The Week in Geek™ – March 24, 2011
I’m once again in ‘crunch time’ as I prepare the June revision of my textbook (read it free online here, or buy print & e-Book versions here). As regular readers know, the Week in Geek may become more of a ‘Month in Geek’ during such times.
The Cloud: Battle of the Tech Titans
When geeks talk about the cloud they mean “the ethereal place somewhere on the network where work gets done”. It’s drawn in diagrams as a cloud because it doesn’t really matter where it is or what hardware it’s on as long as the job gets done safely & reliably. And cloud computing is smokin’! Most think this is a race of the “Big Three” – Amazon, Google, and Microsoft –high profile firms with very different origins. But a gaggle of startups and larger tech shops are also in the game. IBM raised its 2015 cloud revenue forecast from $3 billion to $7 billion. AT&T is building an Amazon-style cloud, and Verizon dropped $1.4 billion to pick up cloud firm Terramark Worldwide. And it is an arms race. According to this BusinessWeek cover story, Amazon is adding enough computing muscle to power one whole “Amazon.com circa 2000” (when the firm was a $2.8 billion business). The biggest of Amazon’s cloud palaces can reach 700,0000 square feet, or about the size of 16 football fields. Cloud are ‘big’ because data use is exploding & firms can’t keep up. “This year, according to IDC, the world’s digital universe will reach 1.2 petabytes, or 1.2 quadrillion megabytes. If you take every word ever written in every language it’s about 20,000 times that” (see ‘Cloud Math’ graphic).
Amazon’s cloud is called AWS and analysts think that business will bring in three quarters of a billion dollars this year. Netflix uses it to stream movies (talk about coopetition – Amazon recently announced streaming bundled with Amazon Prime two-day shipping subscription). Zynga uses the Amazon cloud to handle usage spikes. The craft marketplace Etsy uses the Amazon cloud to analyze purchases & create personalization services, letting Etsy’s small artisan producers have access to code engines that only the big guys could previously afford. Take that, Gap & Ikea! The cash-strapped City of Miami has used the cloud to build a service that monitors nonemergency 311 requests. The cloud also allows firms small & large to throw “big iron” computing behind one-off problems. Northrop Grumman dropped 1.3 million files into Amazon’s cloud and trained cybersecurity learning algorithms in less than a day. Kraft leveraged Microsoft’s cloud service “Azure” to merge IT systems with Cadbury after the M&A. Microsoft’s cloud also allows the 8 person finance/tech firm MarginPro to help banks price commercial loans. The math is great – for every $10 million in revenue the company makes off its work, it pays just $1,500 in cloud fees to Microsoft. No scrambling to free up extra cycles in house – a “guy in a cube” can now pay by the drink as need arrives. And AWS and its competitors are now a catalyst for startups, with VCs now reportedly handing out Amazon gift cards.
The cloud also requires a new skillset, but it’s one you can learn at your desk. We’ve moved way beyond “LAMP”, with today’s engineer leveraging a whole new set of tools that might include Casandra, Hadoop, NoSQL, and Voldemort. Want more detail on Cloud Computing? There’s fun and comprehensive coverage in the chapter “Software in Flux”.
Retailers Struggle in Amazon’s Jungle
It was a great opportunity spending time with students at Amazon HQ in early March – the firm is a stellar study of tech-enabled competitive advantage. Amazon is not “the Wal-Mart of the Web” – it’s better! A recent Wells Fargo study showed that Wal-Mart was 19% more expensive than Amazon (assuming no taxes & shipping). The price gap is about half as wide if customers pay standard shipping (see image from WSJ at left). And of course Amazon’ll give you free shipping if you pony up $79 for an Amazon Prime subscription (and, as mentioned above, they’ll throw in free video streaming). Amazon now gets most of its revenue from non media products (meaning products that aren’t books, video, or music). And Bezos knows SEO – a study of 100 product category search terms showed that in a majority of the listings, Amazon snagged the top organic search spot on Google.
Amazon is so big the law of large numbers should mean growth will slow, right? Well, Amazon’s sales rose 40% last year (to $34 billion) – and that was in a recession! Startups can try to compete, but Amazon’s got a 15 year experience jump on them. Timing builds scale, brand, and expertise. Get a tasty sub-market like shoes or diapers? Amazon will say “get in my belly” (it bought Zappos for $928 million in 2009, and Diapers.com for $545 million in 2010). The Wells Fargo study above is also fascinating because it showed Amazon’s nimble responses: Two months after the initial survey Amazon had more items in stock than its rivals, and when rivals were out-of-stock, Amazon raised prices an average of 10% vs. the first period studied. Yes, they’re big, but they’re also drenched in data, keenly observant, and stealthily nimble.
Can OnSwipe Steal Magazine Sales Back from Apple?
The reading experience on the iPad is great. You hold it at the length of a magazine rather than hunching over a screen, it’s possible to highlight text and take notes right on the device, the content is limitless and served up in a magnificent digital buffet, its always with you, and (key for Prof. BadEyes) it’s usually a snap to increase font & image size. But publishers are still unhappy. As the consolidating storefront, Apple has the potential to gather a massive amount of users data that publishers covet. Few are excited about sharing 30% of iTunes sales with Apple. Now a startup hopes to move the tap & swipe user interface out of the app and onto the web, bringing an app-worthy UI experience to the browser.
OnSwipe’s interface works with tablets and smartphones, and is designed to be cross-platform – iOS and beyond. The firm plans a launch later this spring with 20,000 content providers (although much of that will come from integrating with WordPress and Tumblr).
Full-screen magazine-like ads will pop up at a point determined by publishers – say after a certain number of articles read, and publishers will eventually be able to choose to provide their own ads or work with an OnSwipe’s ad network. The firm is started by Jason Baptiste (who studied at BC) and Andres Barreto, and has managed to recruit some serious advisory and backing cred. Former execs from the two top mobile advertisers AdMob (bought by Google) and Quattro (bought by Apple), sit on OnSwipe’s board. The firm has raised $1 million in funding from super angel Ron Conway (who was in Facebook, Google, PayPal, and WePay among others), Morado Ventures, and Spark Capital (VC to Twitter, Boxee and key content source Tumblr). I’m hugely excited to host Jason Baptiste, and Spark Capital’s Alex Finkelstein in class on Tues., April 14, 4:30-6pm, Fulton 117. All are welcome to drop by (as long as there are enough seats for my students).
Zynga’s Farmville, Cityville Developer Tells What Makes Games Great
Zynga is a beast. The firm dominates three of the top four spots on Facebook. Some value the firm at $10 billion (that’s bigger than EA and just $3 billion shy of Activision Blizzard), and Zynga founder Markus Pincus is now a billionaire (at least on paper). The firm recently made public that it expects to rake in $1.8 billion in revenue this year, and $630 million in profits.
AllThingsD offers some fun facts on the gaming giant. For the full impact on how virally Zynga games spread, consider that in the first 30 days Farmville brought on one million players, and CityVille took in 14 million. A recent talk by Mark Skaggs, Zynga’s VP of product, claimed moms are where the market is (the average Farmville user is a 43 year old woman). Staff call Facebook the “matriarch network”. Others have called Farmville the “new soap opera”. Zynga investor & Kleiner partner Bing Gordon is credited with coming up with the idea for a ‘farm game’ (Gordon, who we bumped into on an earlier TechTrek, was previously Chief Creative Officer at EA). Boston College has gotten an inside look at Zynga recently – we look forward to an alum meeting in May, we just got back from Zynga HQ in March, and in February we visited Zynga Boston in Central Square, Cambridge. Oh yeah – and Zynga is hiring (the firm grew from under 400 to 1200 employees from Sept. ’09 to Sept. ’10)!
SXSW 2011: SCVNGR’s Seth Priebatsch on how gaming will change the world
A keynote at South by Southwest Interactive (SXSWi) means you’ve made it in the world of social geekdom. Previous keynotes have been given by founders of Facebook and Twitter. This year SXSW tapped Seth Priebatsch, the 22 year old CEO of Cambridge-based SCVNGR. And SCVNGR is on a roll. The firm raised another $15 million at a $100 million valuation this past January, passed 1 million users in Feburary, landed a deal as a native app on Sprint 4G Android handsets, and earlier this month launched a new daily-deal / loyalty generation app called LevelUp (initial roll-out in Boston & Philly). LevelUp rewards loyalty (vs. the “one and done” deals at Groupon which have generated criticism from some retailers). Priebatsch hopes SCVNGR can ‘crack the science of loyalty’ through a combination of location-based deals and good incentive mechanics. Here are slides from SXSW, as well as Seth’s TEDxBoston video).
SCVNGR has also a number of notable game triumphs. A recent campaign for the chain Buffalo Wild Wings brought in 33,000 new customers and saw 30% of them come back within seven days. Another campaign with Dunkin Donuts runs ‘til the end of March, and has users vying to win Bruins gear, and Celtics and Bruins tickets while completing Dunkin-centric challenges. Last year the ‘location wars’ heated up when SCNGR answered Foursquare’s Pepsi deal by snagging Coke. BC students recently enjoyed a visit to SCVNGR HQ at the Lechmere stop on the green line, and TechTrekkers also spent time with SCVNGR board member Peter Bell at his office on Sand Hill Rd. in Silicon Valley.
Check In Lately? Foursquare Revamps its App
While SCVNGR had the SXSWi Keynote, Foursquare continues to have a much larger market share. The two year old service, launched at SXSW in 2009, now has some 7.5 million users worldwide. A new update seeks to make app use more fun – moving way beyond “I am the mayor” bragging rights. A new “explore” feature will make recommendations of near-by venues based on your check-in history or where your friends have been. The new search will take broad searches like ‘date night’ and turn them into recommendations, too. And merchants get a variety of new specials including ‘swarm specials’ earned when a venue gets lots of check ins, ‘flash specials’ that are quick-hits at a specific time, and ‘friends specials’ for bringing a buddy, are added to existing promos like ‘mayor specials’ for the person with the most recent check-ins. The ‘leader board’ is now more prominently featured, encouraging friends to compete with one another as Foursquare power users. Foursquare also got its share of buzz at SXSW, linking the app in a rewards deal with American Express. Participants enrolled online, checked in using Foursquare & clicked a “Load to Card” button, then physically swiped their AMEX cards at a venue. Spend more than $5? AMEX gave you $5 back on your statement. Rewards weren’t the goal for Foursquare – rather it was about driving usage and awareness. Right now the world is big enough for two game-like LBS competitors. And we’re delighted that Foursquare is kind to BC as well. The firm will host us during our upcoming TechTrek NYC in April.
2011 Most Influential Women in Technology
Get inspired – FastCompany rolls out this year’s of leaders and pioneers in the world of geekdom. Making this year’s list are Jennifer Hyman & Jennifer Fleiss (Jenn & Jenny) of RentTheRunway. Our students will be visiting RTR as part of TechTrek NYC next month. Haven’t heard of RentTheRunway? Talk to a woman in grad school – the ‘Netflix of Fashion’ is the go-to destination for dresses. It’s huge on campus & a great way to get a varied wardrobe when all of your friends are getting hitched (admission: having this dumpy bald man giving fashion advice is out of place, but the business model is extremely cool & the firm is growing like crazy). Want more inspiration? Check out FastCompany’s 25 Women-run Startups to Watch.
From a Boston College Dorm, New Thinking about How to Encourage Energy Efficiency
Speaking of startups – here’s an exciting story. Three BC sophomores have gone from idea to hardware product in about 10 months. That idea was to surface personal energy use and make awareness as easy as glancing at a clock. Applied Power Innovations sells a monitor that anyone can install – clipping outside the power lines near your home’s main electrical box. A separate monitor plugs into an outlet and shows real-time energy use and carbon emissions. At around $200, API’s solution is far cheaper than many alternatives. The speed and sophistication of the effort underscores how we’re living in the golden age of student entrepreneurship. The team: C.J. Reim and Rich Rines of the Carroll School of Management, and Kevin Driscoll of the College of Arts & Sciences, outsourced engineering and manufacturing overseas and got the product off the ground in a little over a semester. The team has also leveraged social media to spread the word. co-founder Rines has been rated one of the top clean tech folks to follow on Twitter! You can read additional coverage of API in the BC Chronicle and Boston Globe.
Want to meet the entrepreneurs? Applied Power Innovations will be one of several student entrepreneurs showcased at the reception during Boston College Technology Council East Coast Spring Dinner on April 27. That dinner’s speaker will be Paul Sagan, CEO of Akamai. Hope to see our alumni there!