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The Internet Big Five By Product Strength

By - January 05, 2012

As I have written in previous predictions, I’ve been focusing on the Internet Big Five lately, and expect that to continue this year, as the group, collectively, are something of a “character” in my upcoming book (as is Twitter, the “free radical”). Other characters include “The Government” and “Corporations,” so expect predictions about those players in the next few days. But today, I want to focus on the Big Five as a whole. I’ve been staring at these companies, trying to understand their strategic imperatives, which is why I found myself making yet another chart.

This one focuses on core product lines where all (or most) of these companies are playing. For me, these product lines, taken together, are the basis of what we might call “the operating system of our lives.” And since the book is about how we will be leveraging our lives over digital platforms in one generation, it struck me as important to assess where each of the Big Five is right now (what they have already built) and where they are weak (what they need to build to compete).

Here’s the chart:

As you can see, I’ve laid out the same five companies, listed top to bottom by market cap. From left to right are columns of various product lines or offerings that I’ve determined are crucial areas that any player in the “OS of our life” must address. I’ve keyed each company against each product line with one of four scores, from “Strong” – where a company already dominates – to “Weak” – where a company either does not play, or has an anemic offering. The terms “Developing” and “Improving” demonstrate that the company is making progress in that area, from either a weak position (“Developing”) or a middling position (“Improving”).

The product lines I determined were worthy of inclusion mirrored many of the territories found in the Web 2 Summit Points of Control map, with some key additions. Starting from the left: If you’re going to be the “OS of life,” it helps if you have experience building operating systems. Next, it’s critical that you have the ability to distribute products and services, in particular entertainment, to folks on your platform. This means dealing with Hollywood, and the Big Five are in various states of disarray with regard to that issue. Third is Productivity Software, which some of the Big Five may well just punt on (Facebook and Amazon, perhaps). Fourth is Advertising Solutions – where all of the Big Five are either major players or developing solutions. Next are Tablets and Phones, which perhaps could also be called a distribution play but are far more than that. After that is Search, which kind of started this whole Web 2 thing back in the day – I gave Apple a “developing” here because of Siri, which I view as a search interface. Next up is Social, which is pretty self explanatory, Payment, a key point of control, and lastly Voice, which I believe (perhaps wrongly) as a critical aspect of user interface.

Why on earth did I go to the trouble of doing this? Well, because it helps me Think Out Loud about how these companies are going to play out over the next couple of years. If you buy that all of these companies need strategies in most of the areas I outline above, then looking for relative weaknesses and strengths of each is an interesting exercise. In fact, if you really squint, you may well see some patterns in future M&A (the subject of my next prediction post, in fact).

I could go on for pages about how I came to each score. For example, I gave Facebook a “developing” in OSes, even though the company really doesn’t have an OS like Windows or iOS. Why? Because I view Facebook as an OS layer on top of the Web, though of course not in the classic sense. And why did Amazon get a “developing” in Voice? Because it just bought a company in the space, just like Apple did with Siri in 2010. I’ll spare you the details of all the rest, but very much invite your comments on the chart. I labeled it “Draft 1″ for a reason. What categories of product did I miss? Were my scores fair? Comment away, please!

Update: I spaced on Xbox/Kinnect, and have updated the chart wrt to Ent/Dist for Microsoft, thanks for the input!
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Predictions 2012 #4: Google’s Challenging Year

By - January 04, 2012

By some Mayan accounts, 2012 is not going to be a good year for any of us. But in this prediction, I’m going to focus on one company that will have a pretty crazy year: Google.

Now, I’m not predicting the company will lose revenue or profits in its core business of search, but rather that Larry Page’s first full year as CEO will be challenging, due in part to decisions made (or not made) back in 2011, and in part to the inherent complications of the businesses where Google now plants its flag.

I’ve got candidates for what those decisions were (Google+ real names’ policy, buying all of Motorola Mobility, not elegantly stewarding Android, muddying the search waters by favoring its own properties), but I think they all boil down to one core thing: Google has often brought products to market before they were fully ready, then played catch up with the competition against a roiling tide of conflicted partners, grandstanding policy makers, and confused consumers. It all adds up to a massive challenge that I think will come to a head in 2012.

Witness Android: the platform needs a strong and steady product-driven hand behind it, but seems at the mercy of handset makers and carriers. There’s hope in the Galaxy Nexus, but that phone is way ahead of the Android pack, and I’m not sure the ecosystem behind Android is going to follow Google’s lead here. Not to mention the goat rodeo that is the patent mess in mobile – an enervating and expensive battle that is always one court order away from throwing a wrench in Google’s plans. In short, Android is a wonderful counterpunch to Apple’s iOS, but it’s also a massive cat-herding challenge.

Or ChromeOS/Book/Apps: Google’s basically taking on the entire netbook marketplace here (Macbook Air and Windows in particular), but is the company really ready to play the game that its competitors have owned for decades? Sure, you can change the rules (Google’s really selling a cloud-based approach to work, rather than a PC-based one), but you can be right on theory and wrong in practice: hardware and the enterprise don’t move as fast as the web in terms of adoption. The company’s strategy of partnering (with leader Samsung, in this case) is elegant, but not at scale. At the same time, Google is taking on Microsoft in cloud software, and while it’s got some impressive wins under its belt, this is not a market native to Google’s strengths. In short, it will be a massive challenge to manage this business to scale and succcess in 2012.

Or Google+: Google is justifiably proud of how quickly this service has scaled (reportedly to more than 60mm unique users a month, in just six months), but questions remain as to the service’s staying power. If you are Google, and you integrate your new service into everything you own and operate (Android, Docs, Search, YouTube, Picasa, etc), it’s not going to be difficult to get a ton of folks to try the service out. I’m pretty sure that Googlers made their “social bonus” last year, given the good initial numbers, but again, it’s going to be a real challenge to turn those initial visits into long term active users who forsake Twitter and/or Facebook.

Or GoogleTV (and by some extension, YouTube): Probably the poster child for “not market ready,” GoogleTV now has very high expectations for 2012, thanks to Chairman Schmidt’s recent comments. But while the company can cut deals to integrate GTV into every new digital set on earth – and through its Motorola purchase, into every Motorola box to boot – it can’t force the kitty-with-a-ball-of-yarn ecosystem of cable companies and Hollywood to get out of the way of making a great consumer product (and Hollywood is still hoping to win its legal battles with YouTube). Again: A massive challenge, one that I doubt anyone (including Apple) will figure out to great success in 2012.

Or even Google core search: Google’s bread and butter is a massive profit and revenue engine, and I don’t expect that to change in 2012. However, it’s slowly losing share to new modes of discovery like Twitter and Facebook, and Google  has struggled with how to incorporate those signals into its search service. It can’t come to terms with either of the two major social services over data usage (and presumably money), meaning it’s losing ground in relevance, freshness, and depth. Then there’s the shift to mobile and apps: the world of apps is not easily crawled (and like Facebook, Apple is not eager to let Google do so), meaning an entire new digital frontier is lost to Google’s spiders (I lament this for other reasons as well, but more on that later). And then there’s the need to promote core Google properties, from Places to Google+ to Finance to YouTube to…well, you get the picture. Even though the company claims no bias in its results, the fact is that its partners aren’t buying it anymore (Yelp comes to mind). Lastly, there’s Bing, which isn’t going to stop trying to steal share. Back in the glory days of Web 2, the Web was the only game, and Google was everyone’s dashboard to it. Again, it will be a major challenge to keep Google’s core search business ahead of the game – because the major underlying rules are changing.

I could go on (I haven’t even delved into privacy, intellectual property, and international policy issues, or competition in the ad stack from Facebook and others), but I think I’ve made the point: Google has entered a phase in its corporate life where its future rests on bringing elegant products into markets that are goat rodeos on good days, and snake pits on bad ones. Telecom, entertainment, social, search, advertising? Yikes. “Challenging” seems like a euphemism.

On the other hand, if any company has the resources, the talent, and the willpower to execute in so many challenging markets at once, it’s got to be Google. But this is a prediction post, so let me end with one: Given all Google is trying to do, it will have a major fumble in 2012, one that beats anything the company has done in its long (and mostly fumble-free) history. But hey, every good team fumbles, it’s how you recover that matters.  If I had to chose a shortlist for the ball dropping, it’d include Motorola, GoogleTV, and yes, even Google+, which given its high expectations might be set up for disappointment. We’ll see if I’m right a year from now.

Related:

Predictions 2012: #1 – On Twitter and Media

Predictions 2012: #2 – Twitter As Free Radical, Swiss Bank, Arms Merchant…And Google Five Years Ago

Predictions 2012 #3: The Facebook Ad Network

Predictions 2011

2011: How I Did

Predictions 2010

2010: How I Did

2009 Predictions

2009 How I Did

2008 Predictions

2008 How I Did

2007 Predictions

2007 How I Did

2006 Predictions

2006 How I Did

2005 Predictions

2005 How I Did

2004 Predictions

2004 How I Did

Predictions 2012 #3: The Facebook Ad Network

By -

For my third prediction of the year, I’m going with one just a tad bit less obvious than “Facebook will go public.” There seems to be no doubt about that event occurring this year, though I’ve certainly heard intelligent folks argue that Facebook can and should figure out how to stay private. I’ve argued that Facebook ought to be a public company, if only to be held (somewhat) accountable given all the data it has on our lives.

But this prediction has to do with Facebook announcing and then launching a web-wide advertising network along the lines of Google’s AdSense. I’ve talked about this for years (short handing it as “FaceSense,”) and I’ve asked Mark Zuckerberg, Carolyn Everson, Bret Taylor, and Sheryl Sandberg about it on stage and off. The answer is always the same: We’re not interested in launching a web ad network at this time.

I predict that line will change in 2012. Here’s why:

– Once public, Facebook will need to keep demonstrating new lines of revenue and growth. Sure, the company already has the attention of 1/7th of all time spent “on the web.” But there’s a lot more attention out there on the Independent Web, and the default ad service for that other 6/7ths is Google’s AdSense, a multi-billion dollar business.

– Facebook already has its hooks into millions of websites with its Open Graph suite – all those Like, Recommend, Share, Connect, and Facebook Comment plugins. These buttons are pumping data about how the web is being used directly into Facebook’s servers. That data can then be combined with all the native Social Graph data Facebook already has, making for a powerful offering to marketers across the entire web. Think of it as “social retargeting” – marketers will be able to buy attention on Facebook.com, then know where folks are across the web, and amplify their messaging out there as well.

– Because Facebook is already integrated into millions of sites, it’ll be a relative snap for the company to start signing up publishers to offer their inventory to the social giant. It will be interesting to see what terms Facebook offers/requires – I’m assuming the company will match Google and others’ non-exclusivity (IE, you can use any ad network you want), but don’t assume this will be the case. Facebook may have an ace or two up their sleeve in how they go to market here.

– Lastly, let’s not forget that the team who built and ran AdSense is now at Facebook (that’d be Sheryl Sandberg and her ad ops chief David Fischer, oh, and one of the “fathers of AdSense,” Gokul Rajaram).

Critical to the success and rollout of Facebook’s web ads will be two key factors. One, the structural underpinning of the system: AdSense scans the content of a page and delivers relevant ads (though many other factors are now creeping into its system). This leverages Google’s core competence as a search engine (it’s already scanning the page for search.) Facebook’s core leverage is knowing who you are and what you’ve done inside the Facebook ecosystem, so the key structural construct for its web ad network will turn on how the company leverages that data. I imagine the new ad network might initially roll out just to sites that have Facebook Connect installed, so that visitors to those sites are already “inside” the Facebook network, so to speak.

The second issue is what may as well be called the “creepiness factor.”  Search display retargeting is still a gray area – a lot of folks don’t like being chased across the web by ads that know what sites you’ve recently visited or what terms you’ve searched for. Cultural acceptance of ads on third party sites that seem to know who your friends are, what you ate for dinner last night, or what movies you recently watched might provoke a societal immune response. But that’s not stopped Facebook to date. I don’t expect it will in this case either.

Related:

Predictions 2012: #1 – On Twitter and Media

Predictions 2012: #2 – Twitter As Free Radical, Swiss Bank, Arms Merchant…And Google Five Years Ago

Predictions 2011

2011: How I Did

Predictions 2010

2010: How I Did

2009 Predictions

2009 How I Did

2008 Predictions

2008 How I Did

2007 Predictions

2007 How I Did

2006 Predictions

2006 How I Did

2005 Predictions

2005 How I Did

2004 Predictions

2004 How I Did

Predictions 2012: #2 – Twitter As Free Radical, Swiss Bank, Arms Merchant…And Google Five Years Ago

By - January 03, 2012

My predictions this year will be pretty focused on the Internet Big Five (Google, Microsoft, Apple, Amazon, and Facebook) but the first two focus on Twitter. Why? Because Twitter is poised to become a critical “free radical” whose presence affects the actions of all the Big Five players. And 2012 will be the year this becomes readily apparent. In short: In 2012, every Big Five Internet company will need to have a clear Twitter strategy. At the moment, not all of them do.

What do I mean when I use the term “free radical”? Well, taken loosely from molecular chemistry and biology, free radicals are particles with open shells or unpaired electrons – they cause change in otherwise stable systems. I take the term with a bit more license, however – to me Twitter is the only Internet service at scale that has yet to ossify into a predictable platform with a massive revenue base to protect. This fact, plus the company’s liberal philosophical bent toward free speech, positions Twitter as something of a shape-shifting arms merchant in the ongoing battle between the Internet Big Five. Believe me, any one of the Five would kill to own Twitter, several of them have tried to buy the company over the past few years. It’s now clear that Twitter’s path is one of independence. To succeed, it must become the Swiss bank of social intent, providing its services in some kind of useful way to each and every one of the Big Five.

2011 has already set the table for how this year is going to play out. In short, Microsoft and Apple embraced Twitter, Google and Facebook rejected it, and Amazon stayed on the sidelines, for the most part.

Last year, Google allowed its search deal with Twitter to expire (not for lack of trying, I am sure), and then rolled out Google+, which is clearly a Twitter competitor (sure, it’s also a Facebook competitor, but let’s keep this post focused, shall we? Google+ replaced Twitter in Google’s search service. Enough said.). Microsoft, on the other hand, was happy to renew its deal. It’ll do more with Twitter in 2012, to be sure.

Last year was the year Facebook pretty much copied everything Twitter does, up to and including the “Subscribe” feature, which is pretty much a full copy of Twitter inside the Facebook walled garden. Meanwhile Apple embraced Twitter wholeheartedly, with a deal that clearly benefited from Facebook negotiations gone south. And as I said earlier, Amazon didn’t see much reason to work with Twitter, save adding a few new handles to its corporate identity.

In 2012, every Big Five player is going to have to reckon (again) with Twitter. And it’s my hope that Twitter’s approach to these Internet behemoths is to force them all to play by the same rules. In other words, no exclusive deals for any of them. If Google wants to integrate Twitter natively into Android (the way Apple has with iOS), why, great. Twitter won’t refuse to do so because Apple objects. Should Microsoft care to build Twitter natively into Xbox Live, again, no problem, but sorry Microsoft, Twitter keeps the right to allow Sony or Nintendo (or, gasp, Facebook proxy Zynga) the same option. When Amazon starts publicly acting like a full-blown media company (and not just a distribution or ecommerce player), it will cut a deal with Twitter for distribution and data, quite possibly in the advertising network space. Amazon’s competitors will have nothing to say about it. And if Facebook ever wakes up and realizes that Twitter might play a part  in its strategy in some important way, Twitter will be more than happy to figure out a deal, even if Google objects.

In short, the Internet Big Five need a neutral player they can all draw on for value and features that any one of them can’t (or won’t) do – for any number of reasons. This is the role Google played in the first five years of Web 2.o (but increasingly can’t play due to conflicts with owned and operated properties like YouTube, Android, Google+, Places, etc.). For now, Google and Facebook still think they can out-Twitter Twitter. Microsoft and Apple have already punted on competing directly. I’m predicting 2012 is the year Google and Facebook come around and work with Twitter in some new, significant way, as will Amazon.

This is a pretty risky prediction to make, to be sure. Sitting here in January of 2012, it’s quite easy to argue that the folks at Facebook and Google see absolutely no reason to work with Twitter. But there’s an important reason to work with Twitter that hasn’t become quite evident, yet. And that has to do with the concept of openness and the need for third party validation in the eyes of government and consumer scrutiny. More on that in a future prediction.

Related:

Predictions 2012: #1 – On Twitter and Media

Predictions 2011

2011: How I Did

Predictions 2010

2010: How I Did

2009 Predictions

2009 How I Did

2008 Predictions

2008 How I Did

2007 Predictions

2007 How I Did

2006 Predictions

2006 How I Did

2005 Predictions

2005 How I Did

2004 Predictions

2004 How I Did

Predictions 2012: #1 – On Twitter and Media

By -

2012 is going to be a year of contrasts – of consolidation of power for the Internet Big Five, and fragmentation and disruption of that power due to both startups as well as government and consumer action. I’ve spent the past few weeks jotting down thoughts for 2012, and hope to do the Year That Is About To Be justice in the following set of posts.

Yes, I said “set of posts,” because for the first time since the birth of this blog (that’d be nine years ago), I’m going to post my predictions one by one. Why? Well, because I’d like to dig in a bit on each. If I do it all in one post, we’d have a *very* long read, and most of you are just too busy for that. I don’t plan to release these posts slowly, I’m just going to write till I’m done, so ideally I’ll be done in a few days. And when I’ve finished, I’ll post a summary of them all, for those of you who want all these predictions in one easily linkable place.

So let’s start with Prediction #1: Twitter will become a media company, and the only “free radical of scale” in our Internet ecosystem. 

Let me break this into two parts. First, the media company angle. We’ve seen this movie over and over again, with Google and Facebook the most notable “new media companies” of the past decade (and Microsoft the most reluctant). Most engineering-driven Valley companies resist the mantle of “media company,” though Facebook seems to be adapting rapidly to that fact. Its key executives make a point of declaring themselves in the business of selling advertising, and if the new Timeline feature isn’t a play to create the world’s biggest media company at scale, then either A/I’m crazy or B/no one else is paying attention. I doubt the latter is true. The former, well…

Now, Twitter is an engineering-driven company, but its future rests in its ability to harness the attention of its consumers, then resell that attention to marketers. If that sounds crass, I don’t mean it to be. Twitter has a chance to do what Google did – at least initially – provide a platform for advertising that actually adds value to the ecosystem in which it lives. Twitter’s initial platform for ads is pointed generally in that direction – Promoted Tweets only get “resonance” if people engage with them, for example. But it’s about to get more complicated.

Here’s why. When Twitter rolled out its mostly-lauded new design late last year, it added a new section to all of our accounts. Can’t remember what it’s called? You’re probably not alone. Twitter’s new “#Discover” section reputedly addresses what I’ve called the service’s greatest problem and opportunity: How to filter all that Twitter noise into a signal that adds unique value to each individual account.

If Twitter gets #Discover right, it’s created an extraordinary media consumption machine. But so far, #Discover ain’t there yet.

You know what is close to there, when it comes to creating a new kind of media consumption service? Flipboard. And that might make for a few uncomfortable board meetings over at Twitter HP, because Flipboard CEO Mike McCue sits on Twitter’s board. Inevitably, Twitter’s #Discover needs to beat Flipboard at its own game. In the end, Twitter may have to buy McCue’s company (or Mike may have to recuse himself from an awful lot of meetings).

And that’s not the only thing that’s “complicated” about getting #Discover right. As Flipboard has already figured out, once you curate copyrighted material at scale, and then want to sell ads against your curation, things get tricky. This is why Flipboard has spent so much time negotiating rights deals with major publishers.   And this will become a major part of Twitter’s work in 2012; work that, to my point, is the work of a media company.

Once Twitter fixes its #Discover problem, an entirely new front opens up for the company in terms of advertising. I find consuming Twitter on Flipboard eerily similar to reading a good magazine, and I don’t think that’s a coincidence. And good magazines already have a good advertising model called the full-page ad (and the two-page spread). I predict that Twitter’s rise as a media company (along with the success of Flipboard and various at-scale “magazine-like” apps like Wired and The Daily) will augur a new ad unit we can either swipe past, or engage with. New formats like these need a scale player to really drive them into the minds of ad buyers, and Twitter will be that driver (yes, there’s Zite, and Livestand,  Google’s supposedly upcoming Propeller, and and and…but.) This ad format will be a huge hit with marketers, and the subject of many fawning industry press mentions.

My second post will expand on the latter part of my first prediction: Twitter as the only “free radical at scale.” Watch for that later today. And Happy 2012!

Related:

Predictions 2011

2011: How I Did

Predictions 2010

2010: How I Did

2009 Predictions

2009 How I Did

2008 Predictions

2008 How I Did

2007 Predictions

2007 How I Did

2006 Predictions

2006 How I Did

2005 Predictions

2005 How I Did

2004 Predictions

2004 How I Did

2011 Predictions: How Did I Do?

By - December 19, 2011

(image) For many years now I’ve made predictions, and for just as many years I review how I did. This is the week I do the reviewing, my predictions for 2012 should arrive around the New Year, assuming I find the right inspiration.

2011 was a strange year in many ways. We lost Steve Jobs, stupid Internet legislation reared its ugly head yet again in the form of SOPA, Internet IPOs came back in a big way (but didn’t perform as well as most would have liked), and the world woke up to the implications of programmatic buying and Big Data, in a Very Big Way.

As I look back on my predictions of twelve months ago, I think I did a pretty good job, but left plenty of room for improvement. Here’s a rundown of how I did, with some supporting citations, where appropriate:

Prediction #1: We’ll see the rise of a meme which I’ll call “The Web Reborn.” 

If you read this site closely, you’ll have noticed that I’m a bit up in arms about the impact this whole “AppWorld” phenomenon is having on the “real web.” AppWorld is not the Web, in fact, it’s utterly un-weblike. I’ve written about this all year long, too mostly little effect in the larger world. But just recently a meme has risen, in fact, that sounds an awful lot like what I predicted. To wit:

Dave Winer: Why apps are not the future and Enough with the apps already

Doc Searls: Broadband vs. Internet

Jonathan Zittrain: The PC is dead. Why no angry nerds?

Scott Hanselman: Apps are too much like 1990’s CD-ROMs and not enough like the Web

And of course, my latest: On This Whole “Web Is Dead” Meme

Score: I think I called this right. There is a robust movement toward saving the core principles that made the web what it is. But it’s at the early stages at this point. Score: 7 of 10. 

Prediction #2: Voice will become a critical interface for computing (especially mobile apps). 

Hello, Siri…I’d say this one happened, with bells on. And it’s just the beginning. Score this a 9 out of 10 (because Siri, while very important, is still not as good as it can be. Then again, Google, Amazon, and Microsoft all made voice moves this year as well).

Prediction 3: DSPs (Demand Side Platforms) will fade into the fabric of larger marketing platforms. 

This one is hard to quantify, it’s more of a feeling – DSPs were the Big Scary Development in the ad industry a year ago, and now…not so much. They are just part of the world we live in, and programmatic buying is a fact of life, one that is growing very, very quickly. Publishers have responded with their own adtech (FM purchased Lijit, for example, Google bought AdMeld), and on we go. I think I got this right, in the main.

Score: 8 of 10.

Prediction 4: MediaBank will emerge as a major independent player in the marketing world, playing off its cross channel reach (outside of digital) and providing an alternative to the conflicted digital platforms at Facebook, Microsoft, Google, and Yahoo.

Well, MediaBank merged with its main competitor, DDS, to form MediaOcean, run by the CEO of MediaBank. And the combined company is a behemoth, one capable of standing toe to toe with Google on several fronts. I think this one absolutely happened.

Score: 10 of 10.

Prediction 5: The Mac App Store will be a big hit, at least among Mac users, and may well propel Mac sales beyond expectations.

I’m not quite sure how to score this one. I don’t get the sense the Mac App Store was a big buzzy hit, but Apple recently released numbers about its success – 100 million downloads in the first six months of its existence (the last six months of this year).

And the company’s Mac sales are for sure on a roll, though I don’t know if one can attribute this to the Mac App Store. In short, it might be too early to call this one definitively, but net net, the trending is good.

Score: 7 out of 10.

Prediction 6: Apple will attempt to get better at social networking, fail, and cut a deal with Facebook.

Oh boy, I got this so tantalizingly right, or wrong…depending on how you score it. Let’s break it down. “Apple will attempt to get better at social networking…” Check – Apple introduced Ping late in 2010 and then updated it throughout the year.  “…fail…” Check. Ping never really took off. “…and cut a deal with Facebook.” DOOOOH. No way. If only I had said “…and cut a deal with Twitter….” I should have seen that Apple would never play nice with Facebook, if only due to the conflict around owning the business of media consumption. It sure did try, but negotiations broke down, according to most reports.

Score: 6 of 10.

Prediction 7: Apple will begin to show signs of the same problems that plagued Microsoft in the mid 90s, and Google in the past few years: Getting too big, too full of themselves, and too focused on their own prior success.

Now showing this prediction came true won’t be easy, but let’s take a few stories throughout the year as proof points. First, most of the “Web reborn” backlash (#1 above) is a response to Apple’s restrictive iOS. Then there’s the FT’s unqualified success in routing around Apple (see PC’s coverage), which nearly every major media and entertainment company is watching very closely. And there are plenty of rumblings (though not nearly as many as with Facebook, see #13):

IDC offers scathing prediction of certain death for Apple’s iAd program

Apple Made A Deal With The Devil (No, Worse: A Patent Troll)

Apple arrogance exposed by iPad undesign

All in all, I probably didn’t nail this one. But I’m not going to say it isn’t starting to happen. Score: 5 of 10.

Prediction 8: Microsoft will have a major change in leadership. I am not predicting Ballmer will leave, but I think he and the company will most likely bring in very senior new talent to open new markets or shift direction in important current markets.

Well, thanks to the Andy Lees move last week, I look like a genius. Also, long time Microsoft exec Yusuf Medhi, responsible for the most important piece of Microsoft’s new business (Bing), has been moved to its next possibly most important line of business, Xbox. Not to mention Ballmer’s various shakeups of senior management this year. Plus, rumblings continue about whether Ballmer is the right man for the job – to the point of some wags speculating that Gates might come back. As if. Score: 9 of 10. 

Prediction 9: The public markets will be surprisingly open to major new Internet deals.

Well, I could argue this is utterly true. After all, compared to 2010, there was a raft of Internet deals that got out this year – Demand, LinkedIn, Zillow, Angie’s List, Pandora, Zynga – with many more filings pending public debut. But none of them did very well – most if not all are trading below offering price. So the market let them get out, but isn’t trading them up. So was the market “open”? Yes. Was it enthusiastic after open? No.

Score: 7 of 10.

Prediction 10: The tablet market will have a year of incoherence. Apple will dominate with the iPad due to a lack of an alternative touchstone.

Well, that was way too easy. Exactly what happened – HP tried, failed. RIM tried, failed. Amazon is trying, and the early reviews ain’t great. We’ll see. Score: 10 of 10. 

Prediction 11: “Social deals” will morph to become a standard marketing outlet for all business, and by year’s end be seen as a standard part of any marketer’s media mix.

I think this has happened – nearly every small business has now heard of daily deals, and most forward leaning companies both large and small are using deals as a channel like any other (search, Yellow Pages, etc.). Don’t forget that a year ago, when I wrote this prediction, folks were talking about the deal market as something totally unique, like DSPs.

Related, in this prediction I also wrote “I’m tempted to say Facebook will abandon its own Deals offering for a deal with Groupon, but I’m not sure that will unfold in one year.” Facebook did indeed bail on its Deals offering, but did not cut a deal with Groupon. (Foursquare did).

Score: 9 of 10. 

Prediction 12: Groupon will fend off an acquisition by a major carrier, probably AT&T or Verizon. It’s possible they’ll sell, but I doubt it.

Google tried to buy Groupon around the time I made this prediction, but failed. I am unaware of any other suitors for the company on its way to its IPO, but I’m not privy to what might have happened. Nothing was publicly reported, however, so I’ll have to say I whiffed this one.

Score: 0 of 10.

Prediction 13: Facebook will decline as a force in the Internet world, as measured by buzz. The company will continue to be seen as Big Brother in the press, and struggle with internal issues related to growth. Also, it will lose some attention/share to upstarts. However, its share of marketing dollars and reach will increase.

OK, I think I got this one right, but one can argue, as always. Here are a litany of headlines over the year:

Amid backlash, Facebook tries to save face (Cnet)

Facebook as the New AOL (RWW)

Facebook Is AOLifying the Internet—and That Sucks (Gizmodo)

Facebook is gaslighting the web. We can fix it. (Anil Dash)

How Facebook is Killing Your Authenticity (Steve Cheney)

It’s time for a Facebook intervention (TNW)

President Obama Doesn’t Let His Daughters Use Facebook (HP)

The Decline and Fall of Facebook (Cringely)

I could find more, but I think you get a picture here of a broad swath of “buzz makers” questioning the company. Meanwhile, according to all reports, the company is killing it in revenue.

Score: 8 of 10. 

Prediction 14: We’ll see major privacy related legislation in the US brought to the floor of Congress, and then fail for lack of consensus. But that will drive a significant shift in how our culture understands its relationship to the world our industry is building, and that’s a good thing.

Well, we had quite a number of these bills brought to Congress in one way or another. I probably should not have used the words “to the floor,” as that implies open debate. Nearly everyone in Congress and the Executive branch talks about some kind of privacy legislation, but no one can seem to agree what that means.

As of late Fall, seven different legislators have introduced bills. But as far as I can tell, none have really gotten anywhere. However, the conversation around the issues has accelerated significantly, as predicted.

Score: 9 of 10. 

In summary, I think my predictions fared pretty well. If you take a score of 7 or more as a “hit,” 4-6 as a “foul ball,” and below 4 as a “strikeout,” I hit 10 of 14, fouled off 3 of 14, and whiffed massively just once.

So, how do you think I did?!

Related:

Predictions 2011

Predictions 2010

2010: How I Did

2009 Predictions

2009 How I Did

2008 Predictions

2008 How I Did

2007 Predictions

2007 How I Did

2006 Predictions

2006 How I Did

2005 Predictions

2005 How I Did

2004 Predictions

2004 How I Did

TextPlus Adds Free Calling – Watch This Space

By - December 13, 2011

A couple of weeks ago I met with the CEO of TextPlus, and wrote up my experience here. I mentioned he has some news coming, and this is it: TextPlus, which is a popular free text messaging service, is launching free calling between TextPlus members today. Calling to regular lines is pretty cheap to boot (like 99 cents for 40 minutes).

Why am I writing this up? Because it makes me wonder….TextPlus is a fast growing service that is leveraged over the Apple iOS world I call AppWorld. It serves at the whim of a gatekeeper, in this case, Apple (you can also get it for Android, which is growing faster). Apple, in turn, must keep its carriers happy by selling tons of iPhones (and iPads) with plans that lock customers into paying a pretty penny for data and voice connectivity. And I am not sure those carriers are happy with the idea of a fast growing app that helps teenagers (TextPlus’ main constituency) bypass those profitable service plans. It’s like a built in way to teach the next generation of customers how to cut the cord.

Sure, there’s always Skype and Google Hangouts and such, so perhaps this isn’t such a big deal. But then again, maybe it is. With Wifi coverage growing quickly these days, TextPlus – perhaps the name now should be CommPlus – is one to watch, IMHO.

Neal Stephenson on Important Work

By - December 12, 2011

(image) An interesting interview in the NYT  I missed from last week, with noted author Neal Stephenson. In it, he riffs on something that’s been bugging me as I work on the book. Asked about “the future of computing,” he responds:

“I’ll tell you what I’d like to see happen,” he said, and began discussing what the future was supposed to have looked like, back in his 1960s childhood. He ticked off the tropes of what he called “techno-optimistic science fiction,” including flying cars and jetpacks. And then computers went from being things that filled a room to things that could fit on a desk, and the economy and industries changed. “The kinds of super-bright, hardworking geeky people who, 50 years ago, would have been building moon rockets or hydrogen bombs or what have you have ended up working in the computer industry, doing jobs that in many cases seem kind of ignominious by comparison.”

Again, a beat. A consideration, perhaps, that he is talking about the core readership for his best sellers. No matter. He’s rolling. He presses on.

“What I’m kind of hoping is that this is just kind of a pause, while we assimilate this gigantic new thing, ubiquitous computing and the Internet. And that at some point we’ll turn around and say, ‘Well, that was interesting — we have a whole set of new tools and capabilities that we didn’t have before the whole computer/Internet thing came along.’ ”

He said people should say, “Now let’s get back to work doing interesting and useful things.”

I know that many of us in the Internet industry believe we are working on things that are changing the world. But it’s worth asking ourselves if honestly that’s true. We’ve got some really big problems to attack, and we need the best minds of our generation on them.

Stephenson’s thoughts are elucidated in more detail in a piece he wrote for World Policy here.

Instrumenting People Into Location Services

By - December 08, 2011

So this week a well known VC made the trek to my writing retreat in Marin, and we hung out in a room that until this year was a large storage closet behind my garage. I rethought the space, soundproofed it, added a hodge-podge of AV gear and musical instruments, and named the place the “Ross Social Club”  – on Foursquare, anyway. I haven’t really told anyone that I gave the place a name, but it was sort of an experiment – would anyone ever check in there besides me?

Now I chose that name for various reasons I won’t get into here (another story, one I’ll be glad to tell you over a bourbon). But I like being able to name a space on Foursquare, and it’s become a habit for me to “check in” whenever I actually use the room. It’s like  leaving a digital breadcrumb for me, a record of my new relationship to music (I’m learning to play the drums). A lot of friends hang out there too, often playing their own instruments or riffing on the whiteboards I’ve hung about the place. But  I don’t make it a habit to mention the room’s Foursquare doppelganger. It seems a bit … forced. And as far as I know, many of them don’t use the service.

On the same day I created the RSC on Foursquare (and probably because he asked me what I was doing on my phone), one fellow did check in. With some whimsy, he added a tip: “Try the wings.” It’d make you laugh if you’ve ever been there, trust me. Since then, in the past nine months, countless folks have been through the place, but only one other person has checked in.

Anyway, yesterday this well-known VC came by, and we met in the RSC mainly because it was too loud in my home office (construction going on outside). And as he walked in and sat, he put his iPhone down on a nearby table, as did I. I thought about asking him to check in, but….then I forgot. We spoke for an hour or so, reviewing all manner of things in our industry, discussed our business, and on his way he went.

Then I thought to myself – hey, he should have checked into that space. Then there’d be a record of his visit, and that’d be cool. Kind of like a guestbook of sorts.

But…I don’t even know if the fellow uses Foursquare. And he of course had no idea that the Ross Social Club was “lit up” on the service. And I wasn’t sure mentioning it to him wasn’t, well, kind of dorky.

You see all those social instrumentation and nuance problems I’m having?

Anyway, here’s a thought on one way to add just one wrinkle of nuance to location services. While I’m sure at some point in our collective future the concept of a “place” being digitally “alive” and communicable will be commonplace, at the moment, it’s rare and noteworthy.

As a transition between the two, I’d love a feature on Foursquare (or any other location service, er…say Google, or Facebook, or Twitter…) that allows me to send someone who I’ve been with somewhere (like the VC) an invitation to check in post facto. It’d kind of be like saying “Hey, send your phone over to my house. I’ll check you into the Ross Social Club.” The idea is, he didn’t know he could check in (and I forgot to tell him about it), but I can vouch for his presence there. He should get credit on Foursquare for being there (and the great Database of Intentions would get another bit of data), but he’s back in San Francisco now, so there’s no way for him to check in. But if he “sent his phone over” to me, I could do it for him.

Of course he wouldn’t actually send his phone over, the service would verify me as trustworthy and let me check the VC in on his behalf. But it’d add a rare human element to the service, and I for one would see many uses for it. If nothing else, it’d drive more interaction between people around the platform, and isn’t that what we all want anyway?

Just a random thought. OK, on with work…

The Internet Big Five

By - December 07, 2011

As I work on the book, I’ve come to use a shorthand for five companies that I’ve determined are critical drivers of what kind of society we’ll be living in one generation from now. At the moment I’m focused on just Internet companies, though I also plan on looking at other categories, such as energy, food, and health.

My terminology has evolved in the past week from “the Five Horsemen” to simply “The Big Five.” I’ve got a few reasons for this. First, the Horsemen analogy is a bit negative (given it evokes the Four Horsemen of Apocalypse). Second, there’s a rather fun reference for the “big five” that has to do with personality traits (see this research, or this, for example). One goal of my book, which I should probably explain at a later date, is to tease out the essential character and philosophy – perhaps you could call it the personality – of each of these key Internet players. If corporations are people (in the US, anyway), I wonder what kind of people these companies might be?

I don’t think you’ll be surprised by my choice of the Big Five, but I do hope you’ll find my reasoning for their selection worthy. As you can see from the chart, the five are: Apple, Microsoft, Google, Amazon and Facebook.

If you’re wondering if these companies are in some kind of order, the answer is yes. They are in order of current market cap (Facebook is a private market cap, the company is rumored to soon to be public at a valuation that would place it ahead of Amazon). But there’s more to the selection of this Big Five than just market cap. In fact, there are four main criteria for making it into the Big Five.

First, as I began to describe above, the companies must have financial heft, both in terms of large equity capitalizations, significant cash on hand, and a defensible core profit making machine. This gives them the ability to throw their weight around: they can make strategic acquisitions (like Google’s acquisition of Motorola), and they can leverage their profit centers and cash positions in any number of ways that offer them flexibility to play the corporate game at the very highest levels.

Second, the companies must have scale in terms of direct reach to consumers. By this I mean their brands are used as meaningful platforms by hundreds of millions of people on a frequent basis.

Third, the companies must have deep engagement with those consumers, the kind of engagement that builds brand and creates massive stores of useful data. The relationship between the brand and its customer has to be meaningful and consistent (therefore creating permission to extract a premium and offer new products and services). It takes an ongoing service relationship for such engagement to occur – Microsoft with Xbox or Windows, for example, or Facebook with its core service. On the chart, I’ve ranked engagement and data on a scale of one to ten, based in part on my work on the Web 2 map earlier this year, and partly on my own experiences. (As with other parts of this chart, I ask for your help in codifying this metric, should you be so inclined.)

Fourth, the companies must have significant experience building platform operating systems that are defensible and supported by a vibrant developer community.

The Big Five play in each of these four categories, but there are significant differences between them all, as the chart illustrates. Let’s look at each in turn:

Apple has the strongest financial position of any of the Big Five, quite a feat when you consider the company was essentially bankrupt just 14 years ago. It’s one of the top three companies in the world by market cap, and has the largest cash position of any technology company, period. Its core profit driver is its device business, which may be under attack (from Android and others), but appears defensible. Through its Macintosh and iOS platforms, it reaches hundreds of millions of consumers on a daily basis, not to mention the millions who circulate through its retail stores and various software applications. Apple has a deeply engaged set of core users, but I’ve given the company a score of 6 because a lot of the engagement which occurs with Apple’s brand and products is indirect – I’m using a Macintosh to prepare this post, but I’m not directly engaged with Apple’s products as I do it. I’m using services that layer on top of them. I’d argue this is less true with iTunes, the iPad and the iPhone, and I’d wager that’s how Apple wants it – they want to deepen engagement with their customers, and iOS is how they are going about doing that. What data Apple collects is not easy to find  – but it certainly has to be deep. And Apple has long term and ongoing experience creating OS platforms, so I’ve scored the company highly there, though not as high as Microsoft, which has more reach.

Microsoft  is the second strongest of the Big Five in terms of financials. While it’s certainly not been a growth stock in the past decade or so, it’s a profit machine, and its revenues are massive. Windows and Office have been consistent defensible profit centers, allowing the company to pursue search, online publishing, and gaming, among other key businesses. For the same reasons as Apple, I’ve given Microsoft a middling engagement score – its massive Windows base is not very engaged at a brand level, but the twenty-odd million folks on the Xbox Live platform certainly are. As a data powerhouse, Microsoft is a wildcard – it has not leveraged the data created by our interactions with Windows and Office – at least not in ways I can divine. It does have tons of data around Xbox, Bing, and its move to the cloud should make it a key player here soon. And when it comes to experience creating and driving developer ecosystems in the OS space, Microsoft has the deepest experience of any of the Big Five. (And no, I am not going to get into arguments of whether those OSes are better or worse than one another – for now anyway).

Google ranks third in financial heft, but its reach across the web is unmatched by any of its cohorts in the Big Five. Its search business profit center is a monster, though the company faces threats from Bing on one side, and Facebook’s social web on the other. I’ve scored Google equal to Apple in engagement – it’s clearly far stronger as an engaged brand on the Internet, but less strong in its Android business, despite Android’s larger base. And of course, Google was built from the ground up as a data machine. As for experience in operating systems and developer ecosystems, Google is still in early stages. Android and Chrome are both relatively new and not fully baked.

Amazon has never been a major hoarder of cash, but the company has been on a roll of late, and is building both its reserves and its market cap. However, its profit center – ecommerce – is arguably not as defensible as others in the Big Five (though one could reasonably argue Amazon has locked in its consumers with extremely smart services such as its recommendation engine and Prime shipping programs). The company’s reach into consumers is smaller than any of its peers in the Big Five, and it has just begun to play its device engagement hand via the Kindle platform. Of course, nearly 150mm of us are already deeply hooked into Amazon’s commerce engine, and that’s a significant data advantage. As for operating system and developer experience, let’s not forget Amazon Web Services – the compute and storage layers of what might be called the web OS. Amazon has an enviable position in these critical areas of the emerging cloud ecosystem, though they are, in the main, indirect – for now. But those services must give Amazon a view into data that is the envy of its fellow Big Five companies.

Facebook is the youngest of the Big Five, and has pretty much no publicly available financial information. It’s fair to assume it’s the weakest of the Big Five financially, but that is set to change in the next year. It already boasts a massive valuation in the private markets, and once it goes public, it could have upwards of $10billion or more to play with. It has massive reach and deep engagement – nearly 1 billion of us use the service, half of us use it daily. Facebook’s data trove is enviable, and its moves into nearly every aspect of our lives – from payment to media, will create even more of it. The company also has created a huge base of developers for its platform, but the ecosystem is incomplete compared to vertically integrated OSes like iOS, Mac or Windows. Given its youth, I’d argue Facebook has the most to prove, but certainly has earned its place in the Big Five.

I’d love your input on the Big Five. I plan to use this post as a milestone of sorts, as I begin the journey of writing about their impact on our culture in the coming generation.