mobile internet

Europe: The Digital Squeeze Is Coming

 

By Frédéric Filloux

A recent Bain & Co survey paints Europe’s digital future as squeezed between the explosive demand of emerging countries and the dominance of US-based internet giants.

The “Next Billion”, a phrase coined and propagated by the Quartz team, refers to the explosive internet growth in emerging countries — almost entirely fueled by mobile usage. The new phrase got its own  conference (last week in NYC, next May 19th in London) and a dedicated section on the Quartz site.

For Europe, the Next Billion will be hard: Last week, the global consulting firm Bain & Co published a survey that exposes what’s at stake. The report, titled Generation #hashtag (pdf here), was commissioned by The Forum d’Avignon, a yearly gathering of intellectuals and business people that explores cultural changes; the survey was conducted by Bain’s staff in Paris and Los Angeles over 7,000 respondents in 10 countries with the following internet status:

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Source : Internet World Stats

Bain’s key findings follow:

The next period is going to be dominated by digital natives, i.e. audiences that won’t have even known other forms of media vectors (video, communication, news or entertainment). In emerging countries, powerful forces are now in motion (emphasis mine):

Across the BRICS countries, the percentage of consumers 25 and younger—who are, on average, 40% more prevalent than in developed economies, according to Euromonitor—suggests the rapid rise of Generation #hashtag in emerging markets. (…) Over the past year, smartphone ownership rose significantly in emerging markets: from 45% to 50% in China, 14% to 21% in India, 45% to 54% in Brazil and 45% to 63% in Russia.

The chart below shows two important elements. One is the importance of the Generation #hashtag: the digital population comprised with digital “migrants” and “natives”. The second and even more interesting is the demographic distribution which, for emerging countries, clearly states the potential:

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These demographics show two major gaps: disposable income and networking infrastructure. Taking the long view, the first one could be overcome by strong growth in key areas. For the second, in many countries of Asia or Sub-Saharan Africa, land lines equipment is staying flat — and sometimes decreasing — while cellular networks are growing like weeds. A couple of weeks ago, Benedict Evans, from the Andreessen Horowitz venture firm, released his Mobile is Eating the World slide deck – from which I extracted these two charts :

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These figures might prove to be conservative as heated competition for the Next Billion has already started between tech giants. Google’s Project Loon, Facebook’s future drones network, both aimed at delivering broadband internet in developing countries, are soon to be joined by  Elon Musk’s plan to deploy 700 micro-satellites at a cost of $1bn to serve the same purpose. If we factor in Mark Zuckerberg’s idea to get a 100x improvement on internet delivery (10x reduction in cost of serving data multiplied by 10x improvement in compression and caching technologies), we can project the internet’s global availability challenge as solved within the next five years or so.

In this picture, Europe faces a huge industrial problem. The players who will benefit from the exploding demand in emerging markets are everywhere but in Europe, except maybe for Nokia Networks (not the handset division, now owned by Microsoft, but the remaining independent infrastructure business), and Sweden-based telecom maker Ericsson. Other are mostly Chinese, Taiwanese and Korean (Samsung and many others), they cover the entire field from networking infrastructure to mobile terminals. Symmetrically, most of the engineering brainpower and very large investment capabilities are concentrated in the United States with immensely rich companies such as Google or Facebook (or Musk’s Space X) thay are focused on capturing this Next Billion.

Europe’s options are limited. With no common language, no political leadership, encumbered by a gigantic bureaucracy, scattered and uneven access to capital (compared to the Keiretsu-like American venture capital system), Europe could choke, squeezed between Asian hardware markers and US-based software giants. Unfortunately, instead of organizing itself to favor the emergence of tech leaders — through decisive education programs and smarter immigration policies for instance — Europe’s main contribution to technologies has been the creation of tax havens. A textbook example of a missed opportunity.

frederic.filloux@mondaynote.com

BlackBerry: The Endgame

 

The BlackBerry was the first truly modern smartphone, the king of Personal Information Management On The Go. But under its modern presentation lurked its most fatal flaw, a software engine that couldn’t be adapted to the Smartphone 2.0 era.

Jet-lagged in New York City on January 4th 2007, just back from New Years in Paris, I left my West 54th Street hotel around 6am in search of coffee. At the corner of the Avenue of the Americas, I saw glowing Starbucks stores in every direction. I walked to the nearest one and lined up to get my first ration of the sacred fluid. Ahead of me, behind me, and on down the line, everyone held a BlackBerry, checking email and BBM messages, wearing a serious but professional frown. The BlackBerry was the de rigueur smartphone for bankers, lawyers, accountants, and anyone else who, like me, wanted to be seen as a four-star businessperson.

Five days later, on January 9th, Steve Jobs walked on stage holding an iPhone and the era of the BlackBerry, the Starbucks of smartphones, would soon be over. Even if it took three years for BlackBerry sales to start their plunge, the iPhone introduction truly was a turning point In BlackBerry’s life.

RIM (as the company was once called) shipped 2M Blackberries in the first quarter of 2007 and quickly ascended to a peak of 14.6M units by Q4 2010, only to fall back to pre-2007 levels by the end of 2013:

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Last week, BlackBerry Limited (now the name of the company) released its latest quarterly numbers and they are not good: Revenue plunged to $916M vs. $1.57B a year ago (-42%); the company lost $207M and shipped just 2.1M smartphones, more than a half-million shy of the Q1 2007 number. For reference, IDC tells us that the smartphone industry shipped about 300M units in the second quarter of 2014, with Android and iOS devices accounting for 96% of the global market.

Explanations abound for BlackBerry’s precipitous fall.

Many focus on the company’s leaders, with ex-CEO Jim Balsillie and RIM founder Mike Lazaridis taking the brunt of the criticism. In a March 2011 Monday Note uncharitably titled The Inmates Have Taken Over The Asylum, I quoted the colorful but enigmatic Jim Balsillie speaking in tongues:

“There’s tremendous turbulence in the ecosystem, of course, in mobility. And that’s sort of an obvious thing, but also there’s tremendous architectural contention at play. And so I’m going to really frame our mobile architectural distinction. We’ve taken two fundamentally different approaches in their causalness. It’s a causal difference, not just nuance. It’s not just a causal direction that I’m going to really articulate here—and feel free to go as deep as you want—it’s really as fundamental as causalness.”

This and a barely less bizarre Lazaridis discussion of “application tonnage” led one to wonder what had happened to the two people who had so energetically led RIM/BlackBerry to the top of the industry. Where did they take the wrong turn? What was the cause of the panic in their disoriented statements?

Software. I call it the Apple ][ syndrome.

Once upon a time, the Apple ][ was a friendly, capable, well-loved computer. Its internal software was reliable because of its simplicity: The operating system launched applications and managed the machine’s 8-bit CPU, memory, and peripherals. But the Apple ][ software wasn’t built from the modular architecture that we see in modern operating systems, so it couldn’t adapt as Moore’s Law allowed more powerful processors. A radical change was needed. Hence the internecine war between the Apple ][ and Steve Jobs’ Mac group.

Similarly, the BlackBerry had a simple, robust software engine that helped the company sell millions of devices to the business community, as well as to lay consumers. I recall how my spouse marveled at the disappearance of the sync cable when I moved her from a Palm to a Blackberry and when she saw her data emails, calendar and address book effortless fly from her PC to her new smartphone. (And her PC mechanic was happy to be freed from Hotsync Not Working calls.)

But like the Apple ][, advances in hardware and heightened customer expectations outran the software engine’s ability to evolve.

This isn’t something that escaped RIM’s management. As recounted in a well-documented Globe and Mail story, Mike Lazaridis quickly realized what he was against:

“Mike Lazaridis was at home on his treadmill and watching television when he first saw the Apple iPhone in early 2007. There were a few things he didn’t understand about the product. So, that summer, he pried one open to look inside and was shocked. It was like Apple had stuffed a Mac computer into a cellphone, he thought.

[…] the iPhone was a device that broke all the rules. The operating system alone took up 700 megabytes of memory, and the device used two processors. The entire BlackBerry ran on one processor and used 32 MB. Unlike the BlackBerry, the iPhone had a fully Internet-capable browser.”

So at a very early stage in the shift to the Smartphone 2.0 era, RIM understood the nature and extent of their problem: BlackBerry’s serviceable but outdated software engine was against a much more capable architecture. The BlackBerry was a generation behind.

It wasn’t until 2010 that RIM acquired QNX, a “Unix-ish” operating system that was first shipped in 1982 by Quantum Software Systems, founded by two Waterloo University students. Why did Lazaridis’ company take three years to act on the sharp, accurate recognition of its software problem? Three years were lost in attempts to tweak the old software engine, and in fights between Keyboard Forever! traditionalists and would-be adopters of a touch interface.

Adapting BlackBerry’s applications to QNX was more complicated than just fitting a new software engine into RIM’s product line. To start with, QNX didn’t have the thick layer of frameworks developers depend on to write their applications. These frameworks, which make up most of the 700 megabytes Lazaridis saw in the iPhone’s software engine, had to be rebuilt on top of a system that was well-respected in the real-time automotive, medical, and entertainment segment, but that was ill-suited for “normal” use.

To complicate things, the company had to struggle with its legacy, with existing applications and services. Which ones do we update for the new OS? which ones need to be rewritten from scratch? …and which ones do we drop entirely?

In reality, RIM was much more than three years behind iOS (and, later, Android). Depending on whom we listen to, the 2007 iPhone didn’t just didn’t stand on a modern (if incomplete) OS, it stood on 3 to 5 years of development, of trial and error.

BlackBerry had lost the software battle before it could even be fought.

All other factors that are invoked in explaining BlackBerry’s fall — company culture, hardware misdirections, loss of engineering talent — pale compared to the fundamentally unwinnable software battle.

(A side note: Two other players, Palm and Nokia, lost the battle for the same reason. Encumbered by once successful legacy platforms, they succumbed to the fresh approach taken by Android and iOS.)

Now under turnaround management, BlackBerry is looking for an exit. John Chen, the company’s new CEO, comes with a storied résumé that includes turning around database company Sybase and selling it to SAP in 2012. Surely, such an experienced executive doesn’t believe that the new keyboard-based BlackBerry Passport (or its Porsche Design sibling) can be the solution:

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Beyond serving the needs or wants of die-hard keyboard-only users, it’s hard to see the Passport gaining a foothold in the marketplace. Tepid reviews don’t help (“The Passport just doesn’t offer the tools I need to get my work done”); Android compatibility is a kludge; developers busy writing code for the two leading platforms won’t commit.

Chen, never departing from his optimistic script, touts BlackBerry’s security, Mobile Device Management, and the QNX operating system licenses for embedded industry applications.

None of this will move the needle in an appreciable way. And, because BlackBerry’s future is seen as uncertain, corporate customers who once used BlackBerry’s communication, security, and fleet management services continue to abandon their old supplier and turn to the likes of IBM and Good Technology.

The company isn’t in danger of a sudden financial death: Chen has more than $3B in cash at his disposal and the company burns about $35M of it every quarter. Blackberry’s current stock price says the company is worth about $5B, $2B more than its cash position. Therefore, Chen’s endgame is to sell the company, either whole or, more likely, in parts (IP portfolio, QNX OS…) for more than $2B net of cash.

Wall Street knows this, corporate customers know this, carriers looking at selling Passports and some services know this. And potential body parts buyers know this as well… and wait.

It’s not going to be pretty.

JLG@mondaynote.com

The Future of Mobile Apps for News

 

The modern smartphone is 7 years old and yet, when it comes to designing mobile applications, we are still barely scratching the surface. Today we’ll see how harnessing technology already embedded in a phone can unleash great potential. 

A mobile news app has simple goals: Capture and retain reader attention, and repeat the process, several times a day. Pretty straightforward. But not that simple in the real world. For a news provider, the smartphone screen is the the most challenging environment ever seen. There, chances are that a legacy media or a pure-player will find itself in direct competition, not only with the usual players in its field, but also with Facebook, Snapchat, Instagram and scores of gaming applications. Distraction is just one icon away; any weakness in functional or graphic design can be lethal.

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Hence the questions for publishers: What type of news should they put on their mobile apps, what formats, what about images and video, sharing, curation, connections to other apps? Should they be selective or stuff as much as they can in their app? Or should they build easily digestible news blocks à la Circa? Or put more emphasis on a nice, small package of news items, as Yahoo News Digest brilliantly does? Or — the last trend –design an app for fast reading, like The New York Times NYT Now? (I must say, NYT Now, is my favorite news application — and I tested many; it delivers exactly what its promises: a constantly updated news stream, sending back to NYT’s stories, and well curated picks from the web. At the same time, Les Echos, the business media I work for, released LesEchosLive, an app also built around a single vertical “rail” of news with compact stories that expand and collapse as needed — readers seems to like it a lot…)

But… Good as they are, these forays into mobile news consumption are not enough. The  mobile tsunami has just begun to unfurl. Soon, it might flood a solid half, then two thirds of all news pageviews — and we can expect further acceleration after the release of the next batch of iPhones: their larger screens will provide more attractive reading.

If mobile is to become the dominant vector for news, retaining readers will be much more challenging than it is on a PC or tablet (though the latter tends to engage readers 10x or sometimes 20x more). A news app needs to be steered with precision. Today’s digital marketing tools allow publishers to select multiple parameters monitoring the use of a application: They can measure how long the app is used, when, for how long, why and where people tend to drop it, what kind of news they like, if they hit a paywall and give up, and why they do so, etc. Similarly, when an app remains unopened for too long, smart tools can pinpoint the user and remind her of the product’s benefits. These tools are as good as the people who (a) set the parameters, (b) monitor them on a daily basis, and (c) take appropriate action such as launching a broadside of super-targeted emails. But these are incremental measures, they don’t breed exponential growth in viewership (and revenue).

Why not envision a few more steps forward and take advantage of technologies now embedded in every smartphone? A mobile phone is filled with features that, well directed, can significantly improve user experience and provide reams of usage data.

Imagine a news feed natively produced in different formats: long, short, capsules of text, with stills and videos in different sizes and lengths. Every five minutes or so, the feed is updated.

After a while, your smartphone has recorded your usage patterns in great detail. It knows when you read the news and, more importantly, under what conditions. Consider Google Now, the search engine’s intelligent personal assistant: It knows when you are at work or at home and, at the appropriate moment, it will estimate your transit time and suggest an itinerary based on your commute patterns; or take Google Location History, a spectacular — and a bit creepy — service for smartphones (also tablets and laptops) that visualizes your whereabouts. Both Google services generate datasets that can be used to tailor your news consumption. Not only does your phone detect when you are on the move, but it can anticipate your motions.

Based on these data sets, it becomes possible to predict your most probable level of attention at certain moments of the day and to take in account network conditions. Therefore, a predictive algorithm can decide what type of news format you’ll be up for at 7:30am when you’re commuting (quickly jumping from one cell tower to another with erratic bandwidth) and switch for faster reads than at 8:00pm, when you’re supposed to be home, or staying in a quiet place equipped with a decent wifi, and receptive to richer formats.

By anticipating your moves, your phone can quickly download heavy media such as video while networks conditions are fine and saving meager bandwidth for essential updates. In addition, the accelerometer and internal gyroscope can tell a lot about reading conditions: standing-up in a crowded subway or waiting for your meeting to start.

By poring over such data, analytics specialists can understand what is read, watch and heard, at what time of the day and in which environment. Do users favor snippets when commuting? What’s the maximum word-length for a story to be read in the subway without being dropped, and what length is more likely to induce future reading? What’s the optimal duration for a video? What kind of news package fits the needs and attention for someone on the move? What sort of move by the way? Motion and vibration for a car are completely different than the ones from the Bay Area transit system or London’s Tube. Accelerometers and motion sensors can tell that for sure — and help to decide if it’s better to serve the smartphone owner with a clever podcast while she is likely to be stuck in her car for the next 50 minutes on Highway 101 heading to San Jose (as revealed by her trajectories and GPS patterns of the last few months) or favor text and preloaded videos for BART commuters between Oakland and San Francisco.

This approach, based on a large spectrum of patterns analytics, can enormously increase readers’ appetite for news. This is yet another reason for media companies to lean more and more on the technology side. Until now, with very few exceptions, legacy media have been slow to move into that direction. As someone who loves good journalism and smart news formats, the last thing I want to see is newcomers providing cheap editorial succeed at capturing people’s attention only because they’ll have been first to harness these technologies. We’ve had that experience on the web, let’s not make the same mistake twice.

frederic.filloux@mondaynote.com

News on mobile: better be a Danish publisher than a Japanese one

 

This is the second part of our Mobile facts to Keep in Mind (see last week Monday Note – or here on Quartz). Today, a few more basic trends and a closer look at healthy markets for digital news. 

Last week, we spoke about the preeminence of mobile applications. Not all readers agree, of course, but I found more data to support the finding; among many sources, the remarkable Reuters Institute Digital News Report (PDF here) is worth reading:

47% of smartphone users say they use mainly apps for news

According to the report, this figure has risen by 6 percentage points in just one year. By contrast, 38% of the news consumption is made via a browser — which is losing ground: -4% in just a year.

The trend is likely to accelerate when taking in account demography: On smartphones, the most active groups are the 18-24s and the 35-44s; on tablets the most active group is the 45-54 segment.

Platform usage varies in accordance to local market share, but when it come to paying for news, Apple leads the game:

iOS users are x1.5 likely to pay for news in the US
and x2 likely to pay in the UK than Android or other users

Here is the bad part, though. Again based on the Reuters report, the use of smartphones does narrow the range of news sources. More than ever, the battle for the first screen is crucial.

Across the ten countries surveyed,
37% of users rely on a single news source
vs. 30% for PC users

In the UK, the trend is even stronger with 55% of mobile users relying a single news source. This goes along with good news for those who still defend original news production: mobile news consumption is quite focused on legacy media. The BBC app crushes the competition with 67% of respondents saying they used the app the previous week, vs. 25% for Sky, MSN and Yahoo are trailing with respectively 2% and 7%.

If you want to survey a healthy digital news market, go to Denmark

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A Viking logo (from the TV Series) as viewed by the Brand New blog;
note the ancient reference to technology…

Not only does Denmark rank among the best countries to live and develop a business in, but when it comes to digital news, it leads the pack in several of ways:

Despite the digital tsunami, Denmark retains many strong media brands. As a result, legacy media are the prime way for accessing digital news. And since Danish media did well embracing new platforms, they enjoyed similarly success on social, funneling readers to their properties.
The opposite holds for France and Germany where the transition is much slower; in those countries digital users rely much more on search to reach news brands. Two side effects ensue: News readers are more accidental and therefore generate a much lower ARPU; and the greater reliance on Google is problematic (hence the call to arms in France and Germany against the search engine giant.)

— Because of the strength of its traditional media brands, the Denmark news market has left very little oxygen to pure players: They weigh only 10% of weekly digital news, vs. 39% in the US and 46% in Japan were legacy media have been severely hit.

— Danes are the heaviest users of both smartphones and tablets to access news.

— They use mobile apps more than anywhere else: 19%, vs. 15% for US and 12% for Germany.

— They are mostly Apple users : 58% say they use an iOS device to access news in the last week (vs. 28% in Germany), hence a better ARPU for mobile publishers.

—  Danish news consumers generously overlap their devices way more than in any country. 79% use a PC, 61% a smartphone and 39% a tablet. Only 24% use only a PC for news. In Japan by contrast, 58% admit using only a PC for their news diet; up there, the use of smartphone and tablet to access information is respectively one half and one third of Denmark.

— In Danish public transportation, smartphones has overtaken print as the main news vector by 69% vs. 21% of the usage.

We all know where to seek inspiration for our digital news strategies.

frederic.filloux@mondaynote.com

Mobile Facts To Keep In Mind – Part 1

 

By the end of 2014, many news media will collect around 50% of their page views via mobile devices. Here are trends to remember before devising a mobile strategy. (First of a two-part series.)

In the news business, mobile investments are on the rise. That’s the pragmatic response to a major trend: Users shift from web to mobile. Already, all major media outlets are bracing for a momentous threshold: 50% of their viewership coming from mobile devices (smartphones and tablets). Unfortunately, the revenue stream is not likely to follow anytime soon: making users pay for mobile content has proven much more difficult than hoped for. As for advertising, the code has yet to be cracked for (a) finding formats that won’t trigger massive user rejection, and (b) monetizing in ways comparable to the web (i.e. within the context of a controlled deflation). Let’s dive into a few facts:

Apps vs. WebApps or Mobile sites. A couple of years ago, I was among those who defended web apps (i.e. encapsulated HTML5 coding, not tied to a specific OS platform) vs. native apps (for iOS, Android, Windows Phone). The idea was to give publishers more freedom and to avoid the 30% app store levy. Also, every publisher had in mind the success enjoyed by the FT.com when it managed to put all its eggs in its web app and so retain complete control over the relationship with its customers.

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Credit: Vintage Mobile / Popular Mechanics

All of the above remains true but, from the users’ perspective, facts speak loudly: According to Flurry Analytics, apps now account for 86% of the time spent by mobile users vs. 14% for mobile sites (including web apps.) A year ago, the balance was 80% for apps and 20% for mobile web.

Trend #1: Native apps lead the game
at the expense of web apps and mobile sites 

One remark, though: the result must take in account the weight of games and Facebook apps that account for 50% of the time spent on mobile. News-related usage leans more to mobile as there is not (yet) demand for complex rendering as in a gaming app. But as far news applications are concerned, we haven’t seen major breakthroughs in mobile web or web apps over the last months and it seems development is stalling.

News vs. the rest of the app world. On a daily total of 2hrs 50mn spent by mobile users (source: eMarketer), 2% to 5% of that time is spent on news. Once you turn to growth, the small percentage number starts to look better: The news segment is growing faster (+64% Y/Y) than messaging and social (+28%) or gaming and entertainment (+9% each); the fastest usage segment being the productivity apps (+119%) and that’s due to the transfer of professional uses from the desktop to the mobile.

Trend #2: On mobile, news is growing faster
than game or social 

…And it will grow stronger as publishers will deploy their best efforts to adjust contents and features to small screens and on-the-go usage and as mobile competitors multiply.

iOS vs. Android: the monetization issue. Should publishers go for volume or focus on the ARPU (revenue per user)? If that’s the reasoning, the picture is pretty clear: an iOS customer brings on average five times more money than an Android user. And the gap is not about to close. However, Android OS has about one billion users vs. 470m users for iOS, but most of Android users are in low income countries, where phones can cost as little as $80, and prices are falling fast. By contrast, an iPhone will cost around $600 (without a carrier contract) and the not-so-successful “cheap” iPhone 5C shows that iPhone is likely to remain a premium product.

Trend #3: There is more money to make on iOS
than Android and that’s not likely to change

Beside, we must take in account two sub-trends: iOS will gain in sophistication with the arrival of iOS 8 (see Jean-Louis’ recent column about iOS 8 being the real version 2.0 of iOS) and a new breed of applications based on the new Swift  programming language. Put differently: Advanced functionalities in Swift/iOS 8-based apps will raise the level of user expectations; publishers will be forced to respond accordingly: as apps reside side by side on the same mobile screen, news apps will be required to display the same level of sophistication than, say, a gaming app — that’s also why I’m less bullish on web apps. Behind the iOS/Android gap lies another question: Should publishers have the same app (content, features, revenue model across) all platforms – or must they tailor their product to platform “moneygraphics”?  That’s an open question.

I’ll stop here for today. Next week, I’ll explore trends and options for business models, marketing tactics, why it could be interesting to link a news app to the smartphone accelerometer and why news media should tap into game developers for certain types of qualifications.

–frederic.filloux@mondaynote.com

The Network Is the Computer: Google Tries Again

 

All you need is a dumb device attached to a smart network. It’s an old idea that refuses to die despite repeated failures. Now it’s Google’s turn.

In the late 1980s, Sun Microsystems used a simple, potent war cry to promote its servers: The Network Is The Computer. Entrust all of your business intelligence, computing power, and storage to Sun’s networked SPARC systems and you can replace your expensive workstation with a dumb, low cost machine. PCs are doomed.

Nothing of the sort happened, of course. Sun’s venture was disrupted by inexpensive servers assembled from the PC organ bank and running Open Source software.

PCs prospered, but that didn’t dampen the spirits of those who would rid us of them.

Fast-forward to the mid-1990s and thought re-emerges in a new guise: The Browser Will Be The Operating System (a statement that’s widely misattributed to Marc Andreessen, who holds a more nuanced view on the matter). The browser will serve as a way to access networked services that will process your data. The actual OS on your device, what sort of apps it can run — or even if it can run any (other than a browser) — these questions will fade into insignificance.

Soon after, Oracle took a swing at the Network is the Computer piñata by defining the Network Computer Reference Profile (or NCRP), a specification that focused on network connectivity and deemphasized local storage and processing. It was understood, if not explicitly stated, that an NCRP device must be diskless. A number of manufacturers offered NCRP implementations, including Sun (which would ultimately be acquired by Oracle) with its JavaStation. But despite Larry Ellison’s strongly expressed belief that Network Computers would rid the industry of the evil Microsoft, the effort went nowhere.

Today, The Network Is The Computer lives on under the name Cloud Computing, the purest example of which is a Google Chromebook running on Chrome OS. (And thus, in a sense, Sun’s idea lives on: Google’s first investor was Sun co-founder Andy Bechtolsheim.)

So far, Chromebooks have shown only modest penetration (a topic for musings in a future Monday Note), but despite the slow adoption, Google has become one of the largest and most important Cloud Computing companies on the planet. Combine this with the Android operating system that powers more than a billion active devices, could Google bring us to the point where The Network Really Is The Computer?

It’s a complicated question, partly because the comparison with the previous generation of devices, traditional PCs, can (excuse me) cloud the view.

Unlike PCs, smartphones rely on an expensive wireless infrastructure. One can blame the oligopolistic nature of the wireless carrier industry (in English: too few companies to have a really competitive market), but that doesn’t change the simple fact that wireless bandwidth isn’t cheap. The dumber the device, the more it has to rely on the Cloud to process and store data, and the more bandwidth it will consume.

Let’s visit Marc Andreessen actual words regarding Network-As-Computer, from a 2012 Wired interview [emphasis mine]:

“[I]f you grant me the very big assumption that at some point we will have ubiquitous, high-speed wireless connectivity, then in time everything will end up back in the web model.”

If we interject, on Andreessen’s behalf, that wireless connectivity must be as inexpensive as it is ubiquitous, then we begin to see the problem. The “data hunger” of media intensive apps, from photo processing to games, shows no sign of slowing down. And when you consider the wireless bandwidth scarcity that comes from the rapid expansion of smartphone use, it seems that conditions are, yet again, conspiring against the “dumb device” model.

The situation is further confounded when we consider that Google’s business depends on delivering users to advertisers. Cloud computing will help drive down the cost of Android handsets and thus offer an even wider audience to advertisers…but these advertisers want a pleasant and memorable UI, they want the best canvas for their ads. When you dumb down the phone, you dumb down the ad playback experience.

In a recent blog post titled The next phase of smartphones, Benedict Evans neatly delineates the two leading “cloud views” by contrasting Apple and Google [emphasis mine]:

“Apple’s approach is about a dumb cloud enabling rich apps while Google’s is about devices as dumb glass that are endpoints of cloud services…”

But Google’s “dumb glass” can’t be too dumb.  For its mobile advertising business, Google needs to “see” everything we do on our smartphones, just like it does on our PCs. Evans intimates as much:

“…it seems that Google is trying to make ‘app versus web’ an irrelevant discussion – all content will act like part of the web, searchable and linkable by Google.”

Native apps running on a “really smart” device are inimical to Google’s business model. To keep the advertisers happy, Google would have to “instrument” native apps, insert deep links that will feed its data collection activities.

This is where the Apple vs. Google contrast is particularly significant: iOS apps are not allowed to let advertisers know what we are doing – unless explicitly authorized. Apple’s business model doesn’t rely on peddling our profile to advertisers.

In the end, I wonder if Google really believes in the “dumb glass” approach to smartphones. Perhaps, at least for now, The Computer will remain The Computer.

JLG@mondaynote.com

 

The iPad Is a Tease

 

As Apple is about to release its latest quarterly numbers, new questions arise about the iPad’s “anemic” growth. The answer is simple – but the remedies are not.

The iPad isn’t growing anymore. What happened? 

In anticipation of Apple’s latest quarterly numbers – they’ll be announced on April 23rd – the usual prerelease estimates swirl around the Web. You can find Yahoo’s summary of analysts’ estimates here; Paul Leitao’s Posts At Eventide provides a detailed and tightly reasoned history and forecast for the March 2014 quarter.

The consensus is that for the company as a whole, there won’t be any surprises: Apple will meet the guidance stated in its January 27th earnings call. Revenue will be down, as befits the quarter following the Christmas shopping frenzy, but profit per share (EPS) will be up a bit.

Boring. With one glaring exception:

Braeburn Group iPad Edited
(Source: The Braeburn Group)

In the same quarter for 2013, the iPad’s year-on-year growth was about 55%. Some of this phenomenal growth was due to a rebound from earlier iPad mini supply constraints, but that doesn’t explain the precipitous drop from 2013 to this year.

Are the iPad’s go-go years over?

As Philip Elmer-DeWitt reports on his Apple 2.0 site, this gloomy prediction appears to be the majority opinion among analysts. Elmer-DeWitt acknowledges that there are outliers — Horace Dediu comes in at the high end with an estimate of 21.8M units (and positive growth) — but “the consensus estimate of 19.3 million, would represent a 0.7% decline”.

It’s one thing for a product to increase in unit volume sales but still grow less than the overall market — that’s simply a loss of market share. And we know how fallacious share numbers can be in the absence of an honest disclosure of sales volumes. No, assuming the estimates are right, what we have here isn’t market share dilution, it isn’t a post-Christmas lull, it’s a year-to-year decline in absolute unit numbers.

Why?

I’ll offer an opinion: The iPad is a tease. Its meteoric debut raised expectations that it can’t currently meet.

To explain, let’s go back four years.

Steve Jobs’ last creation took us by surprise, price included, and was initially panned by many in the kommentariat, from Eric Schmidt to Dan Lyons (who subsequently recanted). But normal humans joyously took to the iPad. In 1984, one of Apple’s tag line for the Mac was “Macintosh – the computer for the rest of us.” Decades later, the iPad was quickly perceived as a sort of second coming. As MacWorld put it in June 2011: Now Apple’s really “for the rest of us”.

Indeed, the iPad wasn’t targeted at a particular type — or generation — of user. David Hockney has produced exquisite iPad “paintings”. Daniel Borel, Logitech’s co-founder, told me that his two-year old grandson immediately “got” the iPad (even if it was just to play games, but…he’s two). Coming out of our breakfast meeting, I crossed paths with a couple of seniors — octogenarians, probably — who proudly told me that they were going to an iPad training session at the Palo Alto Apple Store.

The iPad rose and rose. It won legions of admirers because of its simplicity: No windows (no pun), no file system, no cursor keys (memories of the first Mac). Liberated from these old-style personal computer ways, the iPad cannibalized PC sales and came to be perceived as the exemplar Post-PC device.

But that truly blissful simplicity exacts a high price. I recall my first-day disappointment when I went home and tried to write a Monday Note on my new iPad. It’s difficult — impossible, really — to create a real-life composite document, one that combines graphics, spreadsheet data, rich text from several sources and hyperlinks. For such tasks, the Rest of Us have to go back to our PCs and Macs.

I realize there are iPad users who happily perform “productivity tasks” on their iPads. Most of them use a stand and keyboard sold in a number of guises. The number of different offerings is a testament to a real need. (We’ll note that Apple doesn’t seem eager to address this issue directly. They don’t offer an “iPad-sized” keyboard — the Bluetooth keyboard I use is fine for my iMac, but feels gargantuan when I pair it with my iPad. And Apple’s iPad Dock hasn’t been updated to work with the “Lightning” connector on the newer iPads.)

The iPad’s limitations extend beyond classic office productivity tasks. I just tried to build an itinerary for a long postponed road trip, driving all the way from Key West Florida to Palo Alto. On a Mac, you can easily “print to PDF” to produce a map for each leg of the trip. Then you use the wonderful Preview app (I salute its author and dedicated maintainer) to emend unneeded pages, drag and drop, combine and rearrange the PDF files into a single document. Don’t try this on an iPad: How would you “print-to-PDF” a map page, let alone combine such pages?

Despite the inspiring ads, Apple’s hopes for the iPad overshot what the product can actually deliver. Although there’s a large numbers of iPad-only users, there’s also a substantial population of dual-use customers for whom both tablets and conventional PCs are now part of daily life.

I see the lull in iPad sales as a coming down to reality after unrealistic expectations, a realization that iPads aren’t as ready to replace PCs as many initially hoped.

In his introduction of the iPad in January, 2010, Jobs himself seemed a bit tentative when positioning his latest creation. Sitting in the Le Corbusier chair, Jobs stated that his new tablet would have to “find its place between the iPhone and the Mac”.

This “in-between place” is still elusive.

Microsoft tried to find that “in-between place”, and we know how well that worked. For the Redmond company, the iPad’s limitations were an opportunity: Simply emulate the charm and intuitiveness of the market-leading tablet and cater to the needs of the “professional” user. With its touch interface and keyboard, the Surface device sounded like the solution that had eluded Microsoft’s earlier PC Tablets. In the field, customers didn’t like the dueling interfaces, nor the introduction of layers of complexity where simplicity had been promised. Surface tablets didn’t move the revenue needle and cost Microsoft a $900M write-down.

The iPad represents about 20% of Apple’s revenue; allowing iPad numbers to plummet isn’t acceptable. So far, Apple’s bet has been to keep the iPad simple, rigidly so perhaps, rather than creating a neither-nor product: No longer charmingly simple, but not powerful enough for real productivity tasks. But if the iPad wants to cannibalize more of the PC market, it will have to remove a few walls.

Specifically, the iPad is a computer, it has a file system, directories, and the like — why hide these “details” from users? Why prevent us from hunting around for the bits and bobs we need to assemble a brochure or a trip itinerary?

None of this is news to Apple execs, but they also know that success doesn’t depend on What, on a simple feature list. The next step in iPad growth will depend on How new features are integrated into the user experience. It’s a tricky game of the Best of Both Worlds…and it tripped up Microsoft.

When will we know? I have no idea. Perhaps at the WWDC this coming June.

JLG@mondaynote.com

The Browser Is The OS: 19 Years Later

 

So it was declared in the early days: Web apps will win over native apps. Why let the facts cloud an appealing theory?

Marc Andreessen, the Netscape co-founder, is credited with many bold, visionary claims such as “Everyone Will Have the Web” (ca. 1992), “Web Businesses Will Live in the Cloud” (1999), “Everything Will Be Social” (2004, four years before joining Facebook’s Board), and “Software Will Eat the World” (2009).

But not all of Andreessen’s predictions are as ringing and relevant. His 1995 proclamation that “The Browser Will Be the Operating System” still reverberates around the Web, despite the elusiveness of the concept.

The idea is that we can rid our computing devices of their bulky, buggy operating systems by running apps in the Cloud and presenting the results in a Web browser. The heavy lifting is performed by muscular servers while our lightweight devices do nothing more than host simple input/output operations. As a result, our devices will become more agile and reliable, they’ll be less expensive to buy and maintain, we’ll never again have to update their software.

The fly in the ointment is the word connected. As Marc Andreessen himself noted in a 2012 Wired interview [emphasis mine]:

[I]f you grant me the very big assumption that at some point we will have ubiquitous, high-speed wireless connectivity, then in time everything will end up back in the web model.

So what do we do until we have ubiquitous, high-speed wireless connectivity?

We must build off-line capabilities into our devices, local programs that provide the ability to format and edit text documents, spreadsheets, and presentations in the absence of a connection to the big App Engines in the Cloud. Easy enough, all you have to do is provide a storage mechanism (a.k.a. a file system), local copies of your Cloud apps, a runtime environment that can host the apps, a local Web server that your Browser can talk to… The inventory of software modules that are needed to run the “Browser OS” in the absence of a connection looks a lot like a conventional operating system… but without a real OS’s expressive power and efficiency.

For expressive power, think of media intensive applications. Photoshop is a good example: It could never work with a browser as the front end, it requires too much bandwidth, the fidelity of the image is too closely tied to the specifics of the display.

With regard to efficiency, consider the constant low-level optimizations required to conserve battery power and provide agile user interaction, none of which can be achieved in a browser plug-in.

Certainly, there are laudable arguments in support of The Browser Is The OS theory. For example: Unified cross-platform development. True, developing an app that will run on a standardized platform decreases development costs, but, let’s think again, do we really want to go for the lowest common denominator? A single standard sounds comfy and economical but it throttles creativity, it discourages the development of apps that take advantage of a device’s specialized hardware.

Similarly, a world without having to update your device because the Cloud always has the latest software is a comforting thought.. but, again, what about when you’re off-line? Also, a growing number of today’s computing devices automatically update themselves.

In any case, the discussion may be moot: The people who pay our salaries — customers — blithely ignore our debates. A recent Flurry Analytics report shows that “Six years into the Mobile Revolution” apps continue to dominate the mobile Web. We spend 86% of our time using apps on our mobile devices and only 14% in our browsers:

Apps 86 Browser 14

…and app use is on the rise, according to the Flurry Analytics forecast for 2014:

Apps Web Flurry 2013 2014

So how did Andreessen get it so wrong, why was his prediction so wide of the mark? It ends up he wasn’t wrong… because he never said “The Browser Will Be the Operating System”. Although it has been chiseled into the tech history tablets, the quote is apocryphal. 

While doing a little bit of research for this Monday Note, I found a 1995 HotWired article, by Chip Bayers, strangely titled “Why Bill Gates Wants to Be the Next Marc Andreessen”. (Given Microsoft’s subsequent misses and Marc Andreessen’s ascendency, perhaps we ought to look for other Chip Bayer prophecies…) The HotWired piece gives us a clear “asked and answered” Andreessen quote [emphasis mine]:

“Does the Web browser become something like an operating system?

No, it becomes a new type of platform. It doesn’t try to do the things an operating system does. Instead of trying to deal with keyboards, mouses, memory, CPUs, and disk drives, it deals with databases and files that people want to secure – transactions and things like that. We’re going to make it possible for people to plug in anything they want.”

Nearly two decades later, we still see stories that sonorously expound “The Browser Is The OS” theory. Just google the phrase and you’ll be rewarded with 275M results such as “10 reasons the browser is becoming the universal OS” or “The Browser Is The New Operating System”. We also see stories that present Google’s Chrome and Chromebooks as the ultimate verification that the prediction has come true.

The Browser Is The OS is a tech meme, an idea that scratches an itch. The nonquote was repeated, gained momentum, and, ultimately, became “Truth”. We’ll be polite and say that the theory is “asymptotically correct”… while we spend more energy figuring out new ways to curate today’s app stores.

JLG@mondaynote.com

Nokia Goes Android – Part II

 

Next week, we might see Nokia’s entry-level feature phones replaced by a low-end device running Android Open Source Project software. The phone may just be a fantasy, but the dilemma facing Nokia’s feature phone business is quite real: Embrace Android or be killed by it. 

Nokia will announce an Android phone! So says the persistent rumor, started about three months ago by an @evleaks tweet, and followed by more details as weeks went by. Initially code-named Normandy, the hypothetical feature phone is now called Nokia X, and it already has its own Wikipedia page and pictures:

Nokia X

Nokia is on the path to being acquired by Microsoft. Why introduce an Android-based phone now? The accepted reasoning is simple…

  • Even though it doesn’t generate much revenue per handset (only $42), Nokia’s feature phone business is huge and must be protected. Nokia’s Form 20-F for 2012 (the 2013 report hasn’t been published, yet) shows its phone numbers compared to the previous year:
    • 35M smartphones (-55%) at an average price (ASP) of $210 (+ 11%)
    • 300M feature phones (-12%) with an ASP of $42 (- 11%)
  • These 300 million feature phones — or “dumbphones” — keep the Nokia flag waving, particularly in developing economies, and they act as an up-ramp towards more profitable smartphones.
  • Lately, dumbphones have become smarter. With the help of Moore’s Law, vigorous competition, and Android Open Source Project (AOSP) software, yesterday’s underfed, spartan feature phones are being displaced by entry-level smartphones. Asha, Nokia’s offering in this category, has been mowed down by low-end Android devices from China.
  • Nokia can’t help but notice that these AOSP-based feature phones act as a gateway drug to the full-blown Android smartphone experience (and much larger profits) offered by competitors such as Samsung, Huawei, and Motorola’s new owner Lenovo.
  • So Nokia drops its over-the-hill Symbian software core, adopts Android, adds its own (and Microsoft’s) services, design expertise, and carrier relationships, and the result is Nokia X, a cleaner, smarter feature phone.

That’s it. Very tactical. Business as usual, only better. Move along, nothing to see.

It’s not that simple.

There’s an important difference between the Android Open Source Project (AOSP), and the full Android environment that’s offered by Samsung, LG, HTC and the like.

The Android Open Source Project is really Open Source, you can download the source code here, modify it as you see fit for your application, add layers of services, substitute parts…anything you like.

Well, almost anything. The one thing you can’t do is slap a figurative “Android Inside” sticker on your device. To do that, you must comply with Google’s strict compatibility requirements that force licensees to bundle Google Mobile (Maps, Gmail, YouTube, etc.) and Google Play (the store for apps and other content). The result isn’t open or free, but smartphone makers who want the Android imprimatur must accept the entire stack.

As an added incentive to stay clean, a “Full Android” licensee cannot also market devices that use a different, incompatible version (or “fork”) of the Android code published by Google. A well-know example of forking is Amazon’s use of Android source code to create the software engine that runs its high-end Kindle Fire tablets. You won’t find a single instance of the word “Android” on these devices: Google won’t license the name for such uses.

(For more on the murky world of Android licensing, bundling, and marketing agreements, see Ben Edelman’s research paper: Secret Ties in Google’s “Open” Android.)

The hypothetical, entry-level Nokia X can’t offer an entire Android stack — it can’t be allowed to compete with the higher-end Lumias powered by Microsoft’s Windows Phone — so it would have to run an “unmentionable” Android fork.

Even without the “Android Inside” label, everyone would soon know the truth about the Android code inside the new device. This could give pause to software developers, carriers, and, the more curious users. “Where is Microsoft going with this? Won’t the Android beast inside soon work its way up the product line and displace the Windows Phone OS?”

Microsoft will make soothing sounds: “Trust us, nothing of the sort will ever happen.  Nokia X is a purely tactical ploy, a placeholder that will give Windows Phone enough time to reveal its full potential.” We know how well attempts to create a Reality Distortion Field have worked for Microsoft’s Post-PC denials.

The Redmond not-so-mobile giant faces a dilemma: Lose the Asha feature phone business to aggressive forked-Android makers, or risk poisoning its Windows Phone business by introducing potentially expansionist Android seeds at the bottom of its handset line.

Several observers (see Charles Arthur’s penetrating Guardian column as an example) have concluded that Microsoft should follow Amazon’s lead and accept the “Come To Android” moment. It should drop Windows Phone and run a familiar Embrace and Extend play: Embrace Android and Extend it with Bing, Nokia’s Here Maps, Office, and other Microsoft properties.

Critics, such as Peter Bright, an energetic Microsoft commenter, contend that forking Android isn’t feasible:

“Android isn’t designed to be forked. With GMS, Google has deliberately designed Android to resist forking. Suggestions that Microsoft scrap its own operating system in favor of such a fork simply betray a lack of understanding of the way Google has built the Android platform.”

Dianne Hackborn, a senior Android engineer (and a former comrade of mine during a previous OS war) contradicts Bright in great point-by-point detail and concludes:

“Actually, I don’t think you have an understanding of how Google has built Android. I have been actively involved in designing and implementing Android since early on, and it was very much designed to be an open-source platform… Android creates a much more equal playing field for others to compete with Google’s services than is provided by the proprietary platforms it is competing with. I also think a good argument can be made that Android’s strategy for addressing today’s need to integrate cloud services into the base platform is an entirely appropriate model for a ‘real’ open-source platform to take.”

In the end, Microsoft probably doesn’t trust Google to refrain from the same games that Microsoft itself knows (too well) how to play. Microsoft used its control of Windows to favor its Office applications. Now it’s Google’s turn. The Mountain View company appears set to kill Microsoft Office, slowly but surely, and using all means available: OS platforms and Cloud services.

None of this draws a pretty picture for Microsoft’s mobile future. Damned if it introduces Android bits at the low end, damned if it lets that same software kill its Asha feature phone business.

JLG@mondaynote.com
@gassee
———————-
PS: Almost four years ago, I wrote a light-hearted piece titled Science Fiction: Nokia goes Android. It was actually less fictional than I let on at the time. In June 2010, I was asked to give a talk at Nokia’s US HQ in White Plains, NY. I was supposed to discuss Apple but I declined to spend too much time on that topic arguing that the Cupertino company was too “foreign” to Nokia’s culture. Instead, I made two suggestions: Fire your CEO and drop your four or five software platforms — Symbian and Linux variants — and adopt Android. Nokia’s combination of industrial design expertise, manufacturing might, and long-standing, globe-spanning carrier relationships could make it a formidable Android smartphone maker.

The first recommendation was warmly received — there was no love for Olli-Pekka Kallasvuo, the accountant cum attorney CEO.

The second was met with indignation: “We can’t lose control of our destiny”. I tried to explain that the loss had already taken place, that too many software platforms were a sure way to get killed at the hands of monomaniacal adversaries.

Three months later Kallasvuo was replaced…by a Microsoft alum who immediately osborned Nokia’s smartphone business by pre-announcing the move to Windows Phone almost a year before the new devices became available.

—–

Is Yahoo serious about media?

 

Under Marissa Mayer’s leadership, Yahoo keeps making substantial efforts to become a major news media player. Will a couple of well-know bylines and a shiny mobile app do the job? 

A big Silicon Valley player entering the news business has long been the worst nightmare of legacy publishers. Combining an array of high tech products with the ability to get all the talent money can buy, the Valley giant could be truly disruptive. Ten years ago, the ongoing fantasy was Google or a Yahoo gulping the New York Times or another such big media property. For many reasons — economical as well as cultural ones — it didn’t happen. Yahoo once approached NYT’s columnist Thomas Friedman, offering him a hefty pay raise to become its star writer. But the Times’ globo-pundit quickly backed off when he realized that most of his reputation —  as arguable as it can be (see the cruel Tom Friedman OpEd Generator) — was tied to his employer. Yahoo and others put the issue at rest for years, focusing on core challenges: survival for Yahoo and global domination for Google.

Until now.

Last year, we first witnessed a significant move from the tech galaxy: Jeff Bezos acquired the Washington Post by. As mentioned in the Monday Note (see the Memos To Jeff series), Amazon’s technical firepower will undoubtedly exert a transformative — rather than merely incremental — impact on the Post. Further, I guess this will end up being a welcome stimulus for the entire industry, it really needs a tech kick in its sagging backside.

Then came the Yahoo initiatives. Last fall, Marissa Mayer, snatched three visible talents from the New York Times: Megan Liberman, until then the Times’ deputy news editor, was appointed Yahoo News editor in chief; Mayer also tapped iconic tech columnist David Pogue; a month later, she picked the Times’ chief political correspondent Matt Bai. Finally, on November 25th, Marissa Mayer announced that she hired former TV host Katie Couric as the portal’s “global anchor”.

Here we are: Expect Yahoo to simultaneously enter three major information segments: General audience programming with Katie Couric’s show; political and national issues; and tech coverage (in addition to the classical Food site). Logically, Yahoo started with the tech side. Pogue himself introduced Yahoo Tech on stage at CES last week — and didn’t pass up the opportunity to blast its competitors, mocking their nerdy and obscure language. Interface wise, I found the site pretty clever with its one page, endless scrolling structure — a trend to be noticed —  and articles showcased in about 120 tiles (approx 7 tiles x 18 rows), each expanding as needed and keeping its own URL, which is essential for social sharing uses.

Regardless of David Pogue’s ability to put a the human face on technology, Yahoo Tech is entering an increasingly crowded segment. This month, the Wall Street Journal rolled out WSJD, set to take Walt Mossberg’s and Kara Swisher’s AllThingsD slot, itself reborn as Re/Code (can’t find a geekier name), operated by the same duo. The Re/Code money machine will be the already sold-out Code Conference and its offsprings. WSJD features potent editorial firepower with no less than 50 writers on deck.

Marissa Mayer made no mystery of the fact that her editorial initiatives will be directed at Yahoo’s #1 priority, “the company’s commitment to mobile”. When she landed at Yahoo, Mayer was dismayed to discover that everyone received a Blackberry. Now, the company wants to board every relevant ecosystem, starting with iOS and Android.

That’s what Yahoo does with its interesting NewsDigest App for iOS, launched at CES. As its tech web site does, the mobile app focuses on a series of hot trends. First of all, with its truncated structure, the app borrows a lot from Circa (see a previous Monday Note); it also inherits technology developed by Summly, the startup it acquired in March last year (merely five months after the app’s launch). Summly’s core idea is a news summarizing algorithm. The NewsDigest iteration does actually much more than condensing stories: In a neat interface, it creates context by slicing coverage as follows:
–Image gallery
–Infographics
–Maps
–Stock charts
–Main Twitter feeds
–Video
–Wikipedia
…plus a set of references if you want more.

For a story picked up yesterday, it looks like this:

304_yahoo_news

Evidently, there is room for improvement. Weirdly enough, the app is updated only twice a day and carries less than ten stories. Both elements go against the idea of a smartphone app supposed to update on a permanent and to provide content in an endless stream. Plus, automated as it is, the prose can’t quite compete for a Pulitzer Prize. But, if Yahoo decides to hand the key ingredients over to a competent editorial team, the NewsDigest could become a really good product.

Coming back to this column’s main topic, I believe Yahoo is really up to something in the news sector:
— Yahoo enjoys huge traction in the mobile world: According to Marissa Mayer, among the 800 million people who access Yahoo every month (excluding Tumbler), roughly 400 million reach the portal through their mobile phone. (Despite that number, one irritating thing: Yahoo made its app available to the US AppStore only, ignoring the hundreds millions of English-speaking users on other shores, East and West of Sunnyvale, California.)
— Unlike with Google’s mobile strategy, Yahoo is free from Android’s strategic goals and from a difficult relationship with Apple. It can therefore play the two ecosystems equally, opening the potential for one to gain leverage against the other.
— Even better, by last week acquiring Aviate, an Android customizing interface layer, Yahoo can now create its own branded experience on top of the standard Android interface.
— Assuming it enters the news business for good, Yahoo will act like a tech company, not a legacy media one. In other words, it will first build a sizable audience for its news ecosystem while deliberately ignoring the revenue side as long as needed. Then, it will optimize and datamine this user base to understand in the most granular way what works and what doesn’t. Having successfully gone through those steps, Yahoo will then transform the (hopefully vast) newly acquired audience into a money machine.
This is the way it works nowadays.

frederic.filloux@mondaynote.com

@filloux