Ways of screaming, “LOOK AT ME!”

What do the following companies have in common? Ebay, Facebook, Myspace and Microsoft (please suggest others in comments).

Answer – they’ve all launched an ‘open’ platform for developers in the hope of stimulating or rejuvenating their core business. It seems that in the web world, once a company hits a certain size/maturity level that throttles and chokes the development of new ideas, the trend is to throw out an element to the developer space in the hope that something better will come from it. But is that always necessarily the case? They could just sell stuff.

Let’s compare that notion to Amazon who launched S3 and their suite of web services with an immediate openness so that it would be embraced from the word ‘go’ by developers as a strong yet flexible tool. Granted it’s in a different arena, but is there something to be said here about having an open strategy from the beginning of a business’ operations?

As well as opening up another chunk of their site, Ebay have partnered with a Vietnamese startup. This type of behaviour is not new from Ebay who, quite sensibly, have in the past collaborated or acquired national/local level auction sites in Asia to gain the specialisation of language and culture. One wonders if they’d adapt their structure in the future to take the trading down to a much more local level in Craigslist style, or if they’d look to go social by pushing their own messaging systems and allow greater in-site sharing on top of their current activities loading Ebay widgets into every other social network on the web.

When putting my face on the Zuckspace, my concerns lie primarily in what the media and authorities tell me about privacy, and then my experience as a consumer begins to become tiresome with the constant nagging of a thousand different invitations to join up to some virally marketed application with zero useful functionality. Imagine a parallel world where from day 1, Mark had opened doors on thefacebook to the developer community and attracted business through being 100% public about changes to services, rather than the ‘by-the-way we added this’ approach. Myspace wouldn’t have stood a chance, and maybe we’d have a half decent set of apps that are useful for our daily routines. It sickens me how much VC money goes into widgets and such, with no real revenue coming back out.

I think openness is something that business analysts should start to use to gauge the level of maturity or desperation of a company. Perhaps in some instances it’s just something of a gimmick in which case the company in question should be exposed as a surfer of the trend wave. Opening a developer platform or a part of your product is a huge move, and any company taking steps down that path should learn to walk before they start to run. I look forward to a time when VCs and angels see in potential investments the strength of an idea that embraces community, social and open concepts in a sensible and straight-forward blend. As the last couple of years have seen the web turn social, it is certain that the immediate future holds for someone the opportunity to make a big win by finding the perfect business model and in my opinion that will find its roots in the beekeeper open source example.

Openness for the purpose of having some hope to clutch on to as your firm levels off isn’t something anyone should push for, so instead we should ask these maturing companies to get smart and openly talk to each other. The future lies in good communication and the portability of services. EA Maxis have released their new game Spore which is the perfect example for what I’m trying to illustrate – there’s a real market out there for products that make sharing information simple and that blur the boundaries between our online and offline experience. The ability to make YouTube videos of game play and add them in-game is incredible, and I hope that GameVee take note of where games like Spore are going, and try to get some good partnerships in motion with game makers.

The directions that companies in the general tech but especially web2.0 fields need to be looking at are vertical (online and offline – helped already by Google Gears and Yahoo! Browser Plus), horizontal (desktop, laptop, giant plasma screen, UMPC or cell/mobile/smart phone – lets have a seamless experience wherever) and everything else in between which I’m naming ‘diagonally’ for want of a better word (integrating and cooperating with services provided by others that could make for sensible partnering and sharing). We’re all still waiting on total perfection in the ‘horizontal’ direction: I’m talking about mobile browsing and the recognised unfulfilled potential.

The latest developer craze is surely all about Apple’s shiny new iPhone (or not). VC activity is bound to go off the scale as startups show the world how you really make use of a platform. I’m praying that mobile platforms generally, whether Android or LiMo or iPhone, find productive and helpful apps housed, and that they don’t spin out of control like social network platforms have all seemed to. I’d love to be able to take ‘digital nomad’ really mobile… or rather, on my mobile. Currently that project is, for me, simply limited to getting all my operations inside a browser.

Firefox 3 has been officially released today, and hopefully now that’s out of the way Mozilla can take a step back and analyse their next moves on mobile platforms. Being a browser maker, they certainly sit in a favourable position, one in which they could stand to soak up an even greater number of users should they adapt products for ‘touchy’ devices.

Unsurprisingly RIM’s Blackberry line up contains a touch phone, and the phrase ‘line up’ is the exact reason that they’re going to keep making money despite just how great the new iPhone might be – there’s so much more choice for consumers. Besides, let’s not forget the business users that swear by them and their hardcore functionality.

Now that Windows 7 is in motion and we have days of staring at our grubby finger prints to look forward to, I think it’s high time that Windows Mobile caught up with Apple’s shiny software. I make no apology for using the word ’shiny’ twice next to ‘Apple’ – I’m no Mac Fanboy, I just think they deserve credit for making flashy (even though, laughably, Adobe Flash STILL isn’t on the iPhone) gizmos that everyone else can copy and make more practical. Microsoft need to push and push their speed at rolling out products and services because I don’t think it’ll be long now before their competitors gain enough market share and publicity to make everyone locked into their brand able to see the shiny stuff and lust after it.

Talking about the Big 3 (and AOL) is unavoidable in this blog post, and I’m not sorry about that. I’ve been avidly following this drama for months and have watched Microsoft’s obsession with joining the online advertising business grow. I strongly agree with Henry Blodget’s latest comment that this isn’t what Microsoft needs, it should focus on corporate business and make its core products so strong that they keep hold of their oligopoly.

I ca(h)n’t take this (bad pun? I don’t care) obnoxious muscling in on affairs and trying to force a sale just as much as I can’t believe how resilient (perhaps arrogant) Jerry has proven to be. He’s frozen the hiring, offered up a package to his quitting employees, and signed the deal with Google. Most incredible of all is just how severed any ties are with Microsoft and how badly this is reflecting on stock, as raised by NYT’s Joe Nocera. So what’s next?

I was so convinced at one stage that Microhoo would happen, and now it hasn’t I’m keeping my lips sealed. Others have not, and think that whilst Yahoo! would do well from acquiring AOL, it’s not going to happen because Microsoft will continually inject an offer that’s higher than Jerry’s, both out of spite for that poison pill and to feed the ad obsession.

Options? Great… Pick one!

The Microhoo situation has made some considerable developments since I last posted on the subject. Sadly though Jerry and his board haven’t made their minds up yet, but that’s justified to an extent now that so many interesting options have presented themselves. Next Tuesday we’ll get to see Yahoo’s earnings report which will (hopefully) give everyone a big clue as to where this is going. Of course other Q1 numbers that will prove interesting are those of AOL – rumoured to be down to the tune of 25-30%. Platform A is being streamlined, which has a short term cost cutting win and could be used to adjust the compatibility of the team for any longer term aspirations such as say a merger with Yahoo!

AOL’s moves as of late have been focused on turnaround. First Bebo was acquired for $850 million, allowing AOL to own a social network and have access to a lot of users. This huge jigsaw puzzle piece will give AOL what it needs over the next few years to allow it to compete with the big players on the Internet. Combined with Platform A, it means they can keep everything that’s ad revenue based in house which is much more respectable than just outsourcing to Google; aka admitting defeat or Yahoo’s great idea. Platform A has taken on Verizon’s web and mobile properties, offering AOL a real opportunity to lead innovation on how to target ads at the mobile internet and its ever increasing number of users. Ultimately whoever gets this right first will hit the jackpot, and the brain power Google has at its disposal makes competition high, so teaming with Verizon on this journey boosts AOL’s chances of success.

Next up, relationships have been built to boost usability and accessibility of AIM, but in this field allowing Google to merge GTalk contacts with AIM buddies is not admitting defeat to Google. It’s a sensible move because it keeps hold of those users that were slowly discovering that the switching costs of going to Google might actually be cheaper and more efficient; as well as being in line with the trend wave of opening up access for communication through web2.0’s like Meebo.

On April 15th, Sphere announced it had been bought buy AOL. Sphere started as a blog search engine that would compete directly with giants like Technorati and Google Blog Search, but it rapidly differentiated itself by becoming a related content engine. In short, it allowed blogging to link itself and search through the big news media sites, generating related stories from big news sites when viewing a blog. This acquisition will now sit squarely inside AOL’s content sites. AOL has been doing a good job of keeping these content sites fresh and relevant, with their recent launch of a women’s lifestyle site for example. There have been other acquisition moves that have made important differences to AOL’s sites and using Platform A ads on them, such as Goowy Media the widget makers and Perfiliate Technologies the Internet marketing specialists. The complete chain looks something like this:

AOL Content sites –> Bebo and public blogging of content –> Platform A ads generate revenue –> Back to start

As dumbed down as this might seem, it’s important to realise that AOL were lacking some of these critical elements (or components of these elements) only a few years ago; and that if they’ve got their heads sewn on properly, they’ll figure out how to make something of the mobile web. At least there’s a clear path that cash is flowing in, and it’s an encouraging direction. But it seems to me that there are two thought patterns or objectives at work inside the top management think-tank. The first objective shows us we have a company that’s trying to pull off this turn around and stand on its own two feet, whilst the opposing decision makers want to see AOL sold to Yahoo! (or anyone that will realistically buy them) to make some cash for TimeWarner.

Does no one else see the problem with this? Right now, having two objectives creates no conflict as they are both achieved by boosting the company’s size, revenue… essentially every method you have of measuring the success of a company. The problem arises when Yahoo! caves to M$’s persistence and leaves AOL out in the cold, or when something similarly devastating takes place in an environment outside of AOL’s control. We are going to see top management fighting it out over which path is right for them, with little or no consideration for the end user.

AOL’s turnaround strategy

AOL has been a company that has seen some slowdown recently. I wouldn’t go so far as to compare them to Yahoo! but lets face it – if they hadn’t had a drastic re-think about where they’re going, AOL were headed for being bought out.

So what have we seen from them recently that proves this new thinking? An entry on the Meeblog announced that Meebo were entering an alliance with AOL. Today Kevin Rose pownce-messaged a Digg story about AOL and their purchase of the social network Bebo for $850 million.

At the moment in the web 2.0 domain, we are seeing the tech giants looking to lower their costs and continue with their organic growth, while smaller firms and startups rush around like mad things trying to innovate the industry. The balance of this rain forest should hold up through the coming recession as the big players look to take on their favourite picks of those inventive startups.

What we have seen from AOL has been their top management frozen, satisfied with their position and not really pushing the company on to new heights. What has resulted has seen other firms like Google and Facebook enter the market and start to gobble up the revenue. Mention of the name AOL to me conjures the image of a company matured and resistant to change.

So it comes as a great relief to me to see that they appear to be concerned about their profitability – seeking alliances and acquisitions. With such a large company here, the “Big Bang” instant turn around is much less of an option, reassuringly they pursue something of a market adaptation strategy which will allow them to evolve and rejuvenate. After all, we all remember AOL as that company that gave away CDs with free internet and a bundle of warez that slowed down your Windows machine to a grinding pace.

Bring it on AOL! Let’s see your offering in this age of web 2.0 and beyond, we await your contribution to the revolution. Take your time though, because incremental change is surely the way to secure your longevity.

Recession around the corner? Doom doom doom… or not.

I read a great article in the Financial Times yesterday about the fear of recession, which must currently be hovering above the heads of everyone over in Silicon Valley. Just in the same way that in 2000 the tech giants tried to play down the likelihood of one taking place, we see even more alarming evidence through this constant dominance game play that’s taking place. The ‘Microhoo’ frenzy, the deeply complex politics that surrounded the 700 mhz auction, the ways in which different companies did or didn’t roll out all/some of their products at CES or the mobile device conference, talk and rumours that float around forums and blogs of mergers and alliances: these all have seeds of worry sewn into them, that to many are beginning to look like more than just the regular state of play.

My view is one of “so what?” because we passed through one recession at the start of the millennium and the other side of it has seen some awe-inspiring innovation. If this next one does happen, I hope it makes some of the giants think about consolidating their positions and looking to longer term and more sustainable strategies. And I really hope that some of the startups that hit the scene as it kicks off make it through to the other side so that we get to see the innovation boom on the up-curve. It would suck to be a founder and watch your idea drown because of bad timing.

The last recession came after the crazy boom/bubble of the dotcom. What is this one following? Certainly innovation in the PC makers domain, and what’s cool for them is that the revenues and cash flows of these companies is much higher and more stable than it was for the poor dotcoms that had to pass the rigors of the 2000 recession.

I’m not worrying for companies like HP and Cisco who have provided commentary on what they see on the horizon, because I’m optimistic any slump will be short lived. It will force some of the giants that have been toying with acquisitions to stop, take stock, evaluate their position, and develop inwardly – ensuring the integration and compatibility of the services that all their subsidiaries provide is adequate to move forwards once the other side of the recession is reached.

Really the biggest sector that will feel the heat of a potential recession is the advertising, search and social networking world. The Facebook craze has passed, and people are just waking up to the quantity of personal data that’s been created in the mean time, which is causing concern and making many review their use of social networking services. Facebook are fast becoming yesterday’s news because everything that everyone was really looking forward to with the company has happened – they have launched; half the online world has signed up; a platform/API has been launched; applications have come into our lives, annoyed us, and been tossed into an optional second page of our profiles or plainly deleted; Microsoft has bought a slice of the ad revenue cake (hello M$, what are you doing with this??); a program caused scandal with our personal data and shocked a realisation as to how open our details are to the world; and now we just wait for … what?

Google have spent their time since 2000 just growing and buying, almost in a whimsical way. They, for me, have been the most fun to watch in an acquisitions and general game play sense. They’ve definitely got the assets to chide them through this possible period, but what’s going to be their first move on the other side? I’m frantically waiting for Google to shock me. I’d be really pleasantly surprised if they could release an Amazon S3 rival and an Apple mobile device running their own OS on their own network. When you think of all it’s achieved, it’s amazing to think that their core business is still search and advertising. I’m looking to Google for a solution that keeps both consumers and businesses connected to the Cloud wherever they are and whenever they need to be. Someone wrote an article today that I got in the GigaOm daily email saying they believe Google should buy Adobe to gain their resources and knowledge, but they were looking more closely at AIR. Surely though, the potential that that kind of acquisition has is more complex and incredible than just AIR, but it’s a good point. Microsoft, too, would benefit greatly from adding Adobe to their portfolio.

Whatever way you look at it, if you’re a decision maker in the valley right now you should be looking to cut costs and push for the greatest possible market share. Startups – if you haven’t already, get your venture funding on speed dial. If today’s article in The Guardian is to be believed, the “Queue for the soup kitchen may start here”.