Posts Tagged ‘Microsoft’

Steve, go big or go broke

January 21, 2010

Microsoft’s new strategy under chief software architect Ray Ozzie has been “three screens and the cloud,” the three screens being mobile, desktop and living room, and the cloud being Microsoft’s actual cloud infrastructure, Azure, and presumably the web, i.e. Bing, Hotmail, MSN and Microsoft’s other web properties.

How are these doing?

Obviously, Microsoft is still dominant on the desktop, and will remain so for a while now. Even though web apps are a long term threat to Microsoft’s desktop software, at the high end (Macs) and the low end (netbooks), right now they’re safe, because software can still do a lot of things the web can’t do, especially in the enterprise, where Google can’t get a foothold.

In the living room Microsoft has a very strong beachhead with the XBox, which is fast turning into a social multimedia entertainment center, which is how it should be.

In the cloud it’s too early to tell. Amazon is clearly the dominant player in cloud infrastructure, but it’s much too early to tell who will end up with the biggest slice of the pie, and Microsoft seems to be doing the right moves so far.

When it comes to mobile and web, though, Microsoft is foundering.

Bing is a strong effort, and has been picking up marketshare (largely through deals and not organic growth, though), and if and when Bing becomes Yahoo!’s search engine, that should give them enough scale to really refine their product. Microsoft’s search leader, Qi Lu, is a scarily talented executive. That being said, so far, it’s practically impossible for Bing to present a credible threat to Google search. It is marginally better in some respects, but in order for people to change their entrenched habits, you need more than marginally better. You need remarkably better. And Bing isn’t that, by a long shot.

Meanwhile, in mobile, it’s a disaster. Windows Mobile 7 is a long ways off. Even if it’s a tremendous product  — and while it will probably be better than previous efforts, it almost certainly won’t be as good as Android or OS X — mobile OSes are a platform game. To win in mobile, Microsoft needs tons and tons of apps — developers, developers, developers — and for that it is very, very late to the party. Plus, how does it make money from mobile? Apple makes money on hardware. Meanwhile, Android is free — in fact, less than free: Google offers revenue share on advertising revenue to mobile operators who use Android. Microsoft wants to charge Verizon to put Windows Mobile on its phone, meanwhile Google is paying them to use a  product that is so far superior, and by now proven.

My point is this: these are two crucial markets where Microsoft can’t win through incremental improvements. It must go big or go broke. In search, it must introduce a new paradigm — so far the most promising looks to be what Mahalo is doing. In mobile, some have recommended that Microsoft buy RIM. The two have tremendous synergies from their strength in the enterprise and BlackBerry’s software. That would be a start. In fact, they should also buy Palm, which is struggling in the market, but has better software and hardware and more apps.

I have a few ideas on how precisely Microsoft can win in search and mobile, but they’re beyond the scope of this post. The point here is: Microsoft must go big or go broke. The only thing they have left is their huge size. They should use it.

Curmudgeon is bitter he didn’t cash in sooner

January 15, 2010

Bo Peabody, the founder of Tripod (remember Tripod? I have an homage to it up there) and now a VC at Village Ventures (no, never heard of it either), wrote an op-ed in the Washington Post to say that social networks like Facebook and Twitter aren’t, and will never be profitable, that the advertising and freemium business models don’t work for social networks, and that it would be best to run social networks as non-profits, a la Wikipedia, rather than businesses, because it’s in the nature of social networks that they fail.

I’m all for contrarianism, but — leaving aside for a moment that the guys who started Facebook and Twitter probably wouldn’t have started them in the first place without the profit motive — Peabody’s argument would probably sound better if he hadn’t written this now.

Peabody writes that News Corp and AOL screwed up by acquiring MySpace and Bebo respectively; while AOL clearly overpaid (yes, technology is the only sector where boneheaded managers make stupid acquisitions), MySpace would’ve probably hit $1 billion in revenues in the year after it was acquired if it hadn’t been for the financial crisis, and kept growing like wildfire if the management at FOX Interactive hadn’t frozen product development while Facebook ate their lunch, stuck a finger in every pie, and generally made a mess of things. But more than all of that, what complicates Peabody’s thesis is that the two companies he holds up as exemplars of the impossibility to make social networking profitable, Facebook and Twitter, are… profitable.

Facebook has been profitable since last September and its revenues are growing rapidly. Twitter is now also profitable thanks to its licensing of its real-time search firehose to Google and Microsoft, and has left most other revenue sources untapped by choice, not inability. Saying that social networks can’t be profitable, and using Facebook and Twitter as examples of that, right after those two companies become profitable, probably isn’t the best way to make yourself look smart.

To grow, Boxee must embrace porn

January 14, 2010

Boxee, the social browser for your TV, has been making all the right moves lately, from its open API and app ecosystem, to the huge splash it made at CES, unveiling a sexy Boxee Box (to put some Boxee on your Boxee while you Boxee). Boxee can be a truly disruptive service, by disaggregating content from the pipelines that choke it. You search for shows, without caring if they’ve been made for TV or for the web, if they’re on networks or cable… This is both a tremendous opportunity and a really uphill climb, precisely because those content pipelines aren’t going to let themselves be commoditized so easily.

To be able to compete with them, Boxee needs tremendous user growth, and they’re not going to do that with a Flickr app and a nice-looking cube. The history of media teaches us that new media channels win thanks to one thing, and one thing only.

Yep. Porn.

Porn is what made VHS triumph over the superior Betamax format, porn is what made the DVD, and of course — don’t deny it — porn fueled most of the internet’s mass market adoption.

The best way for Boxee to grow like a weed and have a chance to take on Comcast and the rest is to become the best way to experience internet porn. It should take a page from software like Heatseek, the porn browser that makes it easy to search for porn, hide and clean your history, browse the many porn equivalents of YouTube and avoid ads and spyware (er, or so I’m told).

Using porn to boost your growth is a hallowed strategy, pursued by such reputable internet giants as Microsoft, with Bing’s video playback feature, and Google, with Chrome’s incognito mode (yeah, sure, it’s for shopping). Like Microsoft and Google, however, it’s important that while you make it clear to everyone that you’re optimizing for porn, you lie through your teeth about ever doing such a thing.

Make Boxee the best way to search, stream and watch internet porn in glorious full screen format, and user growth will explode. I’d certainly use it more often.

(My wife is so going to kill me when she reads this.)