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Steve Ballmer not so gracious

Uncategorized By May 6, 2008 No Comments

Background: this Sunday May 4th Microsoft withdrew its offer to buy Yahoo for $44.6bn. Saturday, Microsoft CEO Steve Ballmer had invited the two co-founder of Yahoo, Jerry Yang and David Filo for a final discussion. In a last move, Ballmer sweetened his proposal by $5bn, to $33 a share. Yang and Filo demanded $37.

So, Microsoft walks away from a bad deal. Incompatible cultures, incompatible computer systems made this a terrible idea, to say nothing of probable delays due to regulatory reviews.
Steve Ballmer could have issued a terse letter: We withdraw our offer because we couldn’t agree on price. We’ll continue on our own path and wish you the best of successes. Steve Ballmer.
Instead, Steve Ballmer sends a long letter to Yahoo’s CEO, Jerry Yang. First mistake. Second, and much worse, this is a bitter, angry, accusatory letter. Accusations and veiled threats.

This raises a number of questions.

First. To quote Ballmer: “By failing to reach an agreement with us, you and your stockholders have left significant value on the table.” If this is true, trust shareholders and their attorneys, they’ll see it without Ballmer’s help and sue Yahoo’s Board of Directors. What does such a statement do for Microsoft shareholders or employees? It just makes their boss sound petulant, entitled. You should have seen we were your only salvation…

Second. Explaining at length (6 paragraphs) why a subcontracting some search and advertising to Google was a terrible idea. Again, is this rising graciously from a muddy playing field or is this trying to throw more mud at the adversary Ballmer couldn’t bring to heel?

Third. Accusing Yahoo! and, indirectly, Google of fomenting the creation of an advertising monopoly. How does this look coming from a repeat monopolist?

Fourth. Is Ballmer angry because, after the Vista fiasco, after failing to achieve any traction in Cloud Computing (ironically called Microsoft Live), or in Search, or in Advertising, his leadership could be questioned?

Fifth. Is Ballmer secretly relieved or is he so insulted by this defeat he’ll go an bomb another country?

What to expect? Perhaps Microsoft will turn to better targets: Intuit, Adobe, SAP… They’ll have to do something and Ballmer will have to explain what got to him going in and going out of this ill-conceived sortie. — JLG


Markitecture (take 2) — Google descends from the Cloud

Uncategorized By May 5, 2008 2 Comments

Google’s markitecture isn’t so different from Microsoft’s. Just like the old champion, Google tells us we can have the best of both worlds: Everything in the Cloud, applications and data. What? You want to work off-line? No problem, we can do that too. Your data and your applications also on the desktop, re-connect and everything is in sync. Another all pros and non cons con.

Like any good preacher, Google doesn’t confuse what you say and what you do. It is well aware of the problem with the new religion: editing this column with Google Docs is great but what happens if I lose my connection? What happens if I’m on a plane? The solution is a browser extension, Google Gears.

Suddenly, they Cloud applications just work, connected or not. Two months ago, Google Reader, a free (and very good) blog reader gets a Gears update. My (large) set of blog subscriptions is now synched to my desktop and equally readable off-line or on-line. Just recently, we see Google Docs get its own Gears extension. As I start writing this on-line, the Cloud docs synch automatically to my desktop. I cut off my Net connection and I continue typing off-line. Back on-line, the two off- and on-line versions re-synch on their own. It seems to work as expected.

Microsoft’s Outlook isn’t that different. On the desktop, you have a local copy of your mail, calendar, address book. If you answer mail off-line, or change a calendar entry, everything will synch back at the next connection with the Exchange server. And, you don’t need Outlook. From any browser, you get to the Exchange server and take care of business. This sounds very much like the on-line/off-line modes extolled by Google.

Where are the differences?

Google: Yes, we have no choice. The truth is we must provide desktop software. We’ll call it a browser extension, but software running off-line on the desktop is what it is. The Desktop vs. Cloud dichotomy? A question of nuances.

Microsoft: Yes, we do on-line/off-line dual mode software. So, what prevents us from doing an on-line/off-line version of Office? Well… Three things, size, profits and culture. Once upon a time, we did software that was small, fast and inexpensive. Hard to believe when you see Vista and Office, but true. Our users grew in numbers, our software grew in size and now we are facing someone like us a quarter of century ago, only better financed than we were and with a better computer infrastructure (in English: large number of servers working well together) than we have.

The real debate isn’t between Desktop and Cloud. Everyone agrees the hybrid model is the future. But Microsoft is saddled with heavy desktop software that will be harder to hybridize than Google’s young on-line applications. To say nothing of business model transitions and corporate culture. –JLG


Wired chief’s harsh views on future of journalism

Uncategorized By May 5, 2008 15 Comments

Chris Anderson, editor-in-chief of Wired and author of the Long Tail concept spoke recently at a media forum at the University of Central Lancshire (UK). His takes on evolution of journalism are blunt, but rather difficult to argue with:
– As an alternative to “commodity news” that is pointless to pursue on the Internet, he suggests going after true journalism (original reporting, narrative pieces), and also Internet packaged stories.
– To him, there is an opportunity to make “something that still has value and which people will pay for, either directly or in terms of their attention which can be monetized through advertising”.
– As for news organization, Anderson said jobs will be lost. He even draws parallel with the damages caused to the classified sector by Craigslist and the likes. (He can’t be more right in the light of the latest figures of job cuts in the media sector. A recent report quoted in the Hollywood Reporter says that layoffs in the US media are up 57% for the first four month of the year compared to a year ago. Almost 8000 persons where fired since Jan 1. Last year, total number was 11,700 jobs lost.


The Google’s creative factory

Uncategorized By May 5, 2008 No Comments

Among the subliminal messages the Monday Note is willing to send to the media executives, one is about tactics to boost creativity in their depressed ranks. This is why Google’s experience is interesting to watch. In Business Week, CEO Eric Schmidt gives some clues:
– Don’t mess up with the 20% thing: at Google, engineers are encouraged to spend 20% of their time for projects outside their assigned duties. Schmidt says, they can actually invoke those required 20% whatever the deadline pressure are, their superior must bend to it.
– Track your innovation processes. Use the right tools to measure progress. Add layers of prototyping and testing.
– Listen to people. You don’t “manage” innovation, Schmidt says, and it comes from unexpected places.


Emotions or rational? The art of the deal decoded by psychology

Uncategorized By May 5, 2008 No Comments

In a negotiation process, whether it is for a job interview or a commercial transaction, two related approaches are often used to understand the opponent: perspective-taking and empathy. The first is the cognitive power to consider the world from someone else’s viewpoint, the second is the power to connect with them emotionally.
Adam Galinsky of Kellogg School of Management at Chicago Northwestern University and his team tested these different approaches in a study outlined in this week’s Economist. Results are worth the click


Mobile publishing — Why publishers should grab the iPhone

Uncategorized By May 5, 2008 Tags: 5 Comments

News publishers remain obsessed with the question: what will be the main distribution platform for their contents, and what will be the subsequent business models? For clues, let’s zoom in the iPhone’s recent performances as well as its immediate prospects.

The smartphone introduced a year ago by Apple has become the tool of choice for news-hungry Internet mobile users. According to M:Metrics, a survey company that tracks the use of mobile devices, a stunning 85% of iPhone owners report using it to access news and information contents. That compares to 58% of the overall smartphones users and only 13% of basic mobile phone owners. By the same token, iSuppli, another research firm, found out that iPhone users spent 12% of their time surfing the web versus 2.5% for the regular cellphone users. On the top of this, data shows that iPhone users spent more time, by a factor of 12 accessing a social network (another future important delivery platform for news content).

What does that means for the publishing sector? First : interface is key. Try accessing a newspaper (or even the Monday Note) on a Blackberry : it’s 1985’s teletext! Do it on an iPhone, it works fine. The added development is negligible compared to the costs of the average Content Management System (CMS) and can be accomplished internally as shown by many sites (The New York Times, Condé Nast’s Portfolio magazine).

Second, we see applications beyond the made-for-iPhone sites that could benefit the publishing industry. In the coming months, we’ll see a first batch of true applications created for the iPhone. For example, how about a powerful caching system for publishers? With it, the user stores dozens of pages of favorite sites — or hundreds of book pages — on an iPhone or iPod Touch for a quiet reading off-line. (I still wonder why a publishing company isnt developing such an application itself and giving it away with pre-loaded content. Small development cost — count less than $100k for a first version — add a nice viral demo on You Tube and you get significant PR impact).

What about the business model? Well, the most obvious one is advertising. On the Internet, scarcity of pixels doesn’t imply little revenue. Quite the contrary, actually. For most sites, the bulk of their revenue comes from very few top slots on their homepage, the remaining inventory being sold at bargain basement prices. (On the French market, discounts between rate cards and net prices average 80%). Translating: a single banner ad on an iPhone-optimized minisite can be sold at a high premium CPM. Plus there are other revenue sharing systems to explore: the monthly bill of iPhone users is 24% higher than the average mobile user’s. That’s $228 extra per year.

News providers should devote small, highly focused set of resources (a developer + a couple of junior editors would be fine) to develop content optimized for the iPhone and related micro applications. This applies also to advertising agencies and media buyers who should get into this emerging piece of digital real estate.

Can such a move prevent the possible extinction (as the Economist puts it) of parts of traditional media? Certainly not. But it is better to be in the race than on the bench.


Smartphone — Can the Apple bite the Berry?

Uncategorized By April 28, 2008 1 Comment

For years, the Blackberry was the tool of choice for the executive on the move obsessive with the idea of staying in touch. Results are stunning: last year, Research in Motion (RIM) added 6.5m Blackberry users. The device is great, with features polished thanks to many iterations and a truly innovation oriented company (read this story in Business Week).

The Blackberry is stable, robust. It has a great push-mail system, and even a private, incredibly fast, network for short messaging (using the PIN number of each device). Okay, speaking of design, its neither Raymond Loewy or Jonathan Ives (Apple’s Michelangelo). But it works. Hence the market share : it peaked at around 60% of the smartphone market back in 2005. Then, Windows Mobile came: the same hassles than your desktop, but in your pocket (sorry, I can’t help it). Fine. Mid-2006, Windows Mobile market share was approaching 40%. Then came the iPhone. Apple’s pie in smartphone is cruising slightly below the 30%, but growing fast. Especially when it is adding features targeted to the office population. Who will eat whom ? Some answers in this story in the New York Times.


Beloved DNA — Personal Genomics providers could violate US law.

Uncategorized By April 28, 2008 14 Comments

We mentioned in Monday Note #29 the boom of personal genomics sector. A great business really, at the convergence of intimate fear, aging population, increase in health prevention expense, paranoia, untold eugenic tendencies, growing hypochondria, etc. Just to give an idea on how it smells good, among the top players : Navigenics is funded by the big venture capital firm Kleiner Perkins Caufield & Byers, and 23andMe was co-founded by Anne Wojcicki, wife of Google co-founder Sergey Brin. (23 is the number of our chromosomes.) Legal life could be more complicated than the molecular version. These companies are under scrutiny by legislators to find out if telling someone that he has Alzheimer predisposition is comparable to an unregulated form of medicine. Lawyers are working on both sides, as they should. And geneticists are sending warning signals like in this article in the New England Journal of Medicine.


Extreme advertising –Your billboard, right from your mobile phone

Uncategorized By April 28, 2008 1 Comment

You thought that you were saturated with ads, with messages of urban life misery, right ? Thinks again. Thanks to Vibes Media, now everyone can create live advertising. How it works: you’re in a stadium, attending a game (to me, nightmare as already begun); you pull out your cell phone and type a text message. Within seconds (after verification, we hope) it appears on a huge billboard sponsored by a beer brand. The advertiser now has two reasons to be happy: many eyeballs are directed on the billboard to see the constantly changing text messages; then, by deriving the number of messages, it can even figure out the number of contacts (Vibes mentions a crowd of 5000 shooting 11,000 messages — forget the game!). As Business Week pointed out, there are plenty of applications such as, in an airport, waving a loved one goodbye on a Motorola billboard… We better get muscles for our eyeballs.

And I don’t want to ruin the party, but just, figure out our future, with the combination of such technology + RFID chips + GPS localized cell phones + wifi triangulation + genomics ID + biometrics devices + behavioral science, and we are in. The network becomes a (gilded) cage.

A quick update on extreme ads practices, Condé Nast is to provide analysis based on ad-tracking system. It struck a deal with MediaAnalyzer. The system will be to measure the efficiency of long terms ad. Story in Folio Magazine.


Axel Springer AG’s bad bets

Uncategorized By April 28, 2008 No Comments

Last year was not a good one for Axel Springer AG, one of Europe’s biggest publishers. The biggest failure was the attempt to get into the mail-delivery business. Springer had to give up when the German government decided on a minimum wages for the postal industry. Then, for Springer, the mail sector no longer appeared viable. (That’s the beauty of this mail-delivery job: as long as you are forbidden to have legion of “working poor” in your plants, it is not worth it). This lead to a massive write-off and Springer lost E288m last year.
Quoted by Bloomberg, CEO Mathias Doepfner said Springer will focus on businesses that don’t depend on political decisions; he mentioned Internet and foreign businesses as expansion areas. Problem is: these two segments didn’t perform well last year either for Springer. In France, the group lost E40-50m in a failed venture to launch an ambitious daily. (As usual, French publishers applied pressure on the government. This turned to pressure on Springer, which gave up. It worked). And on the Internet front, Springer acquired 68% of, Europe biggest women’s site, for 32 euros per share. Unfortunately, Q1 results for yielded a 29% drop in profit. The share tumbled to less than 20 euros, close to its 2000 IPO level. A tougher competitive environment is cited as the cause.
Springer’s stock is now trading at 72 euros, a 50% drop from its all time high in February 2007.
Axel Springer AG controls 170 newspapers and websites and magazines in 33 countries.