free html hit counter Media/Tech Business Models Archives | Page 4 of 152 | John Battelle's Search Blog

The Four Phases of CES: I, Consumer, Am Electronic

By - January 08, 2014

CESCES is a huge event, one that almost everybody in our industry has been to at least once, if not multiple times. I’ve been going for the better part of 25 years, so I’ve seen a lot of change. And after my first day here, the biggest takeaway I’m getting is a sense of deja vu.

Back in the early days, CES was mostly about exciting new televisions, clock radios, and stereo components. Call that the first incarnation of CES – literally, electronics for consumers. Stuff you plugged in, stuff that “electrified” your life with sound and video.

But starting in the mid to late 1908s, a brash new industry was starting to take over the “buzz” on the show floor – personal computers. PCs were becoming a “consumer electronic” and for the next decade or so, PCs were the “it” industry at CES. The PC era of CES was its second incarnation, and it brought our industry onto the show floor in a big way.

By 2000, CES morphed yet again, and the brash new industry at the center of buzz was the consumer Internet. Yahoo, AOL, and myriad now-dead startups competed for headlines and hot-party tickets. The Consumer Internet marked CES’s third phase change.

A fourth phase came in the last five to ten years – the mobile wave. Nokia and Blackberry, then Samsung, Apple, and Google became major players at the event.

The funny thing is, as each of these waves have hit CES, none of them have eliminated the wave before. CES was always a crazy quilt where you’d find cheesy aftermarket car stereo folks right next to the slickest new laptop, or the latest robotic toy for your kid.

But this year, I think the biggest trend is how these once-separate parts of CES are getting mashed together. In a way, CES is once again all about consumer electronics, but they are all computers now, they are all connected through the Internet, and they are mobile and location aware.

The two biggest stories here are the rise of the connected car, on the one hand, and the Internet of Things, on the other. The auto industry has always been here, but mostly represented by after-market players who did massive car stereo installations. Now every major auto maker is here in force, touting their cars as mobile, Internet-connected experience machines with app stores and serious computing power. Auto makers know their future lies in the marriage of their “platform” – the car itself – with the digital fabric of our lives.

Meanwhile, the other big story is how everything – from babies clothes to the machines that wash them – has become a “consumer electronic” – thanks to the Internet of Things. (Stephen Wolfram has even announced a computable database of “connected devices.”) Autos are simply one more connected device – albeit one of our most prized and expensive ones.

I’m left, after one day of meetings and chance encounters, with the sense that four massive tectonic plates – consumer devices, PCs, mobile platforms, and the Internet – are crashing up against one another, causing chaos, opportunity, and more change than we’ve seen in any previous era. There are few standards or touchstones for how this will all work out, but one thing is clear – at the center of this stands the individual – the “Consumer.” And the essence of who that person is is described by data – data that is computed through devices, platforms, and Internet services. We have a long, long way to go before our industry creates a seamless experience across all consumer electronics, based on that data. But to me, that’s probably the biggest opportunity there is. I’ll unpack this idea in a later post, but for now, it’s off to more CES madness.

 

  • Content Marquee

Predictions 2014: A Difficult Year To See

By - January 03, 2014

1-nostradamusThis post marks the 10th edition of my annual predictions – it’s quite possibly the only thing I’ve consistently done for a decade in my life (besides this site, of course, which is going into its 12th year).

But gazing into 2014 has been the hardest of the bunch – and not because the industry is getting so complicated. I’ve been mulling these predictions for months, yet one overwhelming storm cloud has been obscuring my otherwise consistent forecasting abilities. The subject of this cloud has nothing – directly – to do with digital media, marketing, technology or platform ecosystems – the places where I focus much of my writing. But while the topic is orthogonal at best, it’s weighing heavily on me.

So what’s making it harder than usual to predict what might happen over the coming year? In a phrase, it’s global warming. I know, that’s not remotely the topic of this site, nor is it in any way a subject I can claim even a modicum of expertise. But as I bend to the work of a new year in our industry, I can’t help but wonder if our efforts to create a better world through technology are made rather small when compared to the environmental alarm bells going off around the globe.

I’ve been worried about the effects of our increasingly technologized culture on the earth’s carefully balanced ecosystem for some time now. But, perhaps like you, I’ve kept it to myself, and assuaged my concerns with a vague sense that we’ll figure it out through a combination of policy, individual and social action, and technological solutions. Up until recently, I felt we had enough time to reverse the impact we’ve inflicted on our environment. It seemed we were figuring it out, slowly but surely. The world was waking up to the problem, new policies were coming online (new mileage requirements, the phase out of the incandescent bulb, etc). And I took my own incremental steps – installing a solar system that provides nearly 90% of our home’s energy, converting my heating to solar/electrical, buying a Prius for my kids.

But I’m not so sure this mix of individual action and policy is enough – and with every passing day, we seem to be heading toward a tipping point, one that no magic technological solution can undo.

If you’re wondering what’s made me feel this way, a couple of choice articles from 2013 (and there were too many to count) should do the trick. One “holy shit” moment for me was a piece on ocean acidification, relating scientific discoveries that the oceans are turning acidic at a pace faster than any time since a mass extinction event 300 million years ago. But that article is a puff piece compared to this downer, courtesy The Nation: The Coming Instant Planetary Emergency. I know – the article is published in a liberal publication, so pile on, climate deniers… Regardless, I suggest you read it. Or, if you prefer whistling past our collective graveyard, which feels like a reasonable alternative, spare yourself the pain. I can summarize it for you: Nearly every scientist paying attention has concluded global warming is happening far faster, and with far more devastating impact, than previously thought, and we’re very close to the point where events will create a domino effect – receding Arctic ice allowing for huge releases of super-greenhouse methane gases, for instance. In fact, we may well be past the point of “fixing” it, if we ever could.

And who wants to spend all day worrying about futures we can’t fix? That’s no fun, and it’s the opposite of why I got into this industry nearly 30 years ago. As Ben Horowitz pointed out recently, one key meaning of technology is  “a better way of doing things.” So if we believe that, shouldn’t we bend our technologic infrastructure to the world’s greatest problem? If not – why not? Are the climate deniers right? I for one don’t believe they are. But I can’t prove they aren’t. So this constant existential anxiety grows within me – and if conversations with many others in our industry is any indication, I’m not alone.

In a way, the climate change issue reminds me of the biggest story inside our industry last year: Snowden’s NSA revelations. Both are so big, and so hard to imagine how an individual might truly effect change, that we collectively resort to gallows humor, and shuffle onwards, hoping things will work out for the best.

And yet somehow, this all leads me to my 2014 predictions. The past nine prediction posts have been, at their core, my own gut speaking (a full list is at the bottom of this post). I don’t do a ton of research before I sit down to write, it’s more of a zeitgeistian exposition. It includes my hopes and fears for our industry, an industry I believe to be among the most important forces on our planet. Last year, for example, I wrote my predictions based mainly on what I wished would happen, not what I thought realistically would.

For this year’s 2014 predictions, then, I’m going to once again predict what I hope will happen. You’ll see from the first one that I believe our industry, collectively, can and must take a lead role in addressing our “planetary emergency.” At least, I sure hope we will. For if not us…

1. 2014 is the year climate change goes from a political debate to a global force for unification and immediate action. It will be seen as the year the Internet adopted the planet as its cause.

Because the industry represents the new guard of power in our society,  Internet, technology, and media leaders will take strong positions in the climate change debate, calling for dramatic and immediate action, including forming the equivalent of a “Manhattan Project” for technological solutions to all manner of related issues – transportation, energy, carbon sequestration, geoengineering, healthcare, economics, agriculture.

While I am skeptical of a technological “silver bullet” approach to solving our self-created problems, I also believe in the concept of “hybrid vigor” – of connecting super smart people across multiple disciplines to rapidly prototype new approaches to otherwise intractable problems. And I cannot imagine one company or government will solve the issue of climate change (no matter how many wind farms or autonomous cars Google might create), nor will thousands of well meaning but loosely connected organizations (or the UN, for that matter).

I can imagine that the processes, culture, and approaches to problem solving enabled by the Internet can be applied to the issue of climate change. The lessons of disruptors like Google, Twitter, and Amazon, as well as newer entrants like airbnb, Uber, and Dropbox, can be applied to solving larger problems than where to sleep, how to get a cab, or where and how our data are accessed. We need the best minds of our society focused on larger problems – but first, we need to collectively believe that problem is as large as it most likely is.

2014, I hope, is the year the problem births a real movement – a platform, if you will, larger than any one organization, one industry, or one political point of view. The only time we’ve seen a platform like that emerge is the Internet itself. So there’s a certain symmetry to the hypothesis – if we are to solve humankind’s most difficult problem, we’ll have to adopt the core principles and lessons of our most elegant and important creation: the Internet. The solution, if it is to come from us, will be native to the Internet. I can’t really say how, but I do know one thing: I want to be part of it, just like I wanted to be part of the Internet back in 1987.

I’ll admit, it’s kind of hard to write anything more after that. I mean, who cares if Facebook has a good or bad year if the apocalypse is looming? Well, it’s entirely possible that my #1 prediction doesn’t happen, and then how would that look, batting .000 for the year (I’ve been batting better than .500 over the past decade, after all)? To salvage some part of my dignity, I’m going to go ahead and try to prognosticate a bit closer to home for the next few items.

2. Automakers adopt a “bring your own” approach to mobile integration. The world of the automobile moves slowly. It can take years for a new model to move from design to prototype to commercially available model. Last year I asked a senior executive at a major auto manufacturer the age old question: “What business are you in?” His reply, after careful consideration, was this: “We are in the mobile experience business.” I somewhat expected that reply, so I followed up with another question: “How on earth will you compete with Apple and Google?” Somewhat exasperated, he said this was the  existential question his company had to face.

2014 will be the year auto companies come to terms with this question. It won’t happen all at once, because nothing moves that fast in the auto industry. While most car companies have some kind of connectivity with smart phone platforms, for the most part they are pretty limited. Automakers find themselves in the same positions as carriers (an apt term, when you think about it) back at the dawn of the smart phone era – will they attempt to create their own interfaces for the phones they market, or will they allow third parties to own the endpoint relationship to consumers? It’s tempting for auto makers to think they can jump into the mobile user interface business, but I think they’re smart enough to know they can’t win there. Our mobile lives require an interface that understands us across myriad devices –  the automobile is just one of those devices. The smartest car makers will realize this first, and redesign their “device platforms” to work seamlessly with whatever primary mobile UI a consumer picks. That means building a car UI not as an end into itself, but as a platform for others to build upon.

Remember, these are predictions I *hope* will happen. It’s entirely possible that automakers will continue the haphazard and siloed approach they’re currently taking with regard to mobile integration, simply because they lack conviction on whether or not they want to directly compete with Google and Apple for the consumer’s attention inside the car. Instead, they should focus on creating the best service possible that integrates and extends those already dominant platforms.

3. By year’s end, Twitter will be roundly criticized for doing basically what it did at the beginning of the year. The world loves a second act, and will demand one of Twitter now that the company is public. The company may make a spectacular acquisition or two (see below), but in the main, its moves in 2014 will likely be incremental. This is because the company has plenty of dry powder in the products and services it already has in its arsenal – it’ll roll out a full fledged exchange, a la FBX, it’ll roll out new versions of its core ad products (with a particular emphasis on video), it’ll create more media-like “events” across the service, it’ll continue its embrace of television and popular culture…in other words, it will consolidate the strengths it already has. And 12 months from now, everyone will be tweeting about how Twitter has run out of ideas. Sound familiar, Facebook?

Now this isn’t what I hope for the company to do, but I already wrote up my great desire for Twitter last year. Still waiting on that one (and I’m not sure it’s realistic).

4. Twitter and Apple will have their first big fight, most likely over an acquisition. Up till now, Twitter and Apple have been best of corporate friends. But in 2014, the relationship will fray, quite possibly because Apple comes to the realization it has to play in the consumer software and services world more than it has in the past.  At the same time, there will be a few juicy M&A targets that Twitter has its eye on, targets that most likely are exactly what Apple covets as well. I’ll spare you the list of possible candidates, as most likely I’d miss the mark. But I’d expect entertainment to be the most hotly contested space.

5. Google will see its search related revenues slow, but will start to extract more revenues from its Android base. Search as we know it is moving to another realm (for more, see my post on Google Now). Desktop search revenues, long the cash cow of Google, will slow in 2014, and the company will be looking to replace them with revenues culled from its overall dominance in mobile OS distribution. I’m not certain how Google will do this – perhaps it will buy Microsoft’s revenue generating patents, or maybe it’ll integrate commerce into Google Now – but clearly Google needs another leg to its revenue stool. 2014 will be the year it builds one.

6. Google Glass will win – but only because Google licenses the tech, and a third party will end up making the version everyone wants. Google Glass has been lambasted as “Segway for your face” – and certainly the device is not yet a consumer hit. But a year from now, the $1500 price tag will come down by half or more, and Google will realize that the point isn’t to be in the hardware business, it’s to get Google Now to as many people as possible. So Google will license Glass sometime next year, and the real consumer accessory pros (Oakley? GoPro? Nike? Nest?!) will create a Glass everyone wants.   

7. Facebook will buy something really big. My best guess? Dropbox. Facebook knows it’s become a service folks use, but don’t live on anymore. And it will be looking for ways to become more than just a place to organize a high school reunion or stay in touch with people you’d rather not talk to FTF. It wants and needs to be what its mission says it is: “to give people the power to share and make the world more open and connected.” The social graph is just part of that mission – Facebook needs a strong cloud service if it wants a shot at being a more important player in our lives. Something like Dropbox (or Box) is just the ticket. But to satisfy the egos and pocketbooks of those two players, Facebook will have to pay up big time. It may not be able to, or it may decide to look at Evernote instead. I certainly hope the company avoids the obvious but less-substantive play of Pinterest. I like Pinterest, but that’s not what Facebook needs right now.

As with Twitter, this prediction does not reflect my greatest hope for Facebook, but again, I wrote that last year, and again…oh never mind.

8. Overall, 2014 will be a great year for the technology and Internet industries, again, as measured in financial terms. There are dozens of good companies lined up for IPOs, a healthy appetite for tech plays in the markets, a strong secular trend in adtech in particular, and any number of “point to” successes from 2013. That strikes me as a recipe for a strong 2014. However, if I were predicting two years out, I’d leave you with this warning: Squirrel your nuts away in 2014. This won’t last forever.

Related:

Predictions 2013

2013: How I Did

Predictions 2012

2012: How I Did

Looking Back: How Did My 2013 Predictions Fare?

By - December 30, 2013

1-nostradamus

It’s that time of year: The annual ritual of looking back and looking forward is in full voice. Long time readers know I always make predictions around the turn of the year, and I expect my 2014 prognostications will come sometime this weekend. Meanwhile, it’s time to take a look at what I wrote a year ago, and judge how well I did.

You may recall I took a different approach in 2013, and wrote predictions mainly for things I *hoped* would come true, rather than things I expected would. I’ve been doing these predictions for nine years now, and I guess I was looking for a fresh angle. All in all, things came out OK, but you be the judge. Here are my predictions, and my short summary on how they fared.

1. We figure out what the hell “Big Data” really is, and realize it’s bigger than we thought (despite its poor name).

One can argue whether “we” figured out what Big Data is, but we sure realized it’s bigger than we thought. The Rocket Fuel IPO is one clear measure of that, the Snowden/NSA revelations are yet another. And “Big Data is going to be big” is an echoing theme once again for 2014, from the various predictions posts I’ve seen over the past few weeks. Whether or not society has a clear grip on the definition of “Big Data,” I’d argue every thinking person in our world understands it’s a concept that has significant bearing on our collective and individual future. With that in mind, I’ll declare this prediction box checked.

2. Adtech does not capitulate, in fact, it has its best year ever, thanks to … data. 

At the beginning of the year, many were predicting that ad tech was going to have a year of capitulation – but the opposite has in fact occurred. Terry Kawaja revised his charts to show a more than doubling of the companies in the space this past year, and while some might argue that a few ad tech IPOs were not high flyers- Tremor and Yume take the lead here – the fact is, they got out and are now stabilizing. Meanwhile, Rocket Fuel is a massive win, so is Criteo, and so is Twitter – which is as much an ad tech business as it is a social networking or platform company. My own experience in the space – FM’s ad tech business – only corroborates my prediction – our business had an extraordinary 2013, beating all our forecasts handily and growing at near triple digit rates on a large base from 2013.

The basis for all this growth? Data, of course, but more importantly, a more sophisticated approach to data. Criteo and Rocket Fuel were rewarded for this sophistication, and understanding how to manage this new currency of data will be at the center of value creation for 2014.

I think this prediction has also proven accurate. So far, 2 for 2.

3. Google trumps Apple in mobile 

In this prediction, I laid out that I hoped Google would steal Apple’s crown as the leader in mobile. Judging this one is going to prove tricky – Google has clearly outstripped Apple in sales and buzz, Apple still won on profit and driving high end behaviors like e-commerce. I’d argue that sales matter more in the long term, and this prediction has occurred.   However, in my 2013 post I suggested that Google would win by coming up with The Next Big Thing, like the Razr or the iPhone, and while the Nexus 5 and the Moto X are well-received devices (I have the Nexus 5, and I believe it’s far better than any iPhone out there), it’d be difficult to argue they are The Next Big Thing. And Glass – well, not yet, anyway.

I also wrote this: “Google needs to actively promote a vision that is 180 degrees from that of Apple: Open, interoperable, accessible, ungated. This allows for real innovation in UI, services, and apps. Google will win by highlighting things that only Android-based devices running Jellybean or later can do: you (consumers and developers) can interact with digital services and content in a web-like fashion.”

So far, this has not occurred – at least in the marketplace. Google did take a big step forward with Android app linking, but it’s not clear this feature is going to take off, or be implemented in a way that creates the ecosystem I was pining for in my original post.

I’d give myself a half check on this one. So far, 2.5 of 3.

4. The Internet enables frictionless (but accountable) payments, enabling all manner of business models that previously have been unnaturally retarded.

Well…sort of. Bitcoin woke us all up to a new way to pay, and culturally I think a much larger percentage of us have become accustomed to the idea that money no longer comes with the friction it once had. Credit Uber for that – but Uber is not exactly used by the masses. And Square had, by all accounts, a massive year. Still and all, the ecosystem breakthrough I was hoping for has not happened. I also predicted that major consumer-facing online platforms based on “free” – Google and Facebook chief among them, though Twitter is a potential player here as well – will begin to press their customers for real dollars in exchange for premium services. This is undeniably true. Facebook and Twitter ask us for money to promote my posts, LinkedIn keeps trying to upsell us to Premium, Google wants to sell us a better Play experience, Hulu,

Spotify, you name it, they want our money.

I got this one mostly right, I’d say – perhaps 75% right. 3.25 of 4 so far.

5.  Twitter comes of age and recommits itself as an open platform. 

I think I missed at least half of this one, but it’s worth talking about why. First, sure, if having a killer IPO is coming of age, then Twitter came of age. But the real point I was making is the one about committing to being an open platform. I predicted (again, remember these are my hopes) that the company would clarify its sometimes confusing rules of the road, resulting in some breakout new services from third parties. I also predicted Twitter would get itself into some good old fashioned tempests with Big Overbearing Governments and Corporations, much to the delight of folks who used to cheer Google for doing similar things in the past. Lastly, I predicted Twitter would roll out paid services.

So, how did I fare? It’s hard to say, definitively. I don’t feel like I have a clear sense of how important Twitter’s role is in the Open Source world, but it’s clearly committed to being an active player. As for clarifying its approach to developers and opening up an ecosystem for third parties, unless I’m missing something, I don’t think that really happened. Topsy, which is one of the most important Twitter developers, was bought by Apple, but as I posted earlier, I don’t think that was because of Twitter per se. And where are all the cool new third party apps built on top of the Twitter platform? Honestly, I don’t see them. The Twitter platform is best when used as an identity layer, so far. Nothing new there. And no breakout new apps, at least, not from third parties.

Now, on the issue of “tempests with Governments,” Twitter most certainly checked the box. While incidents in the UK, France, and other countries kept execs busy, what was most interesting is how Twitter was *not* implicated, at least directly, in the NSA fracas this year. The company also joined its peers in expressing dismay, and recently implemented tougher anti-snooping security, going beyond the HTTPS that Google, Yahoo and others have installed.

All in all, what I was going for in this prediction was the emergence of an open, robust third-party platform from Twitter, and while I can’t say it’s gotten worse, I also can’t say much happened to push it forward. So I’d say this one was mostly a miss, overall – though I’d give myself .25 for “coming of age” and committing to stand against Big Bad Government. I stand at 3.5 of 5 now. 

6. Facebook embraces the “rest of the web.”

Well, this was probably my biggest “hope” of all the predictions I made. I wrote: “I believe 2013 will be the year it realizes it’s OK to share – bilaterally – with The World That Isn’t Facebook. That means making it really easy to export your identity and data, for example – competing on service, not lock in. And creating a kickass web-based advertising network/exchange. And  learning how to play nice with the hundreds of thousands of publishers out there, pro, semi pro and amateur, who create the value that drives so much engagement on its core platform.”

Umm…not so much. I still think this strategy is crucial to Facebook’s long term value. But it didn’t happen this past year. Big miss. I’m now 3.5 of 6.

7.  By the end of the year, Amazon will have an advertising business on a run rate comparable to Microsoft.

Well, this one is refreshingly specific, isn’t it!? I should easily be able to show if I was right, one way or the other. Well, not so fast. Both companies bury their advertising revenue inside other categories, which make it nearly impossible to understand and compare the media components. By all accounts in the press and from what I’ve heard from industry folk, Amazon’s advertising business is growing very quickly. I made this prediction to highlight that, by year’s end, Amazon would be a force to be reckoned with in advertising. I think anyone paying attention to programmatic advertising would agree this is true. I just can’t prove it yet. So…give me half a check.

4 of 7 so far.

8. The world will learn what “synthetic biology” is, because of a major breakthrough in the field.

Well, it didn’t happen, at least, not in a massive way. No major breakthrough that hit a 24 hour news cycle, just a constant, steady drip of small but important steps all year long. Sigh, I missed this one completely, since I predicted “the world will learn” and unless you were really paying attention, you’d have missed that 2013 was a big year in synthetic biology. No points for me here.

So, that’s 4 of 8, or batting .500. Not an awesome year, but not bad either. The predictions where I whiffed – Facebook, synthetic biology, Twitter’s open platform – I whiffed because I badly wanted them to come true, but the facts are in the way. Lesson learned….my next post will be my 2014 predictions. We’ll see if I take those lessons to heart.

Traffic of Good Intent: We Beat Fraud By Working Together

By - December 06, 2013

TOGIscreen

Earlier this year I wrote a post titled It’s Time To Call Out Fraud In The Adtech Ecosystem. The overwhelming response to that riposte led to a lunch at this year’s IAB annual meeting, which then led to the formation of the Traffic of Good Intent task force (TOGI), an IAB-sanctioned working group composed of leaders from nearly every major player in the media and adtech industry. We’ve made a lot of progress since our first informal luncheon meeting nine months ago – I think the issue of fraud is now a top priority in our industry, and we continue work on best practices, solutions, and education. Today marks a milestone for our industry, the release of two white papers. Both are clearly written and intended to catalyze our progress to date.

Understanding Online Traffic Fraud gives a broad overview of the problem, laying out definitions of non-human traffic, and lays out half a dozen reasons you should give a sh*t. For me, the money quote is this: “Failing to root out traffic fraud funds criminal activity and supports organized crime.” Because as an advocate for publishers, that’s what fraud is: it’s stealing. It’s taking money and value out of the pockets of publishers, and putting it into the pockets of criminals. Along the way, any number of intermediaries also make money, and in the short term, they may be incented to continue to do so. We have to change that.

The second document, Traffic Fraud: Best Practices for Reducing Risks to Exposure, details actions all player in this ecosystem – brands, agencies, trading desks, technology providers, exchanges, publishers and more – can do to clean up this pervasive problem.

If you buy, sell, or traffic in online advertising, please read these documents, and help us move the needle even further. Fraud is not a problem that can be solved by pointing fingers or blaming one side or the other. We have to work together – and these documents are living proof that we can.

Apple+Topsy: It’s Not About Twitter (And Twitter Is Probably Cool With That)

By - December 03, 2013

TopsyApple

I’m going out on a limb, but a fairly stout one: Like Azeem, I think Apple bought Topsy for its search chops. But Azeem, who I admire greatly, says Topsy could become the search engine “for iOS… to index both the social Web, but also the best bits of the Web that power Siri and Apple Maps, [and] reduce the reliance on Google and reduce the flow of advertising dollars to the big G.” Certainly possible, but I don’t think Apple bought Topsy for its ability to search the web, or even for its trove of Twitter data. That might be a nice bonus, but I don’t think it’s the bogey.* Others have written that Topsy might be used to improve Apple’s iTunes/app search, but again, I think that’s not thinking big enough.

No, Apple most likely bought Topsy because Topsy has the infrastructure to address one of Apple’s biggest problems: the iOS interface. Let’s face it, iOS (and the app-based interface in general) is slowly becoming awful. It’s like the web before good search showed up.  To move to the next level, Apple needs a way to improve how its customers interact with iOS. Topsy will help them get there. Also, I think Twitter is happy that Apple bought Topsy – but more on that later.

Let me explain. First, my statement that iOS is “becoming awful.” Faithful readers know I’m not a fan of iOS. I switched to Android almost two years ago, and I’ve never looked back. But it’s not as if the Android interface is much better – I just like its chances of developing into something more powerful down the line. In the past few years, I’ve written several posts about the kind of interface I believe needs to emerge across mobile (which until last year, Apple pretty much dominated). Given my  obsession with the topic, it’s probably no secret that I view mobile’s biggest problem boils down to one of search.

In  Apple Won’t Build a (Web) Search Engine and Of Course Apple Is Going to Do Search, I argued that Apple must get into the “app search” game. Just as web search became the coin of the web realm, app search will be next. It won’t look like web search, I argued, but at its core, it’s quite similar.

That was three years ago, right after Apple bought Siri, launched iAds, and was relentlessly touting the growth of its app ecosystem. I was certain Apple was going to figure out a way to create value above the level of a particular app, using all that tasty data it had within its restrictive walled garden to build the next generation iOS interface.

But so far, Apple has failed to innovate inside its own ecosystem (unless you count minimalist icons and bright base colors as innovation). Three years later, we’re still stuck in a user interface of app-filled screens, most of which we never use, each disconnected  from the other save for the fact they happen to reside on your phone, possibly right next to each other, but otherwise unaware of the value they might reap should they magically start sharing links and data with each other. (You know, the way the web works.)

This has to change.

Google knows it, which is why I find Google Now so fascinating. Apple knows it too – the days of home screens littered with app icons are numbered. What will replace it?

My guess is some kind of intelligent, search-driven interface that “understands” you, based on the intent you signal through your use of all kinds of apps – including browser apps, of course, as well as true search apps like Siri (or Google Now). This new kind of interface responds to your voice as well as your location, your history, and anything else you might willingly (or unwittingly) feed it. It will strive to always put the very thing you need at your fingertips – something that simply isn’t possible without understanding your interactions as the equivalent of …. well, a personal interest graph.

And to do that, Apple needs a powerful engine, the kind of engine that, say, has been hard at work understanding a massive corpus of interest data for, say, six or so years. Something like Topsy.

My prediction: Apple doesn’t really care about Twitter data. The more I think about it, the more I’d wager that Twitter most likely blessed Apple’s purchase – and why not. With its newfound post-IPO billions, Twitter could have easily forced Topsy’s price well past $200 million. But Twitter is probably thrilled that Apple bought Topsy – Apple just took out a company that Twitter eventually would have had to either buy or kill. Now, Twitter is free to build enterprise value on top of its own data, as well it should, and Apple has a team of engineers who I’m guessing can’t wait to get their hands on a new kind of tweet stream – all that structured data captured, but not leveraged, off your mobile phone. It’s a win win win – if I’m right. Apple gets the tech and talent to build the guts of its next interface, consumers get a better OS, and Twitter gets to keep its cash and eliminate a potential competitor to boot.

Smart move, Apple. I hope I’m right.

*For the record, I spoke to no one at Twitter or Apple before I wrote this. It’s all my own brand of pure speculation. 

Why The Banner Ad Is Heroic, and Adtech Is Our Greatest Artifact

By - November 17, 2013

hotwiredbanner

Every good story needs a hero. Back when I wrote The Search, that hero was Google – the book wasn’t about Google alone, but Google’s narrative worked to drive the entire story. As Sara and I work on If/Then, we’ve discovered one unlikely hero for ours: The lowly banner ad.

Now before you head for the exits with eyes a rollin’, allow me to explain. You may recall that If/Then is being written as an archaeology of the future. We’re identifying “artifacts” extant in today’s world that, one generation from now, will effect significant and lasting change on our society. Most of our artifacts are well-known to any student of today’s digital landscape, but all are still relatively early in their adoption curve: Google’s Glass, autonomous vehicles, or 3D printers, for example. Some are a bit more obscure, but nevertheless powerful – microfluidic chips (which may help bring about DNA-level medical breakthroughs) fall into this category. Few of these artifacts touch more than a million people directly so far, but it’s our argument that they will be part of more than a billion people’s lives thirty years from now.

There is one exception. The artifact we’re investigating is already at massive scale, driving billions of dollars in revenue and touching every person whose ever used the Internet. That artifact is currently called “programmatic adtech,” and it is most famously illustrated by Terry Kawaja’s Lumascapes (and less famously, my own “Behind the Banner” visualization).

lumascapedisplayYes, this is the infrastructure that allows a pair of shoes to chase you across the web. How can it possibly be as important as, say, a technology that may cure cancer? Because I believe the very same technologies we’ve built to serve real time, data-driven advertising will soon be re-purposed across nearly every segment of our society. Programmatic adtech is the heir to the database of intentions – it’s that database turned real time and distributed far outside of search. And that’s a very, very big deal. (I just wish I had a cooler name for it than “adtech.” We’re working on it. Any ideas?!)

Think about what programmatic adtech makes possible. An individual requests a piece of content through a link or an action (like touching something on a mobile device). In milliseconds, scores of agents execute thousands of calculations based on hundreds of parameters, all looking to market-price the value of that request and deliver a personalized response. This happens millions of times * a second,* representing hundreds of millions, if not billions, of computing cycles each second. What’s most stunning about this system is that it’s tuned to each discrete individual – every single request/response loop is unique, based on the data associated with each individual.

Let me break that down:

1. A person indicates a request: a desire, an intent, a preference – The Request

2. Billions of compute cycles and sh*tons of data are engaged to process that desire – The Process

3. A personalized response is generated within 100-250 milliseconds. – The Response

At present, the end result of this vastly complicated “Request Process Response” system is, more often than not, the proffering of a banner ad. But that’s just an artifact of a far more interesting future state. Today’s adtech has within it the glimmerings of a computing architecture that will underpin our entire society. Every time you turn up your thermostat, this infrastructure will engage, determining in real time the most efficient response to your heating needs. Each time you walk into a doctor’s office, the same kind of system could be triggered to determine what information should appear on your health care provider’s screen, and on yours, and how best payment should be made (or insurance claims filed). Every retail store you visit, every automobile you drive (or are driven by), every single interaction of value in this world can and will become data that interacts with this programmatic infrastructure.

OK. Let’s step back for a second. When you think of this infrastructure, are  you concerned? Good. Because it’s imperative that we consider the choices we make as we engage with such a portentous creation. This year alone, each human on the planet will create about 600 gigabytes of information, and that number is growing rapidly. What are the architectural constraints of the infrastructure which processes that information? What values do we build into it? Can it be audited? Is it based on principles of openness, or is it driven by business rules and data-structures which favor closed platforms? Will we have to choose between an oligarchy of “RPR vendors” – Google, Facebook, Microsoft – or will we take a more distributed approach, as the original Internet did?

These questions have been raised, and continue to be well articulated, by LessigZittrainWu, and many others. But we’re entering a new, more urgent era of this conversation. Many of these authors’ works warned of a world where code will eventually augur early lock down in political and social conventions. That time is no longer in the future. It’s now. And I believe as goes adtech, so goes our social code.

“Adtech” is a very important, very large application we’ve built on top of the platform we call “the Internet.” It’s driven by the relentless desire of capitalism to turn a profit, yet (so far) it has leaned toward the Internet’s core values of openness and interconnectivity. Thanks to that,  it’s suffering some endemic maladies (fraud comes to mind). It’s still a very young, relatively immature artifact. But so far, it’s more open than not. I’m not certain that will always be the case.

My argument boils down to this: What we today call “adtech” will tomorrow become the worldwide real-time processing layer driving much of society’s transactions. That layer deserves to be named as perhaps the most important artifact extant today.

Given adtech’s rise, let’s not forget its atomic unit of value: the oft-derided banner ad. In time the banner as we know it will most likely fade away, but its place in history is certain. One generation from now, we may not “click” on banner ads, but we’ll always be pulling into traffic, filing health insurance claims, buying clothes in retail stores, and turning up our thermostats. And those myriad transactions will be lit with data and processed by a real time infrastructure initially built to execute one pedestrian task: serve a simple banner ad.

Nearly 30 Years In Less Than an Hour

By - November 15, 2013

Pinch me: Last week I gave a “distinguished” lecture in Engineering at Berkeley. It was an honor to do so – I don’t really see myself as distinguished in any academic sense – and certainly not when it comes to engineering. (I do think my greying temples are starting to look distinguished, if I do say so….) Anyway, it was a lot of fun – in particular because my hosts asked me to spend a bit of time reviewing the past 30 or so years of my own work. Should you want to take a spin through the early days of Macweek, Wired (and HotWired), The Industry Standard, Web 2 Summit, my last book, the launch of and present adtech resurgence of FM, as well as the next book – well, here ya go. Bonus: I had a cold, so I was totally hopped up on Actifed.

More than 200,000 Minutes of Engagement, and Counting

By - November 08, 2013

BehindBannerScreenShot

Some of you may recall “Behind the Banner,” a visualization of the programmatic adtech ecosystem that I created with The Office for Creative Research and Adobe back in May. It was my attempt at explaining the complexities of a world I’ve spent several years engaged in, but often find confounding. I like to use Behind the Banner in talks I give, and folks always respond positively to it, in particular when I narrate the story as it plays.

I realized yesterday that I didn’t know how many people had actually viewed the thing, and naturally as a creator I was curious. So  I pinged my colleague at Adobe, who of course are analytics pros, among many other things. What came back was pretty cool: The visualization has been viewed nearly 50,000 times, with an average time spent of well over 4 minutes per view. That’s more than 200,000 minutes of engagement, or more than one-third of a year! It’s certainly got nothing on the Lumascape, but it’s neat nonetheless.

The version above is really a “beta” – we all wanted to do so much more, but we had to ship it in time for the CM Summit this past May. I’m eager to make it better – create an embeddable version, lay down a narrative track, add more companies and richer detail, fix things folks feel need fixing. If anyone out there is game to help, let me know. It’d be a fun project to work on!

(PS – we found out last week that Behind the Banner has been shortlisted for the Kantar Information Is Beautiful awards. Hurrah!)

Google Now: The Tip of A Very Long Spear

By - October 09, 2013

Yesterday my co-author and I traveled down to Google, a journey that for me has become something of a ritual. We met with the comms team for Google X, tested Google Glass, and took a spin in a self-driving car. And while those projects are fascinating and worthy of their own posts (or even chapters in the book), the most interesting meeting we had was with Johanna Wright, VP on the Android team responsible for Google Now.

Some of you might respond – “Google what?!” – and that’d be normal. Google Now is one of those products that to many users doesn’t seem like a product at all. It is instead the experience one has when you use the Google Search application on your Android or iPhone device (it’s consistently a top free app on the iTunes charts). You probably know it as Google search, but it’s far, far more than that. It’s the tip of a very important spear for Google, and if you study its architecture, all manner of interesting questions and insights can be found about where Google – and the Internet – may be headed.

When you fire up the Google search application on your phone, Google Now is all the bits that are not the familiar search bar. Here’s a screen shot of my Google Now “home page”:

gnow

As you can see, the search bar, which in a PC format is usually the *only* thing one sees, is most certainly not the main event. Certainly it’s at the top, and voice search is prominently featured (I could write 1,000 words just on voice search…another time, perhaps). But, the screen is dominated by “cards” of information – in this case a reminder of a call I have coming up (Google Now integrates with my calendar and contacts), as well as information about my drive home (Google Now knows I usually drive home in the afternoon). If I were to scroll down, more “cards” of information are shown, including local weather, points of interest, and sports scores (when the SF Giants were playing this past summer, I’d see scores – because Google Now knew I searched for “SF Giants scores” a lot).

These cards are extremely important to understanding where Google is heading with not only search, but with all of its various services (the card interface is now incorporated into Google’s “knowledge graph” search results, Google+, Gmail, and Google Maps, among many others). First, the cards “know” things about me – most critically my location, but also my search history, my calendar and contacts, my browsing history, key links in my Gmail, and more. They show up based on what interests and needs that Google believes will be most important to me. In essence, they are very tangible expressions of Google’s pivot from being a company that answers search queries, to being a company that anticipates your most important questions in real time, and answers them before you ask.

This, of course, has been the holy grail of tech  for some time – predating Google and even Microsoft. But now that rich data streams course constantly through the silicon veins of a very personal mobile device, that long-held vision is becoming reality.

In short, Now is Google’s attempt at becoming the real time interface to our lives – moving well beyond the siloed confines of “search” and into the far more ambitious world of “experience.” As in – every experience one has could well be lit by data delivered through Google Now.

Google knows that this moment – the moment of our lives becoming data – is happening now, and the company is very, very focused on seizing it.

If you doubt my hyperbole, I’d not be surprised, but I tend to test such hyperbole on multiple senior sources working deeply inside Google. To each I posited this question: “Is Google Now one of the most important products  at Google today?” Each answered emphatically yes.

To see why, consider this message, which popped up on my screen as I was preparing to write this post:

share daily commute

This is Google, asking me if I’d like to let selected people know where I am, in real time, during my daily commute. Of course, I can only share that status with people who are also Google+ users (no option to share on Facebook, Twitter, Foursquare, etc) – and that’s my point. First, questions like these are habituating us to the idea of sharing intimate information about ourselves with others, in real time. Second, a feature like this is *only* available to Google Now because of its integration with Google+ – one platform is reinforcing the other. Will Google let others play in this sandbox? Such a feature raises a very important question about what kind of world we want to live in – a world dominated by tightly integrated vertical platforms, or a world, as David Weinberger elegantly stated it, made up of small pieces loosely joined?

It was this question that weighed on my mind as I sat down with Johanna Wright yesterday. Since introducing Google Now (and the extremely related Google Knowledge Graph), the company has introduced more than 40 cards – cards for hotels, car rentals, and other travel information (like boarding passes), cards for movies, events, music and local businesses, cards tracking your activity (like walking, biking, etc.), and cards for nearby restaurants. There’s even a card that listens to your TV and tells you what music is playing.

Sound familiar? It should, because, to put it in words we can all understand: There’s an app for that. Or rather, there are apps for each of those. Let me list just a few of them, in order what what I laid out above: Hotel Tonight, Expedia, Lyft, Sidecar, Travelocity; Fandango, NetFlix, Hulu, iTunes, Spotify, Eventful, Yelp, Foursquare; Fitbit, Jawbone Up, Fuelband, Human; OpenTable, Urban Spoon; Shazam.

Google Now supplants the need to open an app by surfacing cards – cards that magically turn into just the information you need, when you need it – *without having to go to an app to get it.*

You following where this is going? Google is potentially disrupting the app world much the way its Universal Search disrupted major web properties  – taking the most valuable service or information, and surfacing it up for free. You may recall that universal search was quite controversial when it came out, because it appeared to favor surfacing Google-owned properties, such as YouTube, Finance, and Maps, over other web properties. Now, six years later, Universal search is, well universal, and that debate, which included an FTC investigation,  is over. Google properties won.

It’s worth noting that a key product manager for Universal Search was Johanna Wright, now the VP over Google Now. With all this in mind, I asked Wright about Google’s plans for Now: Would it be an open platform, where third parties can compete to be surfaced based on merit, or would favored services win out? And would various commercial products and services be able to pay to get integrated into Now’s suggestions and services?

Wright was understandably careful with her words when approaching this question. She declined to talk about monetization and business models for Now, but she did note that Google’s overall philosophy was one that favored the open web. The key, she said, was that Google get the user experience for Now right. The business model will come later (though she did note that Google Offers was already integrated into Now).

While Wright deferred comment on Now’s business model, I have no doubts there are plenty of folks inside Google thinking long and hard about the next steps the company will take to monetize Wright’s work. For now (no pun intended), Google Now is, in the main, a closed platform – surfacing only information that Google has deemed worthy of being surfaced, and integrating on a selective basis with only those services that Google believes will add value its consumers  (Google’s restaurant card, for example, integrates with OpenTable). Just as it did with search, Google is angling to control a key moment of a person’s daily life and attention – the point at which we lift our phone up to receive new information. When and if Google Now become ubiquitous, I can certainly imagine that the question of access and fairness will once again be raised. This movie, it seems, is fated to play out once again.

Twitter’s S1: How Do the Numbers Stack Up To Google and Facebook?

By - October 03, 2013

Twitter’s S-1 filing is now public, you can read it here. There’s no dearth of coverage, just Google News it. I’m interested in a few metrics compared to its most likely comparables, namely Google and Facebook. First, a couple tidbits from Twitter’s S-1:

* Top line growth y/y: 118%. Twitter shows financials up to Q2 2013, so through June. Growth 1H 2012 to 1H 2013 is our most recent comparison: $101.3mm in 1H ’12, to $221.4mm in 1H ’13. That’s impressive y/y topline growth of $120.1mm, or 118%.

* Implied 2013 topline: nearly $600mm, but possibly pushing $750mm. Twitter’s earned 62% of its 2012 revenue in the second half of the year. If it does the same this year, that would imply a topline revenue for 2013 of $582.4mm and a second half of around $361mm. Given Twitter took the option of filing its IPO under the JOBS Act, which allows for confidential filing for businesses under $750mm in annual revenue, one could argue that it filed because it knew it was going to have a blowout second half, which would push its FY topline over $750mm. If indeed revenues are accelerating beyond the norms set in 2012, we may see a second half revenue figure of closer to half a billion, which would be pretty spectacular.

Now, when I think “spectacular,” I think of the Google IPO, the original S-1 is here. How does Twitter stack up? Well, Google had far more revenue, and was very profitable. Twitter is profitable only on an adjusted EBIDTA basis, which is good, but not spectacular. On a growth basis, at the time it went public, Google’s y/y growth was 217%, if you take the comparable first quarters of 2003 and 2004. So from a financial point of view, Twitter’s no Google. But it’s no slouch, either. Here are the two companies financials, from their originally filed S-1s:

Google:

GoogS1

 

Twitter:TwitterS1

Now, what about Facebook’s initial S-1 filing?

Well, a quick look reminds us why there was so much hype: The company had huge revenues and was extremely profitable. See for yourself:

Facebooks1

 

Facebook was pretty much ready to go public a year or two before it actually did. By the time it went out, the public has already assumed it was a behemoth, and the offering failed to “pop.” It seems Twitter is learning from Facebook’s IPO, and is going out just at the moment it hits its financial stride, a bit earlier than Google, but before Facebook, in terms of financial maturity.

Now that Twitter is on the road to going public, it’ll be very interesting to see what the company’s third quarter filings look like. My guess is they’ll be very strong – the company is far too smart to plan it any other way. If I had to wager – and remember, I have no inside information, this is all speculative – Twitter will report a quarter that shows stronger growth than historical norms of 2012 might imply. We’ll know soon enough. If you’re a Twitter employee, partner, or investor: Congratulations on achieving such an important milestone. The world’s really watching now.

PS – I’d also be interested in a free-cash flow analysis of the company, but I don’t have the time to do that work. Anyone seen a good analysis?