Google Rises to the Occasion - 4 Now

This past week, Google's stock rallied after reports indicated that the current downturn in the US economy is not affecting Google's bottom line ability to generate online ad revenues. As reported by AFP:

Analysts credit Google's unrelenting focus on helping people find what they want on the Internet and then matching search results with online advertising they are likely to click on.

Google makes the bulk of its cash from "pay-per-click" advertising, and the company reported 5.19 billion dollars in revenue during the quarter while the US economy was rife with talk of recession.

"Google's business model is making sure advertising hits the mark," Global Crown Capital analyst Martin Pyykkonen told AFP.

While there is still much to be said about the prospects of the US economy, it is noteworthy that US ad revenues for Google were surpassed during the first quarter by international ad sales, specifically Europe, and that Google lost at Yahoo's expense, according to ad agency tracker and service provider SearchIgnite. But this does not by any means indicate that we are out the woods when it comes to the fickle tastes of web surfers and the volatility of the online advertising market.

Quoted today in the New York Times, front page editor Streeter Seidell of highly lucrative site CollegeHumor.com:

[The New York Times] said of us in 2007, “No one can accuse this site of not understanding Web video.” So we sure seem to know what we’re doing, huh?

To be honest, though, we don’t. Nobody in the online content business truly does.

The taste of the Internet user is as idiosyncratic as it is fickle. What is popular and funny one day could be clichéd and boring the next. (“Chuck Norris is so tough” jokes, anyone?) There are certain common traits of viral content that loosely guide our selections — it should be short, easily understood, universal, nostalgic — but for every hit sharing those qualities there are millions of similar failures, not to mention stuff that simply defies explanation.

This uncertainty in the online advertising market might bode well for Yahoo!'s latest positive data that might indicate a strengthening, especially against Google, and thus might increase Yahoo!'s bargaining power against Microsoft's buyout offer. As well, this past week, Yahoo! and Google formed a partnership of sorts around what amounts to Google AdSense ads appearing next to Yahoo! search results.

All of this indicates more and more that while Google, Yahoo!, and possibly Microsoft will continue to dominate online advertising revenues, the advertising pie - a limited pie even in good times - may be shrinking or let us say, not growing, in the next year and perhaps beyond, depending upon economic growth in the US and abroad.

It also indicates that there is no substitute for quality, and while the latest widget might create an online herd sensation and bring in dollars quickly, sustainable models will depend upon sustainable, quality content that is consistently in demand. In the end, the good news for content creators, including writers, artists, designers, musicians, and reporters, is that consistent quality will be rewarded over the long run, albeit, short run groundswells might create short-term profits that are enormous.

Mobile Communication and Developing Countries

Today's Sunday New York Times (April 13, 2008) featured a piece in the NYTimes Magazine on the role that mobile communications - cell phones in particular - play in the developing world. The story focused on the efforts of Nokia 'ethnographer' Jan Chipchase (UK citizen) who travels the world to observe and record the peculiar uses of cell phones in developing countries - from Ghana, to Uzbekistan to Tajikistan and parts of Central and South America. Reports the Times:

"Several companies, including Intel, Motorola and Microsoft, employ trained anthropologists to study potential customers, while Nokia’s researchers, including Chipchase, more often have degrees in design. Rather than sending someone like Chipchase to Vietnam or India as an emissary for the company — loaded with products and pitch lines, as a marketer might be — the idea is to reverse it, to have Chipchase, a patently good listener, act as an emissary for people like the barber or the shoe-shop owner’s wife, enlightening the company through written reports and PowerPoint presentations on how they live and what they’re likely to need from a cellphone, allowing that to inform its design."

Clearly the 3.3 billion cell phone users worldwide and growing - faster than the growth of Internet subscribers - is testimony to demand by people all across the world, including developing countries where annual incomes are as low as $300 per year. Whatever the arguments may be about the metrics of comparisons between such annual incomes in developing versus developed countries, the fact remains that even in lower income economies, cell phones and voice communications appears to have a substantial value associated with it. One such value is theorized to be a kind 'just in time' transactions economy.

This 'just in time' economy manifests in a number of ways. One is the Grameen Phone model whereby a $150 phone 'kit' sold to primarily women, were then turned into a phone service for lease by the surrounding community whereby the women would quickly recoup their microloans used to finance the operations. Michael Mace, blogger on mobile phones, calls this 'spontaneous society' and makes a case for this growth based on the more 'realtime' centric societies.

Another example of a 'just in time' practice enabled by the cell phone is the idea of micro payments using the telephone as 'wallet.' This can involve a small purchase, or the payment of a debt. But the phone plays a critical role in such 'online' banking, and the article points out that estimates are generally high for growth in this area especially since 'latent demand' in rural parts of the world - including Africa - for banking services are so high, we will likely see a further rapid expansion of mobile phone purchases as this deman gets filled by users who want more than a leased line.

It is this 'just in time' thinking that will likely transform the developed world as well. Whether it is the kind of transportation system that depends on mobile communication verification of user credentials to 'ride share' or use a particular public transportation system; or the growth of mobile-based banking; it is clear that transactions will likely play a key role in mobile communications everywhere. What is not so clear is the separation between advertising-based models and membership/subscription based business models. If the Web of today (2008) is an indicator, then advertising would appear to be the safer bet. Yet, given the transactions-oriented use of 'just in time' mobile economics, it is not entirely clear that the advertising model will dominate mobile phone communications. Rather, it may be secure, branded, 'trust based,' subscription services.

Big Seven Mobile Broadband Developments in the Next Five Years

Some of these already exist in some fashion or other; but usually not in a wider sense whereby there's a critical mass or a price point that makes this feasible. Here are my top picks for broadband mobile possibilities in the next five years:

1. Bluetooth 'smart' keyboard for an iPhone-like device. 'Smart' here means that the keyboard is big enough for clunky hands like mine, but maps back to a screen shot that highlights the relevant activity -- such as typing letters and words, or browsing with a mouse, etc.

2. Wimax or LTE and/or 700 MHz and/or broadcasters 'digital spectrum' networks that build on the existing Wifi infrastructure such that 'campus' environments are broadband wireless areas outside and indoors; and connected to larger urban and regional 'meshes.' Key interoperability agreements amongst the big telecom wireless providers (Verizon, AT&T, Sprint, T-Mobile) and wireline broadband providers - Time Warner, TCI, Comcast, Cox, Verizon (wireline), AT&T Cable, and others; leads to an acceleration of device innovation coupled with software apps on standard and stable mobile platforms. (I know, dream on).

3. Rapid advancements in security and identity management for major efficiency applications for mobile-based transactions. For example, 'shopping' in advance using a browser; and then picking up the groceries or other items in a drive through that avoids long lines and the items are pre-packaged for pick up.

4. Again, security and identity management advancements enable secure medical records for patient access and increasingly self management of these records for greater efficiency, reliability, and opening up new choices for patients who can seek feedback based on 'digital examinations' of records. In the longer run, mobile devices may be able to offer greater patient monitoring and sometimes diagnosis. But for immediate economic gains for all, the key is to tie identity management with standardized patient records. This creates new efficiencies for the industry and new opportunities for patients.

5. Municipal and informal transportation ride services. From GPS and real-time updates of a specific bus, train, plane, or related car for reliable and efficient travel that avoids driving; to mobile networks that are based and trusted verification processes and that allow travelers to 'hitch' a ride to virtually anywhere at nearly anytime with someone in the network based on some type of 'credits' or even monetary transfers. Additionally, it would be wonderful to see mobile communications provide daily biking commutes across cities whereby GPS and real-time prompts create efficient 'mass' rides -- efficient in that vehicular traffic is minimally disrupted and bikers are much safer riding as a 'mass.'

6. Reliable and standardized institutional and inter-institutional calendaring from mobile to Web to print.

7. Advanced voice recognition for voice and video, Web transactions, and for retrieving data.

I'm sure there's more ... but I guess those are my big seven broadband mobile wishes in the next five years.

#11 The Future of Online Communities

This week we have a special focus on mobile communications, under the rubric 'the future of online communities,' featuring MobiTV's CEO and Founder Charlie Nooney. MobiTV provides reasonable high-quality cable TV and other TV-like programming for cell phones. We have also read the Aspen Institute's research on the 'mobile generation.' Already, both of these fairly recent entries to the market and today's discussion forums appear to be somewhat antiquated models of the coming changes brought on by mobile communications.

Clearly there will be a niche in the television transmission business as with MobiTV's business model and apparently superior video codec technology for mobile devices. Similarly, the Aspen Institute's research on how youth is using mobile technology makes some important points about how this technology is being used. As with Mimi Ito's research (Personal, Portable, Pedestrian; 2005) including her earlier research with Howard Rheingold (Smart Mobs; 2002), the emphasis on youth and the practices amongst youth point to a transformational device that has both personal associations (identity, style/fashion, aesthetics, taste, etc.) and functional tools (voice, web access, calendaring, SMS/texting, even GPS). Mobile devices are used by primarily youth, the research shows. Devices are used both for social and general communications, and for micro managing the day's activities and social calendar.


With the success of Twitter, which relies on the social network for its success as a tool; it should become increasingly obvious that the 'killer app' for mobile communications will likely be similar to the 'killer app' for the Web -- email. Mobile technology is wholly unique in that it is built on very rich two-way communications in the form of voice; and then adds to this the text and even graphical capabilities of the Web and all of the Web's affordances. This 'Webification' of cell phones is epitomized by the Apple iPhone. And while the iPhone is not as 'open' perhaps as Google and others supporting platform and device-neutral broadband networks aka 'open networks'; the iPhone is really the device to capture the imagination of the consumer and that demonstrates the shift from phones as extensions of proprietary telecommunications systems to extensions of an increasingly mobilized web.

Just in these past months we have seen the opening up of the wireless spaces as the 700 MHz auctions raised over $13 billion for the US Treasury; but much more importantly, it has created a real likelihood that the top bidder, Verizon, will create a new set of broadband spaces that will allow for non-Verizon devices (with a service fee; but device neutral). This will lead, according to Lawrence Lessig and others, a kind of explosion in innovation around devices as companies compete to create the most efficient devices.

At this time, we are at a point in time that is wholly unique regarding broadband mobile, and ubiquitous mobile technologies: global growth in mobile technology exceeds that of the Web. And the spread of the practices around mobile technology are diffusing rapidly throughout society, not only youth. The possibilities for content sharing and distribution, micro and regular transactions, and even identity management are intriguing, and therefore gaining a lot of attention.

#10: Online Advertising Rolls with the Punches

This has been a dramatic couple of weeks for online advertising firms as lawmakers are starting to crack down on the online advertising aggressive tactics to mine user data, including companies such as Google, Yahoo, and Microsoft. Starting with states like New York and Connecticut, lawmakers are restricting the type of information that companies are allowed to glean from user's clicks and profiles on the Web. Reports the New York Times on March 20, 2008:

“A law like this essentially takes some of the gold away from marketers,” said Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania. “But it’s the right thing to do. Consumers have no idea how much information is being collected about them, and the advertising industry should have to deal with that.”



Phorm meanwhile claims fo have a complete Open Internet Exchange (OIE) solution that manages to create a customer profile while protecting the security and privacy of the individual. Reports the New York Times (March 20, 2008):

"Phorm says its technology protects users’ privacy by creating a random number that is associated with a person’s Web surfing patterns, rather than using a person’s name or other information. Phorm puts a cookie, a small bit of computer code, on a person’s computer to tie his or her Web-surfing to the random number and then saves only that number in advertising categories like types of cars or clothing."

Google responded in kind, with a new tactic that more or less places a search window within a company's internal search such that the user ends up seeing Google ads from potentially - likely - competing companies. According to the New York Times (March 24, 2008):

"Analysts generally praise the feature as helping users save steps, but for Web publishers and retailers, there are trade-offs. While the service could help increase traffic, some users could be siphoned away as Google uses the prominence of the brands to sell ads, typically to competing companies.

“Google is showing a level of aggressiveness with this that’s just not needed,” said Alan Rimm-Kaufman, a former executive with the electronics retailer Crutchfield who is now an Internet consultant. Google’s aggressiveness, Mr. Rimm-Kaufman said, ignores a user’s desire to reach a specific destination and it costs those Web sites visitors."

Meanwhile, AOL bought out social network site Bebo, which has a large presence in the UK, for $850 million and Mashable finds it interesting that American Online should take on such a strategy outside of the United States of America. And the New York Times (March 19, 2008) reports that Yahoo and Microsoft may be entering a kind of gracious period of negotiations which resume this week, yet Yahoo released a 'rosy' forecast for the next year's revenue and profit growth ... while Yahoo's stock price is at $27 per share, below the $31 per share offer.

Back in May 2007 when Microsoft made by far the largest buyout in its history of $6 billion for aQuantive for the rather generous sum of $66.50 per share when their stock was at only $35.37 per share. This is nearly twice the amount Google paid for competitor DoubleClick which recently got clearance from the EU to go ahead with the buyout. To complement its aQuantive buyout, Microsoft bought out ad management and consultancy firm Rapt on March 14, 2008.

With all of the activity around online advertising and the connections to social networking sites and privacy issues, it will be interesting to see if this can hold out, or if we might just move to a mini-subscription model for traditionally 'free' online services -- including social network sites, widgets, email, and more ... I think I would be willing to pay some dollars per month to assure privacy, security, and the services that I need -- clutter free with only permitted advertising (perhaps with deductions for some advertising from the core per month bundled service fees).

#9b:Day Two: Notes from the eComm 2008 Conference

Rich Miner, Google and formerly of ORANGE, on mobile innovation (less on Android): Openness and the Future of Mobile": Without openness, you inhibit innovation. The real problem isn't that there hasn't been innovation per se, but that it's escaped users -- getting it in the hands of consumers is almost insurmountable, due to market dynamics within the parameters of closed systems.

Mobile phones are as powerful as the PC in 2002, so very powerful. But what people can do with it, is still very limited ... from apps to 'ease of use,' the limitations are significant. It's important that the global mobile phone user market have access to apps and innovations.

Current barriers/constraints: screens sizes, input capabilities, lack of openness (platforms, networks, devices), working business models (distribution of apps, barriers to entry -- simply not easy to get to innovative apps).

UI Constraints: small screens, button sizes, design -->these problems are being resolved, according to Miner. Additionally, inputing data is not a problem for a very large (very young) demographic, e.g., inputing with device in the pocket.

Lack of Openness: Platforms are closed ... you can't develop for most phones; 'open platforms' are not open ... e.g., MS Windows Mobile ... but is there access to the OS and the source code? Lack of enablers -- location (who's near me, what's near me), billing (no way to transact easily). Porting Google Maps, for example, is difficult to port on different flavors of JAVA. Native OS like Symbian won't work with JAVA, although the phone may be JAVA based.

Business Models for Mobile: Confused relationship between OEM's and carriers; no one who understands the software; little power or freedom given to developers; complex singing process.

Hope on the Horizon: Mobile platforms are shifting to software developers, witness Apple's iPhone: great experience, seamless integration (including with Google, who worked with Apple, e.g., Maps, Address Books); powerful platform; 3rd party development. Android: Started on the premise of 'openness,' both deep and broad. It is a complete platform (open handset stack); the Open Handset Alliance; an SDK; $10 million competition to develop apps. 'It's everything you need to build a phone.'

Linux based; with a complete stack. But aren't there a lot of platforms out there? (J2ME, Symbian, Windows Mobile, Linux ... Open Moko?) Linux is only a small portion -- maybe 20% of the total stack ... so the Android stack integrates middleware that is open.

Ribbit (Chuck Waters, CEO): Telecom veterans together with Web 2.0 professionals -- added to a business model. App on the Web that is seamless or reproduced on the mobile device, value 'goes up.' Ribbit's API sits on a stack that includes XML, Flash API, DB Services, SIP, XMPP, Skype, MSN, Yahoo, and Saleforce Connector.

toktumi: Evolution of phones; stressing the significance of the iPhone. Why do we need both a laptop and a phone with a screen? We need the convergence of both -- . toktomi's business model: hosted services from toktumi (support, etc.) for small businesses that connect phones to a PC directly via a converter. (Poster's note: This does not appear to be a mobile solution, merely an office/stationary convergence solution.)

Yahoo Brickhouse (Evan 'Rabble' Henshaw-Plath): Code named 'fire eagle,' this initiative is all about location sensing and sharing this over the Web. Carriers want to pay what marketers want to buy, e.g., finding a Starbucks. But for consumers, it's more about finding each other and less obvious locations (unlike Starbucks which is all over the place). Fire eagle is comparable to a Facebook platform, with NO site, only the APIs ... this is not a 'client'. (hmmm ...) Here's what it does: takes location info in, resolves the location info, and spits it out; e.g., GPS device in --> SNS out. This might rely on cell phone tower locations that are sent to fire eagle, and then share this with friends. The idea is to make this 'ambient' and natural, and not requiring much 'push' or 'ping' by the user or those 'following.' Works with numerous platforms, including Movable Type.

NMS Communications (Brough Turner, CTO) has a radical approach to 'own' the network. Spoke on the market and the resultant bottleneck to the right of way for access to homes, e.g., running fiber to a home is a problem. Owning and controlling dark fiber is what NMS advocates.

Embarq (spin off of Sprint) -- deals with privacy and has a model for this. Privacy is a means of achieving security. Would we be willing to give up our privacy, if we were assured safety and security. Pointed out LifeLock company and its services, whereby the CEO displays his real social security number on the Web.

Fonolo appears to be a competitor to Skype. (Note: too busy with email to pay needed attention to the presentation).

Niche Markets and Mobile Technology -- panel discussion -- getting the carriers to add apps to a carrier's system, is like pulling teeth. High margin, small communities, like Chris Anderson (The Long Tail). What will you do if you want to add hardware to your niche app? Gumstix Goliath Board is the answer, according to the speaker. If you have a niche app, with motivated customers, and carriers are not interested; you can work with your customer to solve the problem. Speaker -- software is open. So, this is an open hardware system for mobile.

iSkoot -- a company that provides a Skype solution for mobile.

Chris Allen, iPhone Webdev from the security world of the 90s; now in the social software world. Considers the iPhone a useful social software tool. iPhone has 28% of market, compared to 41% for Blackberry, 9% Palm, and 7% for Motorola; iPhone has 71% of mobile internet usage, and a serious chunk of the ad dollars in mobile. SDK is available now; firmware will be available in June 2008 which will help accelerate enterprise level implementation. Includes access to the 3D graphic card, location information (Google Maps); accelerometer; iPhone media capabilities. Cocoa Touch; Media; Core Services; Core OS. Business Model: Developers distribute exclusively via iPhone Apps Store. Costs developers $99 for code signing; 70% of revenues to Developer; no fees (free apps allowed). Apps MUST be approved by Apple (no SIM unlocking; no malicious or illegal apps; no phishing; no porn; no executive code -- Java, Flash eg.; no VOIP via EDGE (Wifi ok); use only Apple APIs. Distribution restrictions (still open question); DivX or flv? Bluetooth such as external keyboard -- likely not available. 3G iPhone probably available before 2008's year end. iTunes App Store makes micro payments possible (!)

#9a:Report Notes from eComm 2008

The eComm 2008 conference is about to begin, here in Mountain View, CA at the Computer History Museum which appears to be a hospitable location. Attendees are trickling in, and the conference founder and powerhouse Lee Dryburgh is quietly preparing for the introduction and working with the upcoming speakers. The auditorium is filling up, and I would guess the gender ratio is around 100 to 1, males to females. This is the inaugural event and it's a full house -- that says a lot.

Says Lee, VOIP is more or less over. It's not that exciting, and it doesn't solve a host of needs. 'We need something farther reaching ... something more transformative." We need a device that integrates content, entertainment, ecommerce, and social networks, adds Lee. But what is it? We need a 'Personal Lifecycle Device' as relationships become the #1 focus. "The telephone is dead," says Lee. The replacement is the exciting part; Google has released Android; T-Mobile and Sprint have joined in. The power of innovation is shifting to the edges. "Innovation and democratizing innovation" is the purpose of this assembly, according to Lee.

Jonathan Christensen of Skype is up, and makes the point that NetMeeting, a product he was involved in developing, is still being used despite no updates in nearly ten years. Jeffrey Pulver early inspirations: Min-X and voice minute exchange, and the 'Free World Dialup.' The VOIP revolution led to better pricing for consumers, but no real innovation. Christensen again repeated: 'The Phone is Dead.' Skype is the intersection of IM and IP, introduced in 2003 (IP therefore IM :).

Question from the audience: "What are the future plans for Skype now that it is part of eBay? It used to be the leader ..." Christensen: We are in a stall ... but this is the most exciting period for Skype ... they are groundbreaking projects .. can't talk about the specifics.


OpenMoko, Michael Shiloh: Open Source as much as possible; within business constraints. Allow for expansion -- allow to hack in; and you reduce the barriers to entry = innovation. The new Neo with wifi will be out in 'a couple of months' ... so the pic is the current, completely out-of-stock Neo 1.0. Love that Neo ...

David Isenberg: Author of The Rise of the Stupid Network. Care about the politics of infrastructure policies. Your job is at stake. "Not all packets are the same." We need the pipes separate from the apps -- instead of net neutrality, let's talk about structural neutrality. Double sided business model: YouTube pays to upgrade user's connections? "I don't understand the model well enough."

Presence: Jabber/Peter (co founder) ... 'dial tone for internet communication' ... shrinking in the half life of communication as bandwidth increases and goods and services can move across the globe ... dialtone is 'boring' .. but it is a catalyst for communication ... PSTN 'presence' indicates that there is a system out there, but not that anyone is on that system. Dynamic possibilities ... more than person-to-person and includes application to application ...

Thomas Howe: Draws an analogy with Paprika as a kind of parallel to the ARPU question. Voice is simply a commodity; and voice is simply a commodity. They increase their value in being generic. Branding is critical though for the carriers, similar to Virgin Mobile (Branson).

Vringo: Used for sharing video ... and video ringtones (?!). This is an example of a viral marketing model, relying not on payment. Rather, relies on advertising revenues. "Free and ad funded" is the future, according to Andrew Perlman. Q: How much are you anticipating wrt ad dollars? The current mobile ad market is very scarce -- 'CPM's are worth more on the Internet.

Boaz Zilberman of fring: A filesharing and integrated solution or 'VoIM service' (voice messaging solution). One of the most popular apps on the market today. Says that it provides 'free' calls, chat, and presence ... here's a YouTube video on using fring. Mentioned that Jooce is now mobile(!)

Phonefromhere: Works on the basis of embedding phone functionality into a website. How can this be 'better' than using a phone? Take MySpace where users discuss bands in a group; or LinkedIn where it's less about 'group' discussions. What triggers a call from a website? Speaker suggests that this can be similar to a Facebook 'poke.'

Dial2Do, CTO Sean O Sullivan: The US fell behind with GSM, but the US has always led in phone call pricing. US users speak more than others from around the world. Value adds in the US market make sense, therefore. Europe has high SMS and mobile voice charges.

Identity and Trust (BT, Piotr Cofta): Resides on the IP and TCP layers on the ISO layer model. Identity and trust are constructed to combat the growing complexity. Your identity is my perception of your persistent interacting 'whole' (IP). Identity is constructed as part of the identity. The bank 'card' is what constitutes this ... but it's really about services, and not one's identity. Identity is a communication shortcut. Identity encapsulates the past, defines a communication endpoint ... the future identity protocol is to do this more dynamically, beyond handing over or doing this with a card. There are many more issues, especially privacy. And what about group identity? Trust (TCP) is an expectation of predictable future behaviors of an intentional identity. There is nothing about benevolent behavior, merely future behavior that is predictable (i.e., 'I trust that you will kill me.').

IBM, Tony Nadalin (Trust/Identity): The problem remains trust and identity.

Young Generation and Communication Technology: Keynote: Dr. Norman Lewis, Chief Strategy Officer of Wireless Grid Corporation : It's not the content, it's the practices. Young females is the largest user base. Getting a response from your posts is an important acknowledgment of your existence. "It's all about them ... all about 'me'." It's about who's in and who's out .... who's part of the group and who's not. This is extremely relevant to the design of the devices and systems that are built in mobile technology. What do you DO with this technology? Through the tactile control you can exert over your environment around you that is key to this technology. "Me to the Power of Us." All of the devices can now be linked together. Mentioned the current implementation of its dorm-centric data system that allows students to share music and data in a central and decentralized wireless environment that allows sharing across devices: cell, computer, laptops, printers, and more.