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Showing posts from 2011

Google Set to Surpass Microsoft in Value; Facebook is Next

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This post was also published on CNET. Brace yourself for the next passing of the torch in the tech industry.

Google, the leader of the Internet era of computing through the aughts, now has a $200 billion market capitalization and is on the verge of passing Microsoft's market cap of $215 billion. Microsoft was the leader of the PC era of computing and continues to dominate the desktop, notebook and server software market for Intel-based x86 computers.

I've been closely watching the relative valuation of these two companies for almost four years--ever since I predicted that Google would exceed Microsoft's valuation. The recent stock moves must come as a high note for Google chairman Eric Schmidt, who competed with--and lost to--Microsoft at both Sun Microsystems, as its CTO, and Novell, as its CEO.


Google's market capitalization (orange line) is creeping up on that of Microsoft (blue line).
Source: YChart

IBM, which led the mainframe and minicomputer era of business com…

Is Apple Vulnerable in 2012? You Bet

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This post was also published on CNET and VentureBeat. After Steve Jobs was fired in 1985, it took Microsoft 10 years to catch up--and exceed--the technical and user interface innovations of the Mac OS that Jobs helped create. Now, Jobs is gone and Apple is once again in a position of clear market leadership with competitors gunning to match its products.

Apple's rivals aren't taking a decade, however. Far from it. Google, Amazon, and Microsoft, along with partners such as Intel, Samsung, HP, and Lenovo are all heading into 2012 with impressive products aimed squarely at Apple's hits--the
iPhone, the MacBook Air, and the
iPad.

The iPhone alternatives
When you hold the Samsung Galaxy S II, the Galaxy Nexus, or other versions for the new generation of Android devices, it's clear why Samsung phones are now outselling the iPhone and why Apple is suing various Android handset manufacturers. These devices are a huge threat to the iPhone. The screens are bigger than the iPhone…

How the touch screen is revolutionizing TV

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This post was also published on CNET. The recurring rumors about Apple entering the TV set business are at fever pitch, with no less than former Apple President Jean-Louis Gassée recently jumping into the fray and joining the it-will-likely-happen bandwagon.

Gassée and I have been arguing about the idea of an Apple TV since 2008, when I was among the first to blog about the idea. Gassée had taken the position that since TVs are upgraded every five years on average, and computers every two years on average, melding the two would not make sense. The computer would make the TV obsolete too early.

Now, Gassée is usually right about Apple predictions, so what's changed?

In short, the TV set is on its way to becoming little more than a monitor that simply displays what's on handheld devices. Think about it: to be interactive, a TV no longer needs a computer built into it.

People are finally recognizing that the long-held idea of how Interactive TV should work--you look up something…

Has content become advertising for advertising?

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This post was also published on CNET. Since the advent of the Web, online publishers have had to create unique content to attract premium ad rates. Over the past few years, however, a flood of subpar content has seemingly taken over the Web, driven by high-growth sites such as Demand Media and the AOL-owned Huffington Post. These types of sites have enjoyed surging traffic by creating relatively simplistic content, repurposing and "aggregating" premium content, and gaming Google's search algorithm. But this strategy faces a growing backlash and as a result may have hit its natural ceiling, and that could create opportunities for new online-media models.

What makes subpar content subpar? Like pornography, you know it when you see it. Take, for instance, "news" articles that simply paraphrase and quote articles written by journalists, or simple "how to" guides that don't explain much and have no accompanying diagrams, videos or other edifying media…

Face it: Steve Ballmer is doing a great job

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This post was also published in VentureBeat. In the wake of the CEO ousters at HP, Yahoo and Nokia and the CEO implosions at Cisco, SAP, RIM and Dell, it’s surprising people are still picking on Steve Ballmer. Hedge funders are calling for his head. Employees are complaining.

I am by no means a big Microsoft fan — during my five-year tenure at Sun Microsystems, Microsoft was a vicious, scorched-earth competitor. But I have to give credit where credit is due: Ballmer has done a remarkable job, especially in contrast to the leaders of most technology companies. Ballmer’s problem is that everyone expects Microsoft to be as good as Apple at entering into new markets.



The reality is that Microsoft has never been a technology innovator. People are nostalgic about the days of Bill Gates, when Microsoft supposedly innovated. However, under Gates, Microsoft copied other products relentlessly, even from its very beginning. MS Basic copied Tiny Basic. MS DOS copied CPM-86. Windows copied the ea…

Facebook is about to feature creep itself into a usage U-turn

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This post was also published in VentureBeat. People use Facebook a lot. They use it to share photos. They use it to invite people to events. They use it as an address book and messaging system. They use it as a games platform. The growth has been so staggering that Facebook is by far the most popular website and can’t even fill its existing ad display inventory.

When a company has achieved complete market domination, it usually hones in on its core features and makes every effort to keep things clean and simple. This is the reason Google’s homepage and search results barely changed for 10 years while Google’s revenue and profits skyrocketed.

Facebook, however, has different ideas. Despite the often rumored Facebook fatigue, Mark Zuckerberg thinks that sharing will double every year. Now that we can already Like everything on the web, what else can we possibly share?

Enter the rumored Read/Watch/Listen features that are expected to be launched on Thursday at the Facebook f8 conference…

The verticalized enterprise stack: why HP needs to merge with SAP

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This post was also published in VentureBeat. HP has had to face tough realities this week. Fortunately, there is a way for it to survive: Embrace the inevitable trend favoring “vertical” companies.

In the first part of the 2000s, IBM and HP went in two vastly different directions: HP acquired Compaq to bolster a horizontally-integrated PC business, while IBM sold its PC division to Lenovo and focused on creating a vertical stack of enterprise products.

In the early 2010s, HP’s decision to attempt to dominate PCs has come back to haunt it. Even though HP is the number one PC seller, the low-margin business doesn’t pay, so the company is exiting both the desktop and mobile consumer computer business.

Now HP needs to act fast to remain competitive in the enterprise.

Rule of three
Earlier I described how the consumer computing business is consolidating based on the “rule of three” economic theory and that three big players would dominate the industry: Apple, Google and Microsoft. To p…

Good morning, would you like an Apple, Google or Microsoft?

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This post was also published in VentureBeat. While it comes as a big surprise that Google is buying Motorola Mobility, it is just as surprising that Apple launched a cloud service that will eventually fully compete with Google’s services and Microsoft essentially turned Nokia into its own private Foxconn and will compete with Apple’s devices.

All of these moves actually fit economic theory perfectly: Personal computing is now pervasive throughout our society, and the 30-year-old industry is maturing into a “rule of three” phase, where three large players will dominate the industry: Apple, Google and Microsoft are the GM, Ford and Chrysler of our era.



Each of these “big three” players needs to build a full vertical stack and extract efficiencies between and from each layer: mobile operating systems, mobile devices, desktop operating systems, personal computers, web browsers, productivity applications, content distribution and cloud services. Now we know why Apple needs Safari, iWork a…

Why Time Warner should reacquire Aol

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This post was also published in VentureBeat. Aol released its earnings today a week after Time Warner, its former dot-com merger partner, announced earnings. The two businesses, once considered completely disparate and deemed one of the worst corporate mergers of all time, are now increasingly complementary as the industry shifts beyond delivery mechanism to content as the value differentiator.

Time Warner reported stellar earnings last week, with income up 14% year over year and strong 11% growth in television networks such as TNT and CNN, 18% growth for premium content such as HBO, and 13% growth for Warner Bros movies.

The one thorn in Time Warner’s side is Time, Inc. — the division grew a moribund 3%. The anemic growth at Time is coming primarily from online revenue, but it is a tough transition since Time does not sit on a premium editorial perch like the New York Times or Wall Street Journal. And although Time is currently profitable, the Time Warner CFO has warned that income …

Just like Google and Facebook, Twitter now Charges Brands to Reach their own Customers

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This post was also published in VentureBeat. You know a web service has reached massive scale when it can charge brands to reach their own customers. Google has been doing it for years, Facebook has been doing it for the past couple of years, and now Twitter has just entered this hallowed territory with its new promoted tweets feature, which lets brands keep their tweets alive in your stream only if you have already followed that brand. The irony here is that you are only seeing these promoted tweets if you already followed that brand – so the brand is paying to advertise to users that already like it.

Now if advertising is usually about getting new customers, why would brands pay to market to their existing customers?

Many years ago, Google had a stroke of genius: to put ads above the search results and then charge brands to own the top spot where the brand inevitably would have been the first result. So when people search for BMW, BMW does not want Mercedes getting the top spot, so…

JavaScript: one language to rule them all

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This post was also published in VentureBeat. The Internet is about to hit its fourth major shift in server architecture.

The early days were powered by simple Perl applications. As the dotcom hit, Java application servers running on highend UNIX machines powered the majority of the web and created a multibillion dollar per year industry. In the 2000s, scripting languages such as PHP and Ruby running on cloud based Linux infrastructure have spawned massive growth at companies like Rackspace and Amazon with its Amazon Web Services service. Each of these shifts in server architecture brought greater efficiencies and the ability to more cheaply deliver more sophisticated Internet services. We are now on the verge of hitting another inflection point with JavaScript running on the server.

JavaScript came onto the scene in 1995 as the browser language in Netscape’s Navigator browser and was primarily used to implement simple user interface elements such as menus. With the wave of Web 2.0 co…

How the carriers screwed themselves out of mobile payments

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This post was also published in VentureBeat. There has been a huge scrum amongst the smartphone players to capture the market for phone-based purchases. In a very surprising move, the major US-based carriers just folded their mobile payments hand, and folded it hard. Isis, the mobile payment system sponsored by Verizon, AT&T and TMobile, announced that it had signed deals with Visa, MasterCard, American Express and Discover to its touch and go payment systems.

In the European and Asian markets, mobile carriers are payment providers, and people use their phones to pay for goods and services and then pay their carrier, and the carriers get a cut. So why are US carriers not going after this incredibly lucrative market?



There’s actually a very simple reason. Payment providers require trust, and the US carriers decidedly do not have their customers’ trust. When your Verizon bill shows up and you see that it is $50 over what you expect, your first reaction is that they are screwing you…

Why Microsoft’s Office 365 will clobber Google Apps

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This post was also published in VentureBeat. Yes, Microsoft is a slow, lumbering giant. It has been working on cloud for years, with numerous iterations, that took so long cloud proponent Ray Ozzie got fed up and left. Microsoft had to work through cannibalizing reseller arrangements, reconciling how to reach consumers versus businesses and a host of other issues. With Office 365, Microsoft has finally delivered an end-to-end cloud platform for businesses that encompass not only its desktop Office software, but also its server software, such as Exchange and SharePoint.

Contrary to Google’s narrative, cloud based office software is still a wide open market. The three million businesses that have “Gone Google” — proclaimed on billboards in San Francisco airport’s new Terminal 2 — are for the most part Gmail users, who are still happily using Microsoft Office and even Microsoft Outlook. Gmail is a fast, cheap, spam-free and great solution for business email, especially relative to the e…

Is Apple’s iCloud an excuse to overcharge for storage?

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This post was also published in VentureBeat. After falling far behind in the shift to cloud computing, Apple’s much-anticipated iCloud offering fell far short of expectations. Rather than a cloud locker that could stream media to a variety of clients, iCloud turned out to be a glorified file synchronization service like Dropbox. iCloud will automatically sync all of your apps, settings, and files to all of your iOS devices.

Syncing all of your files is definitely a useful feature for consumers, but it is starkly different from the approach of other industry titans. Google and Amazon were so terrified of Apple streaming music that they both pushed shoddy beta-quality music lockers out the door in the past few weeks. Instead, Apple shipped the ability to recognize ripped or illegal music on a user’s hard drive and then automatically sync copies of songs at higher quality across devices. While recognizing that a user already has ripped a CD and skipping the upload does not seem like a k…

How Twitter 2.0 will make money

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This post was also published in VentureBeat. This is the second of two articles on likely changes to Twitter. The first article focused on consumer-facing changes to Twitter and this one focuses on monetization.

Twitter has experienced tremendous traffic growth, and more importantly has permeated into the collective consciousness with constant Twitter quotes by news organizations and entertainers. Twitter’s valuation has gone up as people expect it to monetize its traction with both consumers and brands. Here are a few of the features that would seriously inflect the Twitter revenue curve.



Bring on the banners
Twitter has struggled to scale advertising revenue, because like most social sites it tries to inflict strange ad units on both its users and advertisers. From the users’ perspective, things like promoted tweets or Facebook’s social ads are intrusive to their content experience. From the advertisers’ perspective, they can’t use their normal ad units and track results the normal …

Here comes Twitter 2.0

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This post was also published in VentureBeat.This is the first of two articles on likely changes to Twitter. This article focuses on changes to Twitter’s consumer-facing side and the second article focuses on Twitter monetization.

Twitter reportedly acquired TweetDeck today, and that’s likely to be the first of many changes. There is a broad consensus that Twitter had stalled out in terms of product innovation, , which even creator Jack Dorsey noted upon his return to Twitter as head of product. With Dorsey’s return, we should expect more changes, and very quickly.

BusinessInsider recently suggested that Twitter only has 21 million active users, and a lot more people who read of those users’ tweets. While at first blush this number may look really bad, it is actually an indicator that Twitter has matured. Twitter is a microblogging platform, and has followed the same trajectory as blogs. At first, everyone blogged. Now only a few blogs really matter.



Consumers want Twitter to be their…