Big Data Revolution

For years now in the digital age I have heard the common refrain, “Content is King”. This idea that the most important thing to have in the age of information is compelling content to bring users to my website from their PC, Tablet, Smartphone and any other device the future holds.  You need to have something exciting. I agree with most of the premise, but in my view content is not king, it’s just a prince. The real king is data and what the companies or governments who own the data intend to do with the data.   We are seeking information.  That is clearly evident with the current industry buzzword “Big Data”.  The amount of data has indeed become “big”.  Data has become so large we easily talk in terms of terabytes  for our local hard drive on our desktops and laptops.  In the cloud all storage is quoted in terabytes or petabytes and we are starting to hear new terms beyond exabytes and now have zettabyte’s and even yottabyte’s. We are entering a time where every movement we make is being recorded and digitized.  It could be our web sites we visit or when we ship at the shopping mall, or drive on the freeway.  The compelling key to all this is can we turn all this Big Data into something useful and actionable.  The view from a far is we can and will and it will cause a consumer revolution unlike anything we have seen before in human history.

The amazing thing is how readily data is available.  The amount of data on the internet is estimated to hit 1 zettabyte in 2015.  Many of you reading this article did not even know the term zettabytye existed (admit it).  Once we add 999 more zettabytes we get to a yottabyte, which will probably happen sooner than we think.  With this amount of data on the public web and the backdrop of the existing NSA leak scandal featuring Edward Snowden should there be reason for concern?  Yes and no.  Our ability to record history will be unparalleled.  In time every activity and event in a person’s lifetime will exist on a thumb drive.  Historians of the future will have little to research or ask.  We are such spontaneous society that when a little pop up happens asking if we accept the terms of whatever the website, we say “yes” with little hesitation.  I predict an entire human life will be recorded and stored on a thumb drive.  From your birth until your death.  Every high emotional event and every crime committed will all be recorded for humanity to witness.

With this type of large amount of data available and an increasing array of information regarding user behavior there remain challenges to get from point A to B.  Though we can collect data across the web using technologies like Hadoop, we still rely on traditional databases to store and analyze data.  It is one thing when you are talking gigabytes or terabytes, but it is a wholly different thing trying to capture, store and analyze data sets in the neighborhood of petabytes and exabytes on a traditional DBMS.  I was fortunate enough to attend a presentation by the late great Microsoft researcher, Jim Gray in 2006, a year before he disappeared off the coast of California.  At the time he was working on a project where you would move a exabyte of data from Geneva to his lab in the Bay Area (when you were Jim Gray you got this type of funding).  The challenge he discovered was not moving the data across the wire, but getting the data on and off the wire.  It turned out it was a limitation in the PCI Bus architecture involving the southbridge  and northbridge.  It turned out they had 500gb limitations.  At this point I could only imagine Jim getting out the duck tape and adding some additional bridges.  Jim Gray was Bid Data before we had a term for it.  If he were still alive he would be enjoying life more than ever.  This highlights but one example of some of the technical issues with Big Data, and since Jim Gray did this project data sets have only become larger and the internet as highlighted above continues with its abundant growth projections.

The reason we tackle this area of Big Data is the promise it can deliver.  There are examples for the future and examples that exist today.  When you do any search on the web the ability of the search engine to quickly identify and recommend to you information is an example of Big Data.  When you go shopping in a website and the website recommends an additional purchase based on prior purchasing patterns, that is an example of Big Data.  The providers of this type of detailed are not satisfied as they want to collect more information about each individual and be better able to service and sell to them.  recently Amazon filed for a patent that was about predictive user behavior.  Identifying what a user will purchase before they have purchased and ship it to them.  Sounds a bit far-fetched but then this is the reality we live in.  We are accruing so much data and we are creating  the ability to analyze the data that makes these far-fetched scenarios not so far-fetched

Like any major trend in technology those who make the big bets early will stand to reap the rewards.  It is still early in the game as the ability to identify and collect the data is maturing, but the real value will be to analyze, decide and execute upon the data.  The opportunities are there.  As much that has been done in the open source community the traditional database players of Oracle, Microsoft and IBM will play a big role and I am sure recognize a big monetary opportunity that will please shareholders down the road.  the one thing I would suggest to all players is extreme focus.  Some of the biggest winners will be the consulting firms that can develop the IP and hire the talent to create robust Big Data practices.  In particular in the short-term as many companies struggle with what all this means

We are still very early in the Big Data revolution.  Though the ideas and vision are there, the tools and expertise necessary to make them happen are still infantile.  As in everything in technology, a technical challenge will be overcome.  In the early days of the PC it was things like memory management and disk compression.  In search it was relevance.  Each step along the way will be met with opportunity for some company or companies to fill a temporary void until a solution is developed.  Those voids are usually temporary opportunities in the billions of dollars.  But in the end the goal will be met in turning Big Data into meaningful date.  Because of it all our lives are set to change, yet again.

Good Night and Good Luck

Hans Henrik Hoffmann January 28, 2014

Google Chromebooks Momentum

The Google Chromebook has been around for a few years now, but lately it seems to be gaining some traction in the market place.  It is showing up in Best Buy and other retail outlets.  It’s sales are steadily increasing.  There are Chromebooks winning “Best of” categories at CES.  They are being recognized and targeted by competitors, as recently as part of Microsoft’s “Scroogle” campaign they felt it necessary to address their perceived inferiority of Chromebooks.  Not a big fan of these Mark Penn negative spin driven ads, but then I am not on Steve Ballmer’s Harvard buddy list.  The idea behind a Chromebook is we do about ninety percent of our work on the internet why not just have a connected device with a browser? It is a new category of laptop, where technology has taken us in a slightly different direction based on innovations over the past decade.  Chromebooks are coming of age and getting attention, moving beyond cute gadget to contender.

I had the chance to use a Chromebook once a year ago.  It struck me as a fairly simple device.  What is immediately evident is that on the home screen there is pretty much nothing.  You launch your Chrome Browser and off you go.  Having been a Windows guy my entire life this was a bit hard for me to overcome.  Despite the fact that on a Windows machine about 90% of the icons that appear I never even clicked on.  It just seemed so barren to me. Perhaps secretly I like clutter?  The Chromebook is a Google Device, so not surprisingly you are directed to Google products, like Google Docs or Google Drive.  If you are an Microsoft Excel fanatic this device with no hard drive is not for you.  Even a PowerPoint guru would find this a hard sell.  Probably the one product from Google that holds up OK is the Word Processor.  Your experience with a Chromebook from an application perspective is in the cloud, but as more and more traditional desktop apps become cloud enable the appeal of a Chromebook will improve.  My first glimpse into a Chromebook was kind of a “not for me” experience.  But as technology proves over and over again, times change

Google has done a very effective job in attracting schools to use their platform.  My children all use Google Docs and Calendar for their school homework.   A large part is driven by price as a Chromebook retails for between $200-$300.  I honestly do not know how schools budget outside of the fact that my taxes pay for them.  But a key component on particular for schools is price.  When you have a Chromebook and all the Google cloud apps you have a pretty cost-effective financial model that will be attractive to academic institutions.  Technology is being introduced at very young ages in schools and as is often the case people stick with technology purchases based on what they know.

The laptop market is changing as all laptops regardless of OS have dropped in price.  Because of price, functionality and usability the Google Chrome platform has become much more appealing that what competitors offered in the Windows world.  Given the increasingly competitive landscape expect prices to continue downward to less than $100 in the not so distant future.  The price reduction will be driven by OEM’s offering both Chrome and Windows.  This will also impact Apple as they will have to reduce prices.  In the end the winners will be consumers as they will have lower prices and choice.  If the DOJ had understood the competitive landscape and nature of tech they would have foregone the lawsuit against Microsoft.  Things move to quick in technology and what is understood one day is misunderstood the next.

One of the negative critiques of the Chromebook is that it requires connectivity to the internet in order to be of any useful use.  In the short-term, sure I understand the point.  Not everyone is connected via carrier network or near a Wi-Fi hotspot.  Longer term I believe that will be a non issue as we will have ubiquitous connectivity where ever we are whenever we want it.  From Google’s perspective that is a bet they are making and I would say it does not to appear to be a very risky bet.  It is betting the obvious when you have a Royal Flush, you have to go all in.   That being said until we are always connected there is a window of opportunity for the competition to steal Google’s thunder with an always connected device that has more features and functionality and works offline.  First in does not always yield all the rewards, ask MySpace.

At the time of this writing some reports have Chromebooks seizing ten percent of the laptop market.  Unless all ten percent came from Apple this is a pretty significant development.  For the last 20 plus years ninety percent of the market has always been Microsoft Windows.  This will signify in the shift in the market as there now exists another low-cost laptop choice that is able to compete.  The good news for consumers is there are choices with different operating systems at different price points.  This is how a market is supposed to work and the greater the competition the more pressure that will be put of pricing.  How the different OS’ are bundled and priced with hardware impacts not just consumer prices but the various vendors.  Apple makes money from the sale of hardware.  Microsoft receives revenue from the licensing of Windows.  Google does not directly profit from Chrome but uses Chrome to drive search revenue to Google, which is their primary way of making money.

Google is often criticized as a one trick pony.  They only make money off of search.  But where I give them credit is they keep coming up with news ways for you to access their search engine and search.  They started as a url that people learned to use and search from any PC or laptop.  Then mobile devices became a heavy focus.  They realized they needed a browser to compliment search.  Then they have now combined the browser with hardware to create a new category of laptop to drive more search.  On the old growth curve ChromeBooks are steadily moving towards their inflection point.  It is now up to the competition to prevent them from getting there.

Good Night and Good Luck

Hans Henrik Hoffmann January 9, 2014

CES 2014 – Wearable Technology

It seems as we get ready for this years Consumer Electronics Show, that we are entering a new phase of technology.  The buzz this year seems to be around a new emerging category of technology, namely wearable technology.  From the pre-show buzz it sounds like we should hear a lot coming out of CES this year from new Google Glass applications, to smart watches, virtual reality, and maybe even the classic dinner fork.  It seems a foregone conclusion that this years event will signal a launch pad for this category to go towards becoming mainstream in the modern world.  It is time for a new category as the Smartphone and Tablet are in a mature phase, where it’s no longer just cool to have but expected, meaning they are one step closer to being boring.

It seems all movements forward in technology are driven by limitations in what is currently popular.  The move to laptops was driven by the fact that desktops were tied to a power outlet and users had a need to take their productivity with them.  Then as laptops got smaller we wanted something even smaller and netbooks evolved to ease our troubles.  However all these devices were limited by battery supply and a constant need to find a location with an electrical outlet.  We also need somewhere to sit and place our laptop or netbook.  Thus the advent of Smartphones and Tablets, and a bonus, no keyboard.  We could access information where ever we stood, provided we had connectivity.   The limitation now?  We still need to hold the device and use our hands.

It was with this backdrop that the first device to get notoriety was Google Glass.  They actually looked ok.  I was expecting some huge visor of a person’s forehead, but they were actually kind of sleek.  I can already see that early on these new devices will create some of the social confusion that mobile phones with ear buds  did, the “Are you talking to me?” moment.  No, they actually do not even know that you exist (that is kind of rough reality for some people).  The concept of Google Glass is interesting, it at times seems like you could be in your own world, kind of like some of the bulkier Virtual Reality devices you see attached to people’s head,  however as you walk through town you more or less can interact with what is around you and get more information on things you may see and want to know more about.  Some places have already gone as far as banning them.  The Five Point in Seattle, WA has done this.  It is a dive bar and people go there to get drunk and lose themselves.  I can understand not wanting Google Glass to record them, this is a sign of legal battles to come.

The first Smartwatch I saw was over a decade ago when Microsoft Research came up with the Microsoft Spotwatch, it was connected via FM (as in you r radio).   It could do stuff like check the weather, but it was big and ugly.   In 2013 we started to hear a lot of talk about a new breed of SmartWatches.  At the forefront was the Apple iWatch, which was conceptual at the time and despite the rumors still has yet to be released.  Samsung has since released  its own watch which is available through carrier stores.  Having seen them they have some cool features.  The gentleman at the AT&T store I was at had one, but was not wearing at the time and discussed some of the features.  You can receive your texts via your watch.  Check the weather.   I can see this is going to happen and it will reinvent the whole idea of what a watch will be.  The advantage of having a watch that is connected will be having perfect time.  No longer having to reset your watch as it may be running fast or slow, your time is managed by the U>S Naval Observatory in Annapolis, MD. Beyond time we still need a killer purpose for the watch, but then perfect time may be enough.

An area I am rather excited about is fitness technology.  Wearable devices that in time will help manage our daily fitness.  Tell us when we are doing good and not so good.  We could have our bodies monitored throughout the day.  You have devices that help you train as well, like FitStar being promoted by former NFL great Tony Gonzalez.  A device that helps you workout and stay motivated, not sure about Tony yelling at me but it may work.  Going back to our previous theme of watched, Addidas has a Smart Watch that acts as a personal assistant when you are running tracking things like distance, heart rate, time etc..I can foresee a lot of  devices and services coming in the near future to aid and assist us in living healthier lifestyles.  Accommodating our increasingly mobile lifestyle.

A final area that wearable technology will need to conquer is our vanity.  The reality is most people do not want a geeky gadget.  In order to feel good we want to look good.  In the end we are all slaves to fashion so why should wearable tech be any different.  The idea of wearable technology will become mainstream when it is on the cover of GQ Magazine  or Heidi Klum starts analyzing and commenting on fashion technology on “Project Runway”.  This is wear I think Apple with its dedication to sleek and beautiful design can take a leadership role .  Though it is one thing to make a pretty phone another thing to make accessories that you want to wear.  Technology is a cross-section and intersection of industry as it impacts every business model it touches.  It has influenced design in the back room where ideas are conceptualized, not it will impact us in what we see and wear.

The Consumer Electronics Show this year promises to have a lot of buzz around this new and emerging market segment, which should make for an exciting and entertaining show.  CES is not always a success.  One year the buzz was 3D television, which struck me as not a winner.  Most of the US population had either recently purchased a Plasma or LED television and were not interested in buying a new TV.  Let alone having to wear those awful 3D glasses.  Wearable technology is just a natural extension of where we have already been, dating back to the mainframe.  It will push are lives into new areas we have not explored and hopefully make us better.  While at the same time freeing up our lives to do more of the things that we want, to make our lives more fulfilling.   Welcome to 2014, it is going to be the year to step out in your digital clothes.

Good Night and Good Luck

Hans Henrik Hoffmann January 3, 2014

Google – threats and opportunities 2014

One of the more popular blogs that I have written was about Google.  It was written back in March of 2012 and because this industry moves so fast it seems like I am overdue for an update on where I see Google’s opportunities and threats today.  I have actually written a couple of blog posts about Google (Threats and Opportunities and The Google Decade) and they are already starting to look a little dated.  In the world or technology that is not surprising, we are moving from decades to half decades. I thought it a good time to update what I see at one of the world’s leading technology companies.  In the two years since I wrote my initial blog, Google has continued to create industry excitement with its work in wearable technology, Google Glass and in robotics, with its efforts around creating a robotic vehicle.   It is rumored to be creating its own watch to potentially compete with the iWatch.  I say potentially because nothing has been released yet by any major player.  When we review what I wrote and where we are there are  a few updates.  A few new opportunities and new threats.

There is the obvious competitor and then the not s0 obvious co-opetition.  The obvious is Apple.  With the immensely popular iPhone it is the most direct competitor to Google’s Android platform and when we talk about consumers this is direct competition as we have come to know and love.  However this states the obvious, probably more relevant is the threat from its largest partner: Samsung.  When Google made its Android platform open-source and easy to license I imagine it saw a field similar to what Microsoft had created with its OEM platform, a huge ecosystem of partners competing with one another.  However an interesting thing happened along the way, Samsung took more than its fair share leaving the competition in the dust.  Unlike Microsoft’s ecosystems, in Google’s ecosystem one company has come to dominate.  Samsung will use it’s position as leverage against Google, that is for certain, otherwise they would not be a very wise in their future outlook.  How Google manages this relationship will be a big part of its future failure or success..

When we talk about consumers we quickly can get in the Social Media aspects of consumers lives.  Google’s foray into this space has not been an instant media darling as would have been hoped.  Google Plus launched and got some initial traction but has certainly seemed tp slow down to the point it is rarely even mentioned.  The two big threats to Google’s business are Facebook and Twitter.  Around a year ago, just after Facebook’s IPO, Mark Zuckerberg commented that Facebook was making a billion dollars in their search business, without even trying. Since that time Facebook has focused heavily on generating revenue from it’s mobile business.   Twitter is the pulse of the internet.  If you want to know what is happening right now in the world the best place to go is Twitter.  More than anything Twitter had become digital democracy.  With each revolution the main place to get news is on Twitter.  Google makes money on eyeballs on the internet, when another company comes along that takes those eyeballs they threaten revenues, which make Twiiter and Facebook two of Google’s prime competitors.

Robotics is an interesting area.  Google’s interest in Robotic vehicles is not a “humanitarian” act.  If you think about it the first things you do when you get in a robotic vehicle  is give it directions.  Let’s see, who does this better than anybody else?  Why of course it would be Google Maps, which is nicely tied in with Google search, and there you have it.  Google could make money every time you are in your car.  To me, though, Robotics is not just what we have come to now and love in film and books, it’s the new mobile future.  Despite the freedom we have with out tablets and smartphones, we are still in some shape or form physically clinging to our devices.  Robotics is the promise of removing the umbilical cord and providing us all we have today with out the need to be tied to a device. That vision will play out as hybrid of robotics and the cloud.  Google will play in both if it chooses.  That opportunity will dwarf everything we know.

In addition to robotic vehicles Google has what is known as Project Moonshot.  These are essentially where Google comes up with big ideas and then tries to figure out what it can do and if there is a future for Google in what ever Project Moonshot comes up with.  Robotic Vehicles and Google Glass are two such things that have come our of this en-devour.  Now Andy Rubin, of Android fame, has his own Project Moonshot underway focused on simply Robots.  I think what is best about Google and where it shines is with the efforts it places in Project Moonshot.  They come up with futuristic and really big idea and garner attention and admiration for what they do.  Having spent time at Microsoft and seen the billions put into research and development, it seems like the return has been very little, and I think a large part of it has been the inability to see new markets and to try to fund project that will fill the void.  The opportunity that Google envisions and creates in Project Moonshot can potentially yield huge financial upside for Google, while more importantly keeping Google a relevant technology company.

The browser war’s continue to tilt in Google’s favor as their share seems to have only increased since I wrote my original blog.  Google’s business depends on the internet.  The more eyeballs on the internet the more revenue for Google.  It only made sense for Google to invest heavily in the market that provides the windows to the internet.  The latest market share stats show a slow and fairly consistent trend upwards.  Google has launched Chrome based netbooks to challenge Microsoft’s traditional dominance in the PC Manufacturing space, should this take  off it would have a significant impact on the bottom line of Google and of Microsoft.  There are certainly other competitors in this space, such as Firefox and Apple’s Safari.  Firefox shows the limitations of open source as nothing speaks to pressure like an earnings report.  Something the folks at Mozilla seem to be missing, thus relying on the communities passion of the community, who can leave whenever they want.  Safari is too tied to Apple’s product line to be the “biggest” threat.  It will be relevant but in the short term I do not see it being the dominant player.

A lot of Google’s success can be tied to their indirect model of using cash revenues from search to fund other businesses at Google. One such beast is Google Docs.  It is still far behind the 800lb gorilla, Microsoft Office, but unlike previous competitors Google Docs is funded.  It is making headway with younger generations who do not need all that Microsoft Office has to offer.  My kids use GoogleDocs at school, in fact I rarely if ever see or hear about Microsoft software.  It may not hurt Microsoft today but if could tomorrow and considering the over ten billion in revenues it means to Microsoft I am sure Google has thought, “what if we get 20% of that market”?.  As usual Google is able to tie in Search and Chrome as part of the overall experience, thus increasing revenues and talking browser market share.  Cloud based productivity is here to stay and growing quickly and Google Docs will be a big part of that market.

The natural competitor to Google’s traditional search is Microsoft’s Bing search engine.  Despite its enormous financial resources and talent, Microsoft’s Bing has failed to become a serious threat to Google’s search business.  The fear Google should have here is not that Bing within a year or two will take serious market share from Google. A bigger concern is that they will go away all together.  Seems odd, but with the uncertainty at Microsoft these days around who the next CEO will be, some talk has begun that whomever takes over will either sell or kill off the business.  If that were to happen the competition for Google would shrink significantly.  We would have Yahoo, Baidu and a few other foreign competitors, but it would raise anti-trust fears and may make Google “lazy”, not having a competitor to wake up and focus on each working day.  Ironically you see rumblings by Microsoft about the anti-trust.  It seems human nature to hate the government until you need them.

Information everywhere is a powerful driver of revenue and in the end that means we are always connected.  Google drives its revenue from the internet, and despite its already enormous size it continues to grow, foster new innovations and by default new opportunities.  Despite the recent hype around the “cloud”, we have always thought of the internet as being  in some virtual non-physical location.  It is digital, not real.  Google has been at the forefront.  But looking to the future that ethereal environment is about to take on a more physical appearance as that information stored in the cloud will be relayed to communicate with a whole host smart and robotic devices.  There are plenty of great opportunities, not just for Google but the industry to capitalize on.  Perhaps it will be one or more of the existing players and likely their will be several new entries into the market who will become big fast.  The only thing for sure right now at Google is the future has never looked brighter or more ominous.

Good Night and Good Luck

Hans Henrik Hoffmann December 6, 2013

YouTube Music Awards 2013 – Brilliant

No this is not a review of the award show. I follow music and have since I got my first records (John Denver and Glen Campbell). I love music. I love award shows. But to provide a review of the award show would not be my forte and would be a departure for me. I am, however, interested in how well it was perceived and received and what it means.  The YouTube Music Awards did get free coverage on the “Today” show.  More importantly the YTMA shows the convergence of entertainment and technology in a way that not only the entertainment industry makes more money but the technology industry will indirectly generate billions in revenues.  In my humble opinion this is a highly entertaining way to generate more revenues for Google. Specifically more ad revenues for Google. It will also challenge the status quo of television programming as more content is delivered “over the top” versus traditional agreements with the Cable (Comcast, Cablevison etc ) providers and their content partners (Disney, ESPN, Fox, etc..).

When you think about it, it is not too hard to see how this came about.  Technology and Hollywood have always had a very close relationship.  When the digital revolution started to take off one of the first industries to feel the effects was the music industry.  It first started with the development the compact disc, however that was pretty much business  as usual for the industry.  Vinyl was simply replaced by the CD.  Then two things occurred.  The internet and the iPod.  The iPod made the playing and purchasing of music a completely different experiences.  Today with 80gb iPods I can store more music than I ever could hope to own pre-iPod and internet.  Then the idea of streaming video started on the internet (Remember the Real Networks video player?). Then YouTube became the place to watch music video, killing the need for MTV.  I could not watch the video I want without waiting.  The world of on-demand was starting and changing the face of television programming.

The YouTube music awards cater to the younger audience.  This is how they consume a lot of content.  New artists are introduced on the web, not on cable networking anymore.  Because it is the web the artist are introduced to larger and global audiences. The Ryan Lewis and Macklemore video for the song “Thriftshop” has been viewed over 448 million times.  The YTMA winner Girls Generation video has been viewed 74 million times.  Justin Bieber started here. YouTube has become the place for new artists to get their name out and by-pass traditional music industry channels.    It was just a matter of time before it made sense for them to have their own Music Awards show and do it over the internet, thus bypassing the traditional television channels.

The real winner in all this is the company that had the foresight to predict and bet on this shift: Google.   It Is not hard to fathom that every time a Google exec watches traditional TV it is viewed as lost revenue.  No search capabilities, limited interaction with television set.  Since the days before the internet there were those who were betting in interactive TV.  Former Microsoft CTO, Nathan Myhrvold believed that to be the future.  It may still happen but if it does the internet will be its backbone.  The thing to keep in mind about this is Google makes money on search, but in order to make a lot of money in the search advertising business you need traffic.  Google is using YouTube to expand its potential audience for search.  In the end however it is all on the Worldwide Web.

A lot of Google’s success can be contributed to indirect selling models.  The YouTube Music Awards are yet another example of where Google will leverage viewer eyeballs to generate more search advertising revenue.  As time goes by and the viewer ship increases so will Google’s ability to monetize those net new viewers and increase the average revenue per user (ARPU).  They will then funnel this money to other ventures that will either contribute or fail, but Google will always be pushing the needle.  If the YTMA is a big commercial success could we see scenarios similar to what Netflix is doing and have Google generate its own premium content?  I would guarantee this scenario coming to fruition.

When Google bought YouTube some viewed as a poor purchase, one that would spend most of its time in litigation, but Google obviously saw a brighter future.  Now with the success of the YTMA one can start to envision what this will be.  One of the holy grail’s of consumer technology has always been cracking the code to utilize and monetize the last great user interface: television.  It turns out what was needed to make this happen was a connection to the internet.  Then once you have this internet connection  how do you drive traffic to where you want it?  This gets back to the old axiom “content is king”.  If you have the right content they will come.  It is also important n this day and age to get younger audiences engaged as they are the first consumers of technological shifts.  With YTMA awards and other new internet content (primarily from Netflix) we could see the age of interactive TV finally begin to be realized.

This is a brilliant idea and move by Google that will garner them a lot more of positive press and attention to their brand.  It also threatens to leave their competitors in their wake as they struggle to create an even tighter relationship with the entertainments up and comers and its elite.  Apple has the relationships but the integration between the device and the web is not nearly as tight as Google (Search, YouTube, Android, Chrome etc..). Microsoft may be better positioned with the XBox and its gamer community.  More importantly many of these games are going Hollywood as games are turned into major motion pictures.  Where Microsoft is hurting is it has a weak music story and poor track record in the industry, plus it is way behind in the devices landscape.  Google is leading this decade as they right now are in the zone where they have more foresight into the future and where things are headed.  It is rarefied air that they exist in right now.  Having been through this before the danger is thinking it will last forever.  As long as you are scared of the future you stand a chance of success.  When you take the future for granted you are doomed to failure.

Good Night and Good Luck

Hans Henrik Hoffmann November 8, 2013

Tidal Waves create Innovation

In my last blog I talked about innovation. Which got me thinking again. I apologize that I again will reference Microsoft, but as it is my heritage and a relevant point of reference I shall go there again.  When we look at the big misses at Microsoft over the last decade it’s easy to say they got clocked by Apple and the iPhone. That they missed on the tablet.  But as I alluded to innovation is not often in the product unless you are there first.  Ballmer said his biggest regret was Vista. But in my humble opinion the bigger miss was not understanding a technology movement that was under way and envisioning how big the possibilities could be.   More than anything it was the inability to truly understand mobility that killed Microsoft,. In short they never did think big enough.

In any big shift there is a movement that occurs and then there are the innovators who take advantage of the movement.  In the early phases of the PC industry, the movement was the idea of a personal computer.  There where may companies who innovated based on this movement.  Intel created the microprocessor that powered the PC.  Microsoft jumped on the operating system with DOS and then Windows.  More than any company Microsoft understood the value of the software that created the experience for the PC.  Give Intuit credit for changing how we did our taxes. There where hardware manufacturers that popped up all over the place, like Gateway, Dell and Compaq.  There was a lot going on in the space and the competition was brutal.  It created a lot of wealth and a very affluent younger generation, who profited on this tidal wave.

These grand movements would continue with the birth (or maybe re-birth) of the internet.  As companies moved in force to get online and establish a presence in a global virtual real estate play with the creation of a website.  This again would drive innovators to start creating new opportunities along with new business models.  A second movement that coincided with the internet was the rise of mobility.  More accurately mobility was about freedom.  The ability to have access to our technology but not be connected to a wall.  Underlying all this was digital convergence as everything we had known from our music tour television and film, books, catalogs etc….  was being digitized.  I could access all this content from my PC, laptop or smartphone.  A new are is the cloud, which  in my opinion is not a new tidal wave, but more innovation built on the back of the internet.  All in all, these movements have fundamentally changed how we all lived and worked.

The list of examples of companies who rode these grand movements to success is a list of small companies who have become tech giants, with the exception of Apple, which made a grand comeback.  In the internet Google, Facebook, Twitter, Amazon, Netflix etc.. are but a few examples of companies that leveraged this new medium.  In many instance mobility created an expanded market and new opportunities.  In the case of Twitter it helped them become a global beacon of democracy and human rights.  Mobility projected Google and Apple to new heights as they drove new devices to new sales models.  For Google they used Android (and iOS) to extend the reach of their search engine.  There were companies that burned brightly only to fade, i.e. RIM and Nokia

If I look around the industry and try to predict the next industry movement, my eyes and ears always gaze to robotics.  There is a lot of work being done today that is far more advanced than anything we have seen before and in some cases hearkens to our favorite science fiction novels, film and television series.  If you take Google’s foray into robotic vehicles, it is visionary while making sense.  If you have a robotic car and you need to go somewhere, what is the first thing you will need to do? You will need to give it directions, “Bing” (not intended use of Bing but funny in any case), who makes great mapping technology?  More importantly it takes the most dangerous piece of driving out the equation, humans.  This is but one example of something that will come to pass.  Prosthetic’s will move from plastics and metals to having intelligence and a more human like appearance.  Anyone remember Steve Austin, aka the Six Million Dollar Man? I think robotics will combine all three of the previous tidal waves while creating a new one that removes humans from a number of traditional equations.  These movements do not happen without consequences.  It will be interesting as robotics evolves to see how it will impact the movement of labor.  If a robot is picking our apples will we have need of cheap labor?  Robotics will take off and have a bigger impact than mobility or the internet, as it is physical in nature, not virtual.

The excitement and disaster of these “big” movements is they are like tidal waves.  If you catch the wave early on you can ride the wave to extreme success.  However if you are late the wave you risk catching it as it crests and comes thundering down on you.  For the start-up these sometimes seem obvious as many gamble on the next big thing. Youth Is rampant in this area and like so many young generations they are more idealistic and dream of a bigger and brighter world, ignorant of the consequences, but driven none the less. For the incumbents that challenge is often much more daunting.  They may have been part of an earlier movement that still drives big revenues but makes them blind to the future, until they find themselves on the crest of the wave, looking down in horror at what has befallen them.

These changes are what makes the world today so exciting as when these “tidal waves” occur it has a material and social impact across the globe.  If you think about how internet has brought us all closer together and made communications across boards easier than they ever have been through out the history of mankind.  When these changes occur, for companies in the tech space and across other industries it is important to bet early and often, if one is to survive.  They come very fast and with great velocity, that those who do not anticipate quickly, they become a legacy to history, they become yesterday’s news.

Good Night and Good Luck

Hans Henrik Hoffmann October 24, 2013

Bing-ality

Microsoft Bing since its launch has been considered the primary competitor to the behemoth known as Google search. It is a valiant effort in a very lucrative market space. However despite the immense opportunity,the term success has so far eluded Microsoft Bing.  When you look at Search Engine market share the numbers continue to improve for Bing as it hit over 17% in April, however the revenues have so far failed to materialize.  In Q2 of Fy13 for Microsoft’s Online Services Division lost money, $283 million.  In Q1 Google generated over $11 billion in revenue.  Granted Microsoft’s OSD is not just Bing, but all the other online services such as MSN and Outlook Mail.  The flip side of course is we really don’t know how Bing as a stand alone business is doing, despite the market share increases.

The history of Bing some may say is one of failed opportunity.  I am not so sure it is so much that as it is understanding online reality.  Bill Gates and Steve Ballmer often have said they blew it on search and I have often said they would never have figured it out.  Even if they had I am not so sure they would have been willing to take the financial risk to challenge Google at the time (remember we are going back to the 2002/2003 time frame) .  In his short stint at Microsoft Ray Ozzie provided the best analysis of Google.  He stated that they were using their immense revenues to fund software development projects that would compete against Microsoft. It was an indirect model, where ad revenues funded software engineering.  As has been shown Google has a lot of revenue to fund these projects.  It was difficult for Microsoft to grasp as they for so long have lived off of volume license revenues.

In the past decade it took a long time for Bing to come to the forefront.  First Microsoft toyed around with  Live search.  It was not a well named product.  Certainly not as fun as saying, “Google”.  But globally it did ok and when you looked at the top 100 websites, Live did appear in the top twenty.  It just did not have an ad word business model set up that could compete with what Google was doing.  Microsoft was slow in understanding the competitive threat that Google posed, if not holistically, at least opportunistically.  My view is Microsoft viewed it as another software market to conquer rather than the threat it was to existing businesses, namely Microsoft Office and Microsoft Windows.   This is just another market space in which we are entitled to own.

As things progressed so did Microsoft’s desperation ending in an audacious bid to acquire its competitor Yahoo.  Luckily for Microsoft and many grad schools across America this would end in the ego of Yahoo founder Jerry Yang as he made every attempt to kill  the deal. In the end this may have worked out for the benefit of Microsoft as they entered onto a partnership rather than spending $40 billion on an acquisition that may have been doomed to fail. While Jerry Yang seemingly failed business 101 which is to increase shareholder value, not decrease it.  He is now a case study for business graduate school history.

What has happened as these events have unfolded  is that Google has systematically found other business opportunities to augment and promote its search business and increase revenues.  Namely using the mobile phenomena to launch Android.  This has led to great headway in the mobile phone business and the tablet.  In 2013 it is projected that there will be 800 million Android devices sold.  None of these devices will have Bing as the default search engine.  In addition there will be 300 million iOS devices sold in 2013, again none will have Bung as the default search engine.  I only wrote this to share with Steve  as he seems to be unaware of this fact, but hey, he is a numbers guy.

So what does Bing do?  For starters that Apple iOS number is key.  One of Steve Jobs last talks to the Apple faithful at their corporate headquarters was about the evils of its key competitor Google.  There is no question that there is no love lost between the two.  Apple has tried to compete with Google head to head.  The failed Apple Maps comes to mind.  In my opinion a rare case of me saying, “Whose stupid idea at Apple was this?”  Google owns that space and barring some catastrophe, I do not see them losing in that space.  So with all that hate and failure what if Bing was the default search engine for Apple iOS?  Instantly Bing would have access to 300 million users.  Granted this would be a bizarre twist of fate, but Microsoft is not in a position of power in this space and Apple would like nothing better than to hurt Google.  If Bing can meet Apple’s high quality standards they could have a very compelling play in this space and be considered attractive to Apple.

There is also a bigger question of “if Not Microsoft than who?”.  Competition  that is not challenged is a threat to the greater benefit of society.  They can dictate terms, which is never a good thing.  When we look at companies that are able to challenge Google there are few with the cash reserves to do it.  One of the few would be Microsoft.  And frankly they owe it to us all.  Fundamentally competition is a good thing and maybe Bing is competing, it’s just that Google is pushing their game to a higher place.  If that is true than Bing needs to set a higher bar, not just compete at parity.  Faster more accurate search is nice, but we are reaching a point where for the end-user it is becoming increasingly difficult. to distinguish in milliseconds.

Another factor is much of Bing’s success is tied to other products like Windows 8, Surface and Windows Phone.  To successfully get people to switch alla Coke versus Pepsi, is not so easy as there is a lot more tied to it than just switching a can. The effort Microsoft must put in will take years, which in technology is worlds away.    So far it has been slow in coming and market share has increased at a snail’s pace.  This may drain Microsoft’s cash reserves but the reward is high Once yo have been great there is always a thirst to be great again and I think that more than anything drives Microsoft.  To get there search will be a key cog in the engine.  Information rules the world and if Bing is not successful Google very well could rule that world.  Bing is in a tough place but it is a fight worth fighting.

Good Night and Good Luck

Hans Henrik Hoffmann July 10, 2013