Google can be relatively easily replaced by Microsoft or Yahoo. On the other hand, personal or corporate content in the cloud can be hardly moved from one provider to another. Maybe in the future it will be possible, e.g. by having a virtual rather than real data center to host all the data and applications (a la Google Docs).
In the meantime, this quote below is an indicator that content providers are looking for new revenue streams.

Reports have surfaced over the last several months, most recently in the Financial Times, that News Corp. is in talks with Microsoft to enact a plan that would see News Corp. properties hiding their content from Google's search engine in return for exclusive listing with Bing.

tags: cloud, tool, transition, computers, content, evolution, value, google, microsoft, network

BizTech Dilemma of The Day: Google vs Microsoft

== To be used as an illustration for a Dilemma-busting session (Separation Principles) ==

Background

The tandem of the Microsoft e-mail client (Outlook) and server (Exchange) has been a dominant force in corporate IT world for years. Now, Google is trying to break into this lucrative market by offering companies a competing product - Google Apps, a software-as-a-service suite of cloud applications for e-mail and information sharing. Unfortunately for Google, there's a problem:

there apparently is a sizable enough number of workers that refuse to move off Outlook, meaning that IT directors who want to sign up with Google were forced to maintain a Microsoft Exchange server to placate those folks while moving everybody else to Gmail. An alternative where Outlook users are connected to Gmail through IMAP got the job done, but at the expense of a severe performance hit, said Chris Vander Mey, a senior product manager with Google.

Dilemma formulation

Thus, we can formulate the first-level dilemma:
- on one hand, IT managers need to continue maintaining the Microsoft software, because it is familiar to their company's workers (Condition 1)
- on the other hand, IT managers need to stop maintaining the Microsoft software, because, for some of them, Google provides a more cost-effective solution (Condition 2).

By separating in space, we arrive at a configuration, where Outlook remains on the client (Condition 1), while Google Apps becomes the new server (Condition 2).

The IMAP solution moves us in the right direction, but it doesn't go far enough. The dilemma it tries to avoid can be formulated as follows:
- one one hand, the e-mail client should use the MS Exchange interface, because it provides the best performance (Condition 3);
- on the other hand, the e-mail client should not use the MS Exchange interface, because the new IT infrastructure runs GoogleApps servers (Condition 4).

In other words, the client should speak natively both "languages". The question is: When? By separating in time, we get a client that at one time speaks Exchange, and at another time speaks GoogleApps.
When does it need to speak Exchange? When it talks to Outlook user interface application. When does it need to speak GoogleApps? When it talks to a GoogleApps server.
As a result we get a solution of a plug-in that leaves Outlook unchanged, but "fakes" an Exchange interface for it.

An alternative solution would be to separate in space, i.e. have a server-side Exchange-GoogleApps translation module (e.g. a virtual implementation). Does it makes sense? Maybe for Microsoft, but not for Google. Mostly, because Google wants to, eventually, get rid of Outlook clients altogether. Also, e-mail clients that don't have Outlook, e.g. mobile devices, can sync with GoogleApps directly, and they don't need an Exchange translation module.

The end-result: a set of configurations where legacy Outlook clients (PCs) with lots of processing power and bandwidth use a plug-in, while mobile clients use native GoogleApps interfaces.

==

Notes:
Also, see Principle #24 (Intermediary) in the contradiction resolution matrix. It would be ok to apply it here right away, but it won't be specific enough to provide adequate criteria for configuration choices.

Three diagrams are needed to illustrate various problem configurations.

Dictating the pace of innovation

Steve Jobs in a 2008 interview describes the benefits of owning an operating system:

"That allows us to innovate at a much faster rate than if we had to wait for Microsoft, like Dell and HP and everybody else does. I mean Vista took what -- seven or eight years? ...we can set our own priorities and look at things in a more holistic way from the point of view of the customer. It also means that we can take it and we can make a version of it to fit in the iPhone and the iPod.

We can clearly see Apple's advantage on the 10X diagram. In addition to it, the introduction of the AppStore enables Apple and its developers to run innovation cycles at breakneck speeds. Very few companies, if any, can match this.
Furthermore, with the newly acquired silicon design capabilities, Apple might be able to beat its hardware competitors at their own game.

Cnet on Microsoft's strategic move into cloud computing:

Microsoft also now understands that its platform must span every kind of device--PC, notebook, smartphone, car, home, etc.--and offline scenarios. Microsoft missed the Web search revolution, but it's not going to miss out on the much bigger revolution--the move to the cloud over the next two decades.

Google is building a competing ecosystem from the ground up with similar characteristics and a desire to attract millions of developers. Amazon is pushing its elastic computer cloud, and Rackspace, EMC, IBM, and many other companies are trying to get a piece of the action. Most the cloud companies are focused on hosting services, but the biggest piece will be platforms-as-a-service with developers creating and running their applications for on a cloud operating system.

Microsoft's best shot would be to go after the enterprise market. They can leverage MS Office installed base and enable access to shared documents and applications for smartphones, netbooks, laptops, etc. The enterprise market is a better business target because it allows Microsoft to move away from the ad-supported model where Google dominates.
As we discussed in the class last spring, the battle for the back-end, i.e. the cloud, is the next step in technology-business evolution of computing. Proliferation of smartphones, spurred by iPhone, is going to accelerate user adoption.

p.s. I wish blogger would allow me to draw diagrams!