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37 posts from July 2006

Ozzie Says Services to Complement, Not Replace Existing Software

According to this article on cnet, Microsoft’s Ray Ozzie is confident that Microsoft’s existing software business will remain secure, despite the services threat. I tend to think this is true in the short term, but not in the long run.

It’s important to separate this discussion into the platform and the applications. On the platform side, regardless of how many security holes and other problems exist in Windows, Microsoft isn’t about to lose platform dominance anytime soon. There are far too many great Windows applications for the typical IT shop to abandon Windows for Mac OS X or Linux. Although Linux has made great strides on the server side, it’s never been able to make a dent on the desktop. I don’t see that changing anytime soon.

The applications side of the industry is where Microsoft is most vulnerable. Everyone knows that most users only take advantage of a very small percentage of the features in Office. So why be forced to pay a fortune for this bloatware when cheaper alternatives are all around? Because it’s easier for an IT shop to keep doing the same old thing (upgrading Office) than it is to switch to a different product. That, and the FUD that surrounds jumping off the Office bandwagon are probably the two biggest reasons why Microsoft continues to dominate in this area.

The little applications Google offers (Spreadsheets, Writely, etc.) are not a serious competitor to Office…yet…but they very easily could become a viable Office replacement down the road. But I’m not on the Google-is-the-next-Microsoft-and-will-dominate-the-world-on-every-front bandwagon some folks are on. In fact, I wouldn’t be surprised to see Microsoft Office knocked off by someone other than Google, maybe someone we’ve never heard of.

Isn’t that part of the beauty of the promise of Web 2.0, though? The fact that a complete unknown could come from out of nowhere and become a market leader…that’s what must keep Ray Ozzie and his colleagues up at night.

Is Ma Bell Killing America’s Technology Leadership Position?

Better stated, “Are all the various telecom and cable companies so focused on protecting their own interests that they’re killing off true innovation?” I think so. Read this article, The Phone Companies Still Don’t Get It, by Mark Gimein, and see if you don’t agree.

We not only see core attributes of Clayton Christensen’s The Innovator’s Dilemma here, but also what I would call the related problem of The Incumbent’s Monopoly. I’m starting to get a better appreciation for why I don’t have a telecom-based alternative to my overpriced cable TV subscription. These guys have an army of lobbyists and other weapons at their disposal to make sure no technology will ever get widespread support/approval without them getting a cut of the resulting revenue.

Here are a few excerpts from Gimein’s article that really turned my stomach:

One of the ways in which these companies (Verizon, AT&T, etc.) are very different from the old phone monopoly is that while the original AT&T had a world-class research operation, its successors don’t.

Isn’t it a little odd, for example, to hear the CEO of a company the size of AT&T talk about needing to get bigger to have the resources to innovate?

And increasingly their approach has put the telcos on the wrong side of technological innovation, leaving them in the position of protecting their investments in their networks from the encroachment of new ideas.

No wonder other countries have better and more widespread access to faster broadband. As long as we let these fat cats call the shots we jeopardize America’s longstanding position as a leader in the technology space. Here’s to hoping enough of the little guys will continue plugging away on this front and change the playing field.

The Long Tale?

In this article in The Wall Street Journal, Lee Gomes kicks the tires on Chris Anderson’s claims in the recently published The Long Tail. It’s a bit disappointing that Anderson is backing off the “98 percent rule”, but what’s particularly surprising is the fact that he doesn’t have any examples of his suggestion that “misses outsell hits”. In short, it looks like the old 80/20 rule still applies in more cases than Anderson’s book might suggest.

FWIW, I tend to think the truth is somewhere in the middle. There clearly are numerous cases of the long tail in different business segments today, and I’d be willing to bet that the number will continue to rise. But, it’s not a universal law that can be applied to every situation.

Mark Cuban Wrestles with the Movie Business Model

Mark Cuban has a job waiting for you…all you have to do is solve the movie business model that seems to be haunting him. He poses the following question:

How do you get people out of the house to see your movie without spending a fortune?

He goes on to talk about the outrageous amount of money that must be spent to manufacture a blockbuster movie.

I think he’s going about this all wrong. The problem is in the phrase “out of the house.” Let’s face it.  Movie theater attendance is down, mostly because most people don’t want to leave their house. They’ve found great ways to entertain themselves without ever leaving home. Look at all the money that’s been and is being spent on home theater systems, high-end televisions, etc.

Cuban needs to get out of the model that worked in the past and focus instead on the future. Or, another way to look at it is by saying that he’s still trying to apply the blockbuster mentality in a long tail world. I know because I often face the same challenges in the book publishing business, especially when working with brick-and-mortar accounts vs. online ones.

Sure, there will be more blockbuster movies later this year, next year and in the years after that. But they’ll come at a price, and Cuban has correctly noted that the price is ridiculously high. So rather than fighting within the parameters of the existing model, break through and completely changing the playing field.

Build a new model that’s centered on the home entertainment experience, not the theater. Cuban has stated before that he wants to break the system and not force customers to go to a theater to watch a new release. Great. Now make that an irresistible proposition. He talks about an affiliate program for theaters. Forget about that and build one for home rentals/viewing. Figure out how to fold in some sort of snack component so that people can really “stick it to the man” by not having to pay an arm and a leg for stale popcorn and a bucket-o-Coke. The solution here is right under his own roof, not at the movie theater.