All Things

Dana Blankenhorn has posted an interesting article discussing how open source software is being divvied up among top software companies (IBM, Google, Microsoft) in a way reminiscent of Japanese keiretsus. She argues that only these three seem to have the “size, scope and ambition” to play in this space, though Sun also continues to seek such a dominant position.

According to the article, in American usage “keiretsu” has become a term describing a much looser form of business association, with one large company and a number of smaller ones beholden to it in various ways. The Mozilla Foundation’s dependence on Google would be a good example, a relationship of substantial ties between independent entities.

Years ago, I was thinking open source might end up being its own “keiretsu”. Nevertheless, I guess it was inevitable that it would instead end up fragmented and mostly beholden to big companies. Blankenhorn cites the examples of IBM-Red Hat and Microsoft-Novell as other instances of such ties.

On the other hand, if these big companies do things right, open source software can advance and still end up producing a thriving ecosystem. IBM’s relationship with the Eclipse Foundation is a prime example.

It seems that key to the whole process is how a Big Co. views the software product lifecycle. If it accepts that functionality gradually will become commoditized, it will view open source as the likely end-point for most proprietary software. Such a strategy/outlook will result in the Big Co.’s typically releasing the source after some years/decades, with the intent of building still-proprietary software and services on top of it.

IBM did that with VisualAge (now Eclipse), and has also worked hard at promoting the open-source Linux operating system. On the other hand, Microsoft seems to want to milk its Windows operating system forever, which makes it hard to play well in the open-source world.

While it may seem wasteful, companies such as Apple have shown that a steady discarding of old technology can do a lot to promote innovation. I keep waiting for more companies to follow their example.

Evidence continues to mount that “creative destruction” is indeed a key process in a healthy economy. Peter Drucker argued that companies ought to continually make way for the new by killing off old products, rather than waiting for the market to do it for them. Henry Ford’s reluctance to part with the Model T, and its nearly destroying Ford in the process, is the classic case study on this.

With software, however, there’s a difference, since many software products are foundations for other systems (software or hardware), or integral to the use/retention of valuable data produced by them. For this reason, it’s not as simple a matter to remove a program from the market. Software may be used for many different purposes by different customers. Some may be able to switch quickly to new products, but others would incur great cost.

Consequently, it seems inevitable that users are eventually going to demand some kind of protection from software vendors - or else from government regulators - that a software product’s source code be made open source if the product is abandoned. At the least users would be protected, and possibly the product might see further development by others (WordPress, successor to b2, is in some respects an example of this).

More interesting, however, are the more state-of-the-art open-source projects such as Linux and Eclipse, that promise innovation and a product that is “built right” for the future in a platform-agnostic way. Knowing that a software product will be here to stay, because the source is available, seems to be such a strong draw that many of these best-of-breed projects have been able to attract top talent to contribute, often on a volunteer basis, as well as substantial support from Big Co.’s such as IBM.

For the software industry to thrive and not just reinvent the wheel, we need strong and viable foundations to build on. If these Big Co.’s are willing to kill off the revenue streams from their old software somewhat before it dries up, their code may well retain importance, or even grow in dominance as Eclipse has. This can offer a strong foundation both for services and for additional products higher up the stack.

Moreover, it will produce an overall healthier software industry ecosystem, since the underlying code will continue to be developed, increasing the value of it and everything higher up on the stack, due both to stability and to greater innovation.

Mashable and others have been reporting that the venerable Classmates.com site is now about to do an IPO (initial public offering), at a valuation of $125 million. Started in 1995, Mashable’s Pete Cashmore says Classmates deserves credit for being the first social network, begun two years before the now-defunct Six Degrees.

While it may seem old, dull and boring to the digerati types (and it’s not Facebook), Classmates might still be pretty interesting to average users, if they are smart about making the right enhancements. I like Classmates; they continue to be slowly but steadily adding folks from my school classes. I’ve only communicated with a few, but think the site still fills a viable need (I’ve had virtually NO success locating anyone my age - 44 - on Facebook or other networks yet), and they’ve got the market share/critical mass to make it work.

As others have noted (generating considerable controversy), the big social networking sites like MySpace and Facebook appear to be attracting different sorts of users. While Facebook is now pulling in a lot of older technically-inclined users, the large bloc of non-technical older Americans is pretty much being left out. Obviously Classmates is too specialized to serve all their needs, but it’s the kind of simple and inviting format that would likely appeal to a lot of average folks.

My main complaints are with the pricing and the speed of the site. Classmates needs more functionality to be free and to get away from the True ads, which seem to be their main advertiser. I suspect if the site were faster to navigate and search, folks would spend more time there. Monetizing a site nowadays with AdSense, etc., generally isn’t too difficult, so I don’t see why they couldn’t offer more free functionality and still be viable.

Of course, any school-oriented site should have plenty of ways to generate well-performing ads (though even Facebook doesn’t seem to have succeeded at this, yet), but I suppose Classmates could also keep their paid subscriptions. In the several years I’ve used Classmates, I haven’t seen many people going this route, because you have to pay so much up front just to try it for a short time.

If sites like Classmates are going to have a paid subscription model, then they should by all means offer a less costly middle tier (above the free tier) and segment their market between those who don’t mind paying $20 or more to try out a site that may (likely) disappoint vs. those of us who aren’t willing to risk much until we know we’re going to get our money’s worth!

As with any social network, the key is users returning to the site on a regular basis (Facebook’s strength). Classmates is good about sending weekly emails announcing new members from your classes, but the site is slow to load and navigate, and when someone does try to communicate with you, you can’t even see it without paying a considerable amount for a subscription.

Obviously, basic communication features should be free. Maybe subscriptions could add the option of a blog page or other customization, the opportunity to have a page for that particular class, etc. There are so many possibilities, the site ought to be worth $125 million, considering the number of users (50 million) that they’ve signed up.

A few other ideas for added functionality (maybe some of this exists already but could be enhanced and made more visible):

• Stores for sale of school related merchandise (shirts, stickers, etc.)
• Alumni association pages. My high school’s alumni association has become much more active and is now even conducting a campital campaign to raise money for improvements! With the internet, these activities are much easier to do, and a site like Classmates provides a key ingredient - finding and keeping in touch with people.
• As I’ve written about elsewhere, it’s still VERY hard to locate your former teachers, and Classmates already offers this functionality (membership for teachers, etc.) but it’s almost completely ignored. They need to make a push to sign up teachers, which I suspect would stimulate a lot of other interest, and maybe a fair amount of free media coverage.

As I hinted at above, I find Classmates interesting in part because it’s so different from the sorts of things that the Silicon Valley crowd get excited about. The Valley folks have brought us a lot of good things, but also have some huge blind spots. A large part of the country is moving MUCH more slowly onto the internet, and there’s still not that much available on the net for for folks who didn’t grow up using it.

Classmates isn’t Facebook, but I really believe that there are still a lot of great business opportunities on the net for serving older folks (which, as far as the internet goes, is pretty much anyone over 35). Even though they have a lot of disposable income, many of these users are still fearful of doing too much, of making purchases online, etc. Sites that seem stable and “safe” have a certain appeal that a wild and woolly site like MySpace could never offer.

Since I posted my Initial Thoughts About the iPhone, Dave Winer has described his experience after four weeks, and it’s not too favorable:

iPhone, month 1

He describes, for instance, how he couldn’t quickly retrieve a phone number from an email and return a call, and is generally unhappy with the iPhone’s email function, as well as its touch-screen keyboard.

Worse, in an interesting observation Winer notes:

“It also seems we’re going to have a long-term discussion over whether it makes sense to have a “mobile web” or take the iPhone trade-off, more effort to use its web (lots of scrolling and pinching), but making the whole web accessible, mobile sites or non-mobile sites. I think what Apple has attempted is noble, but it’s not going to work. The screens have limited resolution, and even if they didn’t, even if they could cram a billion pixels into every square inch, there’s the limit of how much detail our eyes can see and how big our hands are.”

It does seem that some people’s eyes and fingers fit the iPhone’s diminutive size better than others. I’ve long felt that the trend toward ever-smaller devices is a mistake. Early in the Treo’s development, when Palm (or probably it was still Handspring) was eagerly describing how wonderful it was that they were going to make it yet smaller, I got frustrated enough to write them about it, but to no avail.

If the iPhone starts to falter, it will be in no small part due to its form factor, and maybe then handheld device makers (besides Blackberry) will finally start to listen. Many devices, especially phone devices, are TOO small, and keyboards are important to a lot of folks, especially for texting and email, and must be gotten right. Some users seem to like the iPhone’s touch-screen keyboard, but clearly it’s not for everyone.

Winer, who’s been involved with Mac software since the early days with the ThinkTank and More outliners, and seen both the good and bad sides of Apple, concedes that “the iPhone is much prettier than a Blackberry and feels better in your hand. I’m not mocking Apple for that, style matters, esp in a personal device.”

He figures that “the iPhone, if it attains success, will reach it the way the Mac did, after the initial fatal flaws are removed, in the “iPhone Plus” or whatever.” Indeed, a lot of folks seem to have forgotten that in 1984, initially Mac sales were good, but soon stalled after the early adopters (including myself, even though I’m not usually such) bought theirs. The original Mac was not really a very useful machine until the memory was bumped from 128K to 512K.

I’m sure that Apple is already working to fix many of the first-generation iPhone’s deficiencies, and will do it faster than Apple did in 1984-7 with the Mac. Nevertheless, the question remains whether they’ll be open to more radical changes - such as a bigger device with a bigger screen and real keyboard - which may be necessary to pull in a lot of the Blackberry’s users and other folks no longer in their twenties.

Internet Duct Tape (formerly EngTech) has an interesting post about proper use of categories and tags in WordPress. Eric says:

“One of my first and longstanding complaints of WordPress is that it does not understand the fundamental difference between tagging and categorizing. Categorizing is like taking all of your socks and putting them into drawers based on colours. Tagging is like sewing a little label on your socks that says when you bought them, how to wash them, … Categories add organization and tags add semantic information. A category can be a tag, but if you use your tags as categories you’ll eventually have a right old mess.”

This is an interesting question because in my experience, there’s never just “one” right way of organizing or presenting information. To find an appropriate way to organize something, you must consider the use and the user.

The goal with tags, categories or whatever scheme is to organize the information in a way that you or another familiar user can find everything, while presenting it to a new user in a way which allows them to easily assess what all is there and then navigate through it to access what they’re particularly looking for. Consequently, I think it depends on the blog how many categories or tags are appropriate.

In my WordPress blogs, I use multiple categories with each post, so I guess that means I’m using them like tags, not true categories. This and my other Blogsome (WordPress) blog, RealCurrents, each have a few dozen categories, used like tags, but it’s not too hard to scan them all as they’re listed on the right side of the page.

My personal blog Light Side on Live Spaces is only allowed one category per post, but that’s OK for a simple blog like that, though I still find myself wanting to add a category every once in a while. If I had a lot of photos on that site, then I’d certainly want a good tagging system, however.

Closer to the other extreme is my aerospace blog (currently still on Xanga), in which I like to note all kinds of esoteric things and so have close to 200 tags,

http://www.xanga.com/AeroGo/tags

so folks can look up specific aircraft, certain famous individuals, manufacturers, etc. This tag cloud really functions more like an index.

For those who want to use categories more properly, as unique groupings, Eric’s post links to an interesting and fairly lengthy discussion by Lorelle VanFossen, Putting Some Thought Into Blog Categories and Tags. She says that

“In the simplest of terms, I think of categories as the table of contents for your blog, a kind of general outline that directs visitors to general topics that you blog about. Tags are more like the index page of a book, a list of key words people will use to search for specific terms.”

She also includes a helpful discussion of how limiting yourself to a small set of categories can help you focus and really think through the purpose for your blog. Nevertheless she notes that she ended up including one category as a sort of “catch-all”, giving it a vague name, “Web Wise”.

Regarding tag clouds, I’ve noticed several ways of presenting them on various sites, typically with the more popular tags in larger type. While that’s a good idea, many times the tags are organized in a rather unhelpful way. I even saw one site where they were in a spiral!

For a site like AeroGo, where it’s likely that the average user is not looking for one of the top 10 tags, it would be better if Xanga presented the tags not only alphabetically as currently, but also in orderly columns, as in a book’s index, though keeping the varying font sizes. This might be overdoing it for many sites, but it would be interesting to see an experiment on a big site like Flickr of several different tag cloud presentations and the resulting click-through rates.

Like Google’s simple but (truly) helpful index, I wonder if on a lot of sites an alphabetical, index-like tag cloud might produce better results, though a simple tag module added to a page wouldn’t have room for all that. In any event, as the “semantic web” becomes more of a reality, I suspect more detailed tagging systems will gain value and prominence, as they help users drill down to the specific information they’re looking for.

I ran across a post, The Attention Crash on Steve Rubel’s blog Micro Persuasion. In it, he argues that the real danger isn’t another .com financial bubble bursting, but rather individuals hitting a wall of information overload:

“We are reaching a point where the number of inputs we have as individuals is beginning to exceed what we are capable as humans of managing. The demands for our attention are becoming so great, and the problem so widespread, that it will cause people to crash and curtail these drains. Human attention does not obey Moore’s Law.”

I agree that there’s still a lot of life left in this tech deployment cycle. At the same time, I’m amazed that the media and society at large still don’t seem to be taking information overload seriously.

There’s been such an explosion of both work and leisure information, not to mention creative tools, games, etc., yet you don’t notice many people outside of the GTD blogging community talking about it. We obviously are going to need some more sophisticated tools than just raw RSS feeds, and these folks seem to be about the only people seriously exploring that. There’s so many GTD-related productivity and project management tools, that I’m having a hard time getting them all sorted out.

In other words, we need a lot of innovation in order to develop tools for handling information overload, and so we should be seeing a lot of experimentation taking place. Right now most of that is happening in the GTD community. I think we should also expect to see a variety of tools tailored to particular individual styles. That’s an area I’ve done a great deal of research in, and hope to see its application to innovative productivity tools.

Beyond GTD, Twitter is clearly generating some of the loudest buzz currently, mainly as a social networking site, where it seems to have great potential. A lot of folks have criticized it as the worst example of pointless info overload but I think Twitter, or something like it, could actually be a tremendous tool to help deal with overload, both by making inputs timely without interrupting (using the web interface, anyway) and by forcing inputs to conform to a quick summary so you can judge whether it’s worth a further look.

Of course, most folks don’t get that yet. I see tweets saying “This is great” and just a link, giving me no idea what it’s about. Others send out a half-dozen or more pointless tweets a day, clogging up my friends page. Some news sources such as the New York Times, commendably quick to get on board, nevertheless send out the same update on multiple channels. All this “noise” reduces Twitter’s usefulness, but even in just the six weeks or so that I’ve used it, I’ve already seemed to notice a certain sort of evolution going on, with many (not all) folks starting to effectively pre-screen their tweets and limit them more to ones that would actually be helpful to others.

I think eventually we’ll see people going to multiple accounts (”channels”?), one with personal info and more security, another with interesting links (as Robert Scoble has already done with his Scoble’s Link Blog), and another with updates from all one’s own blog posts, important comments, etc. The last purpose is how I’m primarily using my own Twitter account, aeroG, at present.

The main point is that Twitter, as with so much of the web, is a grand experiment being done on a huge scale, and it’s likely to evolve rapidly in the coming year or two. If Rubel is at all correct, then we should expect to be seeing a lot more of these tools coming along shortly, to help us sort out not only our increasingly complex lives and connections, but also the huge flood of information that increasingly threatens to overwhelm us, or at least to drown out the truly valuable information tidbits that these tools should help us to find and track.

I’ve been reading about the rekindled Microsoft/Yahoo talks; perhaps it’s a good sign. It just seems so obvious that Microsoft doesn’t yet understand the internet, and so inevitably can’t really take it seriously enough. It’s got a dozen years of half-hearted efforts under its belt and not much to show for it, other than the dominance of Internet Explorer, which continues to slowly lose share to Firefox.

A BBC report quotes one analyst, Matt Rosoff, as saying, "I do not understand what Yahoo would get out of the deal, including that there are people there who don’t want to work for Microsoft." Well, that really says it all!

Nowadays, there are a lot of people who are trying to get away from Microsoft. After 27 years of being their customer, and 23 years of using a Mac, I’ve learned to pick and choose their offerings, rather than just drink their kool-aid and swallow the whole enchilada. I don’t at all want them to go away, but it would be really nice if they would be honest with themselves, accept what their true strengths and weaknesses are, and stop trying to be all things to all people, in order to keep most all the pie to themselves. That strategy is just not working anymore, and after years of disappointments, the reality is starting to be generally acknowledged.

As I’ve noted before, I thought MSN Spaces (where I have my personal blog) was one of the better things they’ve done, but they’ve made it increasingly Windows-centric as the Live Spaces rollout has continued, which has made it clunkier and more difficult to use, at least for non-Windows/IE users. I don’t expect Microsoft to be Apple, but after all their years of vaunted usability testing, they still don’t get basic design principles.

Everyone knows that Toyota’s cars aren’t that stylish, but they’re well-made, and Toyota (as it has recently) will put the brakes on to ensure a consistently high-quality product. Microsoft isn’t going to have the style of Apple, but they need to develop some decent processes like Toyota, so they can produce a quality product that meets customers’ needs.

Quality is a long-view strategy. In the short run, Toyota sells a bit fewer cars because they last longer, but in the long run, they sell a lot more, and pretty soon even more than GM. Bill Gates once said that his favorite business book was Alfred Sloan’s My Years With General Motors, but the days when one company could dominate a global market and put out mediocre products, in a strategy of planned obsolescence, are long past.

At least Microsoft is reaching out to a company that has some insight. I’ve always thought Yahoo was a bit clunky itself, but they are innovative and do understand the potential of the internet. Maybe Microsoft is at last acknowledging that they don’t get it, and that their culture needs to change.

I suggest that they start by returning to a more inclusive strategy on their online offerings. Don’t automatically expect users to be running all Microsoft software (e.g. IE and Windows), and so don’t penalize users who are using some MS software, just because they aren’t using all Microsoft software! In an era of open source and global markets, all that strategy will do is ensure that eventually no one will be using any Microsoft software.

Microsoft has to accept that they can no longer expect to get the whole pie, except for the crumbs, and that they better be glad for whatever share than can get, without coercion. They still have a lot of talented people; if they revitalize their culture and get their processes right, they could still do really well, and I hope they manage to pull it off.

IBM is once again giving away some software; after donating its VisualAge tool to Eclipse and so many other products to greatly invigorate the open source movement, this isn’t so surprising. What’s more interesting is that these donations seem to be moving higher up the value chain, as IBM will reportedly begin giving away a Universal Database Express-C version of its high-end DB2 database that will run on up to two-chip systems.

It seems to me that a sign of a healthy software ecosystem is the gradual price decline of particular packages as they grow more complex. One example would be Microsoft’s bundling of Word, Excel, PowerPoint and various other packages into Office, which doesn’t cost nearly as much as the total prices of individual packages 15 years ago, especially after adjusting for inflation. Excel itself, when introduced on the Mac, had consolidated functions previously handled by Multiplan, Chart and some other programs.

One of the common signs that a particular software ecosystem is declining is that this trend of generosity on the part of the ISV reverses, and it starts to look for ways to increase unit revenues. This is one of the reasons why I suspect that much of Microsoft’s software business isn’t as healthy as it once was, as they have at least begun to make changes in their licensing/pricing that for some customers might be viewed as an effective price increase.

Some vendors, such as Computer Associates, seem to have done fairly well by buying up aging software and gleaning what they can from the remaining user base, many of whom may prefer to stay with what they have been using for quite a few years. Though potentially an opportunity for exploitation, if managed with restraint such a business can provide a valuable service, by keeping users from languishing without vendor support.

Nevertheless, in a healthy, growing software ecosystem the price of packages should normally decline, since the user base is growing (allowing development costs to be spread over more units) while development costs should be moderating as the product matures. Actually, while the first effect is often realized, for some reason (perhaps Parkinson’s Second Law - expenditures rise to meet income) the second is more difficult to achieve.

As sales of its software rises, a successful software vendor will typically add features while keeping steady or lowering the price. Though holding the line on costs, in the real world the size of programming staffs generally seems to balloon, which gradually works to reverse the virtuous cycle of generosity. This excessive growth in programming staff is a curious outcome which I suspect results from management’s desire to speed development in response to competition, despite Fred Brooks’ showing over thirty years ago, in his classic essay “The Mythical Man-Month“, that such an approach is generally counterproductive.

Peter Drucker frequently argued (e.g. Managing for Results, Ch. 9) that one of the biggest problems in business is vendors’ unwillingness to kill off their own aging products, thereby retarding innovation and eventually causing loss of markets to more innovative upstarts. I suspect a software ecosystem requires a modified form of systematic abandonment, where products gradually decline in price and eventually are given away, either as open source or as an inducement to attract new users who may upgrade a to a vendor’s more advanced offerings.

Vendors also ought to consider still selling at a lowered price older versions and upgrades of their software (at least as long as these are supported) since this might be a good approach to segmenting the market between higher-spending customers with newer hardware and budget-conscious buyers using older hardware (and might induce additional upgrades as the cost declined).

Of course, much of the business motivation for open source comes from recognition both of the need to continue stimulating a software ecosystem to attract new users (as many are attempting to do now with Java) and that much of the revenue opportunity comes from services and other add-ons, which seem also to be a fairly effective way to segment the market.

Every industry has its own unique economics. I remember a database seminar once in which a vendor rep described how he had worked with grocers, where the prices, discounts and other factors changed constantly. Airline economics, with which I’ve been fascinated for years, is another very difficult area.

Software, too, has its own sort of economics, driven by the vendors’ desire to smooth out the revenue stream (development is steady but revenues tend to bunch around releases), the extremely low unit marginal cost, and intense competition amidst constant technological change. I’m surprised there doesn’t seem to be more active discussion of the unique economics of software, as this might help to reconcile vendors and the open source community.

Software has been the “sick man of technology” for some years now, with disappointing advancement (despite incredible gains in hardware) and recurrent schedule slips. A better understanding of the underlying economics might go a long way in producing a newly healthy software industry.

Google has been catching some criticism for its deal to pay $1 billion for a 5% stake in AOL, but I can see several reasons why it may make sense, at least for them.

First of all, the deal is a defensive move, in multiple ways. Google can afford the billion but doesn’t want to lose a substantial portion of its revenues and cash flow. As any experienced entrepreneur knows, managing cash is Job 1. Maybe Google is so big it could afford to be a bit sloppy in this area, but it’s good they are being disciplined about this and defending their revenue and cash flow first before worrying about maximizing return on investment.

Of course, it’s also defensive in that it locks Microsoft out, thereby sustaining Google’s online ad momentum while restraining Microsoft’s. Though some seem to view things differently, I think Google’s brand, on the net, is still way more valuable than Microsoft’s, and the brand must be defended.

Second, AOL’s valuation seems to be nearly completely a function of the perspective from which it is viewed. At the time of the merger (with Time-Warner), it was viewed as a top internet property/portal/brand that was key to driving traffic, and was given a sky-high valuation. Today it is viewed as just a dial-up ISP going the way of the dinosaurs.

A couple of weeks ago, I got another AOL disk in the mail (what does that make - about one a month for a decade?). This one, however, was different, and got me thinking. Instead of just trying to sign me up for AOL, the cover says, “Get Your Business Online”. This was such an obvious growth direction for AOL that I’m surprised I hadn’t thought of it before.

It seems to me that AOL’s members align pretty well with Sams Club shoppers, i.e. upper middle-class folks who often own their own businesses. Of course, these are all switching to broadband and AOL is no longer viewed as the premium ISP. As someone noted the other day, however, AOL’s core competency may really lie in getting newbies (or now their businesses) on the web.

Of course, AOL has a lot of work to do if it wants to make this really profitable, but considering that the local web is something that really hasn’t happened yet, at least most places, there’s still a lot of growth potential there for helping small business owners. Those who have been AOL customers and used to the web are likely smart enough to know there’s more their business could do online, if it was simple enough to implement.

Consequently, a third reason Google’s deal may make sense is that it solidifies its relationship with AOL, which has already proved to be a strong partner in generating ad revenue. Google hasn’t really tried to be a portal like Yahoo, Excite, or the others, but AOL could provide that part while Google drives development of new online services.

One opportunity I keep waiting for Google to tackle is local classifieds, which would capitalize on their compelling brand and near 100% user base. A single, strong brand for local classifieds seems so obvious (and needed), I don’t know why they haven’t been more aggressive about it. Maybe they’re just trying to be merciful to the print newspapers.

I enjoy reading about how Google is turning the business/venture capital world on its head. I use Google every day, and haven’t paid them a dime, yet they’re making billions. It’s interesting … fascinating!