Category Archives: Software

MacOS App Store, Finally!

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So the Mac app store is finally here!  (After I wrote about this two years ago).  This is a huge step, that will fundamentally change the way desktop software is sold.

I’ve been buying small indie/utility apps on-line for years (e.g. photography tools, text editors, PDF tools, etc.), but it’s a pain:  entering payments, dealing with registration codes, doing updates, etc.  Many large software vendors are offering on-line purchase and download options, and Valve’s Steam platform has been around for a while, but it’s only for games.

This is great for consumers:   great (and growing) selection with a seamless purchase, download and install experience.  Physical media is quickly becoming obsolete.

But things may be less-great for developers.  First, like the iOS platforms, Apple will only allow approved apps.  Also, in exchange for Apple handling payment, distribution, and install, developers have to give up 30% of the sale price.  (Think of this as Apple starting to control and tax the desktop software business).  But most importantly, the ecosystem is becoming so efficient, it will be very competitive, with prices dropping over time (just like they did for the iPhone app store).

But what boggles me the most is Microsoft — are they completely asleep?!?  They still have ~90% market share, and Microsoft could have easily drafted Apple’s early app store experience into an app store for Windows.   They’d be years ahead by now.

It’s a great time to be a consumer.

Games Are Different

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I’ve become generally negative on most pure software projects.  I think it’s very hard to build large value there, for a variety of reasons:

  • It’s insanely crowded; lots of people code these days
  • Open-source stacks make it easier than ever to crank things out
  • Cloud-based hosting (e.g. EC2, S3) removes most up-front capital requirements
  • If you’re successful, it’s easy to get copied

It’s a great time for consumers — the innovation rate feels higher than ever.  It’s just tough for entrepreneurs:  there will be some nice software exits, but returns are becoming so skewed, it’s more like a lottery than anything based on skill.

One exception to all of this:   games.

Games are different, for a variety of reasons.  One big reason is content:   many games aren’t pure software projects, they’re really engines wrapped with levels, puzzles, art, 3d models, textures, sound effects, designs, characters, AI, story lines, scripts, music, etc.

This makes the rules a bit different.  Content takes real time and money to create, and it’s harder to copy (copyright law tends to apply more). You can enjoy the online gambling games such as prediksi togel that can bet and make money. Playing online casino games like happyluke is getting really popular in the gambling community. However, content-centric games, like movies, can have limited re-play value.  Which in turn leads to a franchise strategy for the biggest titles (e.g. Halo on Xbox).

So, one question:  will we see any large, content-centric, non-game software businesses?

How Many Groupons Can We Stand?

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Groupon, the deal-of-the-day company, certainly left a trail of salivating investors from their last round of funding.  Now, it’s rumored that they’re seeking funding at a valuation around $3 billion.

First, congratulations to them:  they’ve built a real business with real revenues, and created a whole new category in the market.  That is a real accomplishment.

But, this is now bordering on crazy.  It reminds me of the early days of email marketing, when marketers were paying $0.15 (yes, 15 cents) per email.  It was a new medium, so nobody knew how to price it.  And, in those early days, it actually worked well.

Then email fatigue set in with customers, and effectiveness dropped.  Some high-flying, fast-growing email marketing companies saw revenues stall, then drop steeply.

I think the same thing happens with the deal-of-the-day category.   As more offers become available from various companies, effectiveness fades and fatigue sets in.

Also, some existing content sites are much better positioned to offer daily deals as a feature, not as the premise for the entire company.  For example, Yelp’s first deal of the day in San Francisco reportedly went quite well.

I wish Groupon (and clones) the best, but at a $3b valuation, I want to go short.

Disrupting Education: Khan Academy

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I think Salman Khan is onto something with Khan Academy.  I’ve been wondering when we’d see Internet-style disruption coming to education, and this might be it.

Sal’s found a way to leverage the power of the Internet.  He’s a great teacher, and his videos package up that teaching ability, for anyone, anywhere to use, at virtually no cost.  For a system that’s depended on teachers being physically present with their students, this is a way to take our best teachers and make them available to everyone.  I don’t think this will fully replace a face-to-face education (and it shouldn’t), but it can surely augment it.

Also, he’s using video very well.  Instead of a talking head or a lecture podium shot with fuzzy slides, we see what’s most important — the shared “paper”.   Also, he’s kept the videos short, and single-topic.  Too many people are still using traditional video production principles (e.g. long segments, talking heads), and Sal’s showing us a much more effective way.

Finally, I wish Richard Feynmen had been able to do this before he died.

Repeat After Me: “Location” is a Feature, not a Product

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Two years ago, Daniel Cozza and I spent a lot of time looking at location-based apps.  We brainstormed tons of ideas and prototyped one.  But we ultimately decided not to pursue it; the space (and the iPhone app space, generally), was starting to feel really crowded.

Later, it also became clear that many of our ideas were really nice features on existing platforms, not new products.  For example, Twitter and Google have been steadily adding new location features.  And a few days ago, Facebook finally launched their check-in feature, Facebook Places, as (presumably) a first step to making Facebook much more location-aware.

Facebook’s news is interesting from a number of angles, some I’ve written about before:

  • Gorillas rule. Facebook watched the app evolution closely, then made their move.  They won’t let anyone get big enough to threaten them in any one area, and if they do, they’ll (a) use their policies to control things (as they’re attempting with Zynga and payments), or (b) take over the functionality (as they’re doing here).
  • APIs are a great way to seed an ecosystem. Foursquare’s original integration with Facebook was a huge part of their growth.  A continuous stream of check-ins in the news feed is a great way to acquire users.  Now, Foursquare’s integrating with Facebook’s new location API.  Foursquare PR spin aside, make no bones:  Facebook just grabbed a huge chunk of strategic functionality from Foursquare.  (My bet is that Foursquare devolves over time to a location-based game, or set of games).

For users, this is all great news — having Facebook be more “location aware” is hugely useful.  I can’t wait to see what new features become available.  For entrepreneurs and ecosystem players, it’s a bit more tricky:  how can you play here without having Facebook stomp you when you get too big?

The Internet Used to be Flat

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The Internet used to be a lot “flatter”.

Last decade, there really weren’t any major points of control.  If you had an idea for a new app or content site, it was pretty much a level playing field, and you could largely control your destiny.  The browser was a major point of control, but that was very “horizontal” — few Internet companies worried about bumping into Netscape or Microsoft as a competitor.

Now, the world is quite different.

Google emerged as the first gorilla, becoming the “starting point” for many Web sessions.  Most Internet companies are now hugely dependent on Google, directly or indirectly.   SEO-dependent companies can find their fortunes change overnight, and Google’s “quality score” manipulations can materially affect an SEM budget (and usually not in the favorable direction).

Facebook is the next gorilla, especially with their recently announced strategy to own the social fabric for the Internet.  They’re a major “attention point” for many users, and it’s hard to consider a new Internet idea without a Facebook strategy.

Twitter is a gorilla-wannabe, but it’s not clear if they’ll win (long-term) over Facebook status updates.  But the Twitter ecosystem got a splash of cold water with the news of Tweetie’s acquisition.  Many app developers are now wondering if they’ll end up competing with Twitter.

And finally, Apple is emerging as a gorilla wildcard.  They don’t have leading market share overall, but their mobile devices (iPhone, iPod, and now the iPad) are dominating and defining their categories.  The App Store is a huge improvement over the carrier’s closed systems, but it’s hardly open.  Apps are approved at Apple’s pleasure, and can be un-approved at any time, without reason or notice.

The Internet’s Darwinian era seems to be over.

Your on-line presence is more than your Web site

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Five or ten years ago, your Web site was your entire on-line presence, simply because there wasn’t any other place to deploy content and functionality.

Today, that’s not the case at all: with the proliferation of platforms (Google, Yahoo, Amazon, Facebook, MySpace, Twitter, etc.), embeddable content, widgets (video, Flash, etc.) and access methods (desktop, mobile, game system, large screens) your on-line presence is much more than just what’s on the Web site. In extreme cases, there’s no site at all: a company’s presence may be entirely embodied in a Facebook app, for example.

Moral: don’t think of the Web site as the only place to focus development efforts. Treat the off-site stuff as first-class features and prioritize them against the Web site investments. Specifically consider:

  • Widgets
  • iPhone app (or an iPhone version of your site)
  • Google widget
  • Facebook & MySpace app
  • Twitter integration

Hulu Desktop & Boxee: Temporary Solutions

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Hulu Desktop just came out:  it’s a client-app (Mac and Windows) that provides a “lean back” UI for Hulu video content.  It integrates remote control inputs, so it works well for folks plugging computers into the living room TV.

I’ve written before about the evolution of Internet TV:  Hulu Desktop and Boxee, as client apps, are just temporary, intermediate points.  There are few reasons (soon, no reasons) why these UIs can’t be provided through existing browser technologies, with no client install.

We saw this movie with Web browsers in the mid-90s.  As the Web took off, many groups talked themselves into a need to “control the client” by having their own Web browser.  In some cases, there were good technical reasons:  browsers were pretty limited, and adding small capabilities could enable big things.  In many cases, it was just flawed strategic thinking.

The Web became part of the operating system (or even has become the OS iteslf) and with increased capabilities, subsumed a lot of apps that would otherwise be client-deployed.  These client-side TV apps feel like the last vestige of stuff to get absorbed into the browser.

Inflexible Process meets Immovable Software

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Devdutt Yellurkar (at CRV) and I were comparing enterprise software war stories and notes on SaaS opportunities (he did CRV’s recent investment in ZenDesk).

The enterprise software business model is a tough one.  Large organizations frequently need custom features, and with project investments of millions or tens of millions of dollars, companies expect the solution to fit their operations and processes.  As a result, many enterprise software companies were more like professional services businesses that happened to have some software, than the other way around.

But there’s an interesting angle for SaaS:  the lower price points make organizations more willing to accept the feature set “as-is”, and adapt their business to the software.   If the hosted software costs (say) $10k/year, it’s hard to justify $500k of customization work.

This drives another effect:  SaaS offerings can focus on the core features that actually get used.  Many enterprise software solutions turn into bloatware:  the feature set evolves to an aggregated super-set of all possible customer features.   Worse, after the purchase decision, many customers end up using a sub-set of what they originally thought they needed.   This is why the product manager’s job is hell:   the product has 100 features, only 40 matter to any given customer in the sales process, and only 10 get actually used.

Browser-Powered Television

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[A longer than usual blog post, summarizing some strategy ideas I’ve been working on.]

In the early 90s at DEC, I had a colleague that worked with the cable industry.  I tried (unsuccessfully) to convince him that TCP/IP would be the winning network infrastructure for the fancy interactive TV services everyone was talking about.  In the end, “adequate general purpose” solutions always win.  Proprietary solutions can’t compete with economies of scale.

Moving up-stack, I’ve been thinking about how TV content delivery is going to play out.  We started with over-the-air broadcast, then shifted to cable (first analog, then digital), and now we’ve suffered through a decade or two of crappy set-top-box user interfaces fed from proprietary cable networks.  Along the way, our TVs have evolved from tiny, fuzzy CRTs to large, crisp 1920 x 1080 color monitors.

As household bandwidths have increased, we’ve got options that end-run cable companies to get content on the screen:  Apple TV, Roku/Hulu, Tivo, network-enabled DVD players, game consoles, etc..  But these are still closed & proprietary:   I can’t deploy my own apps (or even content, in some cases) without a lot of permission from other people.

On the bleeding edge, users are plugging their large-screen TVs into computers (the Mac Mini is a popular option), sometimes installing software like Boxee to provide a “couch-friendly” UI.  I like Boxee, but it’s only an intermediate step and feels like a response to the past.  Users don’t want “set top boxes” (STB) or “media centers” or “electronic program guides”; they want unrestricted access to apps and content.

And a general-purpose delivery mechanism already exists:  Web browsers.  As Apple demonstrated with the iPhone, HTML+JavaScript is an excellent way to get content on-screen, because it leverages a deep existing technology infrastructure.  (And adding Flash makes it even more compelling).

I’m betting the same will happen with TV:  HTML (and related technologies) will become the new “broadcast standard”.  I’m not talking about seeing Firefox’s File/Edit/View menu bar on your TV; I’m saying that content will be rendered by a full-screen browser engine using HTML+JavaScript+Java+Canvas+Flash+Quicktime+etc technologies.   Users will access any app or content they want by navigating to the appropriate URL.  (Innovators will adapt browser navigation to the TV screen & remote control, just like Apple adapted Safari for the iPhone.)

Here’s the test:  how hard is it to write Boxee’s UI or any STB UI as a full-screen JavaScript or Flash app?  Apart from accessing LAN content, it’s relatively easy.

I’m pretty certain this is how things are going to play out.  Now the entrepreneurial question is:  what to do about it?