The Week in Geek – June 3, 2007
Seoul Calling: I’m planning to take BC MBAs to Seoul as part of our IME Asia experience in May 2008. It’ll be our first Korea trip. If you have contacts in S. Korea that would be willing to meet with our MBAs next May, please let me know. And if you’re a Korea-based alum, also drop me a note. Hopefully we’ll have a critical mass to match the successful alumni events we’ve had in Bangkok, Beijing, Hong Kong, Shanghai, Taipei, and Tokyo. Also on next year’s schedule: Beijing, Hong Kong, and Tokyo. We’re always grateful for your suggestions!
Note: The Week in Geek will post less regularly during the summer months. The recent hiatus was due to my travels to Asia. New posts, with a summary of two excellent books on China & India will be forthcoming.
The New Facebook is on a Roll
A must read by Fortune’s David Kirkpatrick: A week ago Facebook launched an effort to turn itself into a platform for outside developers, a sharply contrasting strategy to MySpace’s often-closed door, and an effort that may pave the way for a high-value Facebook IPO. My former students know the power of the network effect – open to third party developers and they’ll add value to your platform. This is the rocket fuel – developers choose the open platform and add value, users choose the one with the best/most ‘add-ons’, more users attract more developers, etc. – a virtuous cycle and potentially killer competitive advantage. The new Facebook (now with 25 million users) could very well allow it to become a sort of ‘Windows of the Web’. The one-week stats are stunning. Most notable is music app iLike. The firm is adding 200,000 Facebook users a day – it had just 3 million users prior to offering a Facebook app. Feeds (the once-protested feature that’s now almost universally accepted), coupled with the site’s other features, may make Facebook the most viral software development platform in history, allowing blisteringly fast million-user acquisition rates that make MySpace and Skype adoption seem tepid. Users logging into Facebook will see a feed with a prompt like ‘John Gallaugher added the iLike application’, prompting others to check out what their trusted friends are geeking to. As another example, ‘x me’, a sort of popularity meter, snagged nearly 200,000 users in a week. When Facebook unveiled the applications strategy, it had 65 partners offering 85 new apps. A week later there are 300 applications, many created by dorm room jocks like Zuckerberg. Corporations are in on it too: Washington Post’s Political Compass will tell you where you lie on the political spectrum, and Red Bull has a goofy rock, paper, scissors game. All this also points to a new world of viral advertising for the generation that flies below the TV radar. There is a learning curve on all of this – Facebook shut down an application called “Statistics” that tracked visitors to your Facebook profile (watching user surfing is creepy, and a violation the firm’s terms of service), but Facebook apps may very well turn out to be one of the most significant web-tech stories of 2007. Talk to someone college-aged if you still don’t get what Facebook is all about (my students live in it, saying e-mail is for professors, but you’d never e-mail a friend, you’d Facebook them). The dominance of the platform may allow Facebook to wedge its way into all sorts of markets, from photos to auctions to scheduling. While MySpace first punished PhotoBucket, then bought them for $250 million+, Facebook will let thousands of apps bloom. Another thought: look for the inevitable iPhone/Facebook apps to transform the way we think about mobile computing.
Microsoft joining the Mashup World (Video)
Where will all these Facebook apps come from? Microsoft (Facebook’s ad partner) wants to help. Redmond has several new products that enable application developers to create Facebook services and links between Windows applications other social networking sites. One, called PopFly, is meant for novices and doesn’t require programming. It’s been suggested that ‘if you can use PoweerPoint, you can use PopFly’. The video of the ‘alpha release’ product shows the creation of a gadget that links Flickr photos with a world map. Popfly is cool, but we’ve seen ‘drag and drop’ programming tools before and all have been pretty limited. I suspect the biggest impact from Popfly will be to get power users motivated to move up the application development food chain and learn more sophisticated web programming (think the way WYSIWYG web editors prompted graphic artists to become HTML jocks). Microsoft’s Silverlight and VisualStudio products will let users do more, and to Microsoft’s credit, most of these efforts will create apps that work in Firefox and the Mac Safari web browser, too. Microsoft isn’t the only one offering Facebook apps. Amazon will have book reviews, SideStep will offer a trip-planning services (think linking up with Spring Break buddies or backpackers), Prosper will even offer a consumer-to-consumer loan service app so you can borrow coin from your buddies.
The broader market for tools to create web applications is heating up (and getting confusing). Sun has unveiled a new, consumer-oriented Java. Adobe’s Apollo effort will allow users to create applications that move from the web to the desktop and that run cross-platform (Windows, Mac, Linux, phones?). And Google Gears will allow users to suck down data from the web so programs (think online calendar apps, Google’s new office tools, etc.) can be used when the Net’s not available.
Alibaba Plans IPO
The firm that killed eBay‘s Chinese network effect, and which bought out Yahoo’s China effort (Yahoo is now part owner) is going public in what will likely be China’s biggest Internet IPO yet. Enthusiasm is high for the firm founded by Jack Ma (left). China already has 137 million Internet users, second only to the US, and all arrows point up. One of my summer research projects is considering why China’s home-grown Internet efforts like Baidu, NetEase, Alibaba and Alibaba’s Taobao auction site have largely dominated their Western rivals. If you have thoughts, I’d love to hear them!
Microsoft’s Surface Computer – a PC in Your Coffee Table (Video)
Remember in Minority Report when Tom Cruise gestured at a computer screen to move and sort images? Well Microsoft is ready to roll out a similar gizmo to be embedded in coffee tables and countertops. The video is super-slick and very much work a view. Drop a camera on the desk and photos are downloaded to the tabletop. Put down your phone and you can swish the photo image to sync into your mobile. Maps are likely the most practical app (find a local & dump it into your mobile). The first multi-touch boxes will retail for $5-$10K, and initial clients are high-end hotels (geek chic sells for a strong segment of business travel) and Harrah’s Casinos and https://www.bcasino.co.uk/ (where a BC grad runs marketing). Today it’s costly and impractical for most use, but tech gets real cheap, real fast.
Media Moves: Will the New Online Advertising Models Click?
Knowledge@Wharton summarizes moves in the smokin’ online ad space. Microsoft bought aQuantive for $6 billion, Google bought DoubleClick for $3.1 billion, Yahoo purchased the 80% of Right Media it doesn’t already own, and ad firm WPP gets 24/7 Real Media for $649 million. And that’s just in the last six weeks! The race to consolidate the online advertising industry comes at the same time that advertisers are demanding more return on their marketing spending.
Apple Overhauls Music Store: Adds iTunes Plus, iTunes U
Quick Apple notes: Apple has rolled out iTunes Plus, offering high quality (256 kbps AAC) encoded tracks from EMI for a higher price ($1.29) but without copy protection. Most significant, Apple claims that by year-end more than half of the songs on iTunes will be offered in DRM-free iTunes Plus versions. Apple is taking some heat because the tracks have user names & e-mail addresses embedded in them. At the same time, the firm also announced iTunes U, a service delivering professorial podcasts, campus tours, and other bytes from campus. A quick shoutout to BC as being the first school in the Northeast to sign as an iTunes University. Official rollout will begin, soon, but podcasts of my courses have been available since last Spring. Thanks for the feedback from those who have been listening! And thanks to those who nominated me for the TWIN Award. Prof. Kane & I both scored top honors (along with many other innovative BC profs). I had no idea this was in the works until the TWIN folks called me. The 80GB video iPod prize is nice, but I’m most flattered to learn that so many sent in nominations. That was incredibly kind and thoughtful. I’ll try to keep the quality high (Facebook apps & PopFly for the Fall’s course?). Suggestions are always welcome!
A shout-out is due to a couple of the teams that developed particularly strong papers for this past semester’s group projects. The Cemex case (see white paper) and the Virtual Worlds chapter were both unanimously seen by peers as top-tier work, and stand alone would make great class reading for any course. Feel free to check them out. Well done – particularly for teams made largely of underclassmen!
One more bit on Apple. The firm has upped the max storage for AppleTV from 40 to 160GB, and will add YouTube content to the service (a natural with Google’s Eric Schmidt on Apple’s board). Looks like the initially limited box is being quietly positioned for greater things.
Amazon Announces DRM-Free Music
Speaking of neat video efforts, the Amazon/TiVo pact still looks the most robust, and our friends at Amazon have also recently launched a DRM-free music effort of their own. Apple partner EMI is on Amazon, along with 12,000 labels offering ‘millions of songs’. According to Bezos, the Amazon store is to be entirely DRM free, offering tracks that ‘play on any device’. Also, related to the mash-up talk with Facebook above, interested folks may want to visit Streampad. Its a web based mobile iTunes built on Amazon Web Services that allows you to access your music anywhere you have an internet connection.
Google Street View Succeeds Where Others Have Stumbled
Google maps now sports street-level views, but both Amazon’s A9 and Microsoft’s Live Search have offered this feature for months. No one paid much attention to the earlier efforts, but Google’s is attracting boffo attention. How come? The success of the Google launch demonstrates the importance of product design. The product is easy to use, has high quality images, and uses technology most users already have in their browsers. Images were collected witha camera mounted on top of a car (see hte image of a VW bug used to take the shots). San Francisco images are sharper, since Google shot those itself (vs. other cities handled by Immersive Media). Google Street Level Views does raise privacy concerns, see Wired even running a site ranking the most “noteworthy” (?) inadvertent urban images. Up to something you don’t want the world to see? Look out for that camera-toting bug!
Watch Ads – Get Your Bills Paid
Blockbuster has tried in-store returns and lower prices to compete with NetFlix, but hasn’t made much of a dent in the leader’s share. Now it may be offering a free service if users agree to watch about 20 minutes of video and answer questions. The would-be partner, BrightSpot Media, already has deals with Major League Baseball, the NBA, and GameFly. Watch 30 BrightSpot ads for a free month of mlb.tv. Watch 40 ads and get a month of NBA games on TV and the web. Ford, US Airways, and NBC/Universal are among the firms running ads on BrightSpot. Compete.com offers interesting stats & graphs on the battle for DVD services. I’m skeptical that Blockbuster can make a dent. I’m not convinced most NetFlix customers will watch videos, then go to a PC to answer questions. And even if they are, hat’s to stop NetFlix from developing a similar service? The firm arguably already has a killer database filled with rifle-scope profiling technology. Unless BrightSpot/Blockbuster holds a patent and can defend it, it NetFlix is primed to be a fast follower.
Electronics industry outlines plan for national e-cycling program
Early recycling efforts were a travesty, with as many as 80% of machines collected for recycling sent overseas to be harvested in grotesquely polluting operations. Hopefully this is about to change. The Electronic Industries Alliance has released an outline for a national recycling program for household TVs and technology equipment.
The Trouble with MBAs
Fortune runs a one-pager on what is pitched as a novel approach in MBA programs – team projects. Are they kidding? BC has been running team projects for two decades – real world consulting efforts with real clients. Add to that the business plan competition, the Chinese consulting projects, hands-on work managing the endowment, and so many others. Fortune offers some of the finest business journalism out there, but teamwork in MBA programs just isn’t news, folks. Maybe you need to take off the blinders and look beyond the very-top tier of the rankings race.
Six Kid-Based Virtual Worlds Top 2 million unique users/month
Kid-focused virtual worlds are turning into a big business. For the current generation, having an avatar (or several) will be as common as having a pet was for their parents. At 2 million unique useres each month, Gaia is bigger than SecondLife (based on regular usage). NeoPets has 4.2 million unique users. Club Penguin (worth half a billion?) has 4.1 million. Even General Mills Millsberry boasts 2.2 million users. And WebKinz (immensely popular with my son’s first grade crowd) also has 4.1 million. WebKinz is tame – no stranger chat, limited commercialism, and access that comes with a fuzzy stuffed animal – but some of the efforts are disturbingly commercial and far too unfettered. Off limits for all but much older kids.
Not Just Direct from Dell
Sustainable competitive advantage doesn’t mean permanent competitive advantage, and firms have to revisit their strategy as markets shift. Dell’s 15 year run at direct sales boasted killer margins and turned a kid in his dorm room into the #1 PC manufacturer… for a time. Now contract manufacturers have come close to Dell’s prowess, the market has shifted toward laptops (where users want to see, hold, and type on the machines), and prices have dropped so much that a 10% cost advantage doesn’t mean as much as it used to. The weakness in direct sales has prompted the Round Rock firm to begin selling PC bundles at WalMart, with other retailers to follow. For all the negative press on Dell, it’s worth noting that we’re talking about a profitable firm with $57 billion in revenues, and a cash flow from operations of more than $1 billion a quarter. Dell’s lining up some significant executive talent, hiring two former Fortune 500 CEOs as CFO (Don Carty, who ran American Airlines) and Global Operations Chief (Mike Cannon, who ran Solectron). Still, Fortune’s recent analysis of the turn-around suggest a radical reworking of the firm’s core strategy.
Carroll Capital
BC launches a new online newsletter for events in the Carroll School. Enjoy!