2006
Quality is important
11.12.06
Target Audience:
Corporate
To quote Walt Mossberg of the Wall Street Journal at Consumer Technology Ventures last week, quality is an important pillar of success for consumer products and I couldn't agree more. Many times products are hyped with incredible promise (marketing) but the product either doesn't work as advertised, requires other services to be activated or simply is not ready (does Zune ring a bell).
From that perspective I am less happy that Apple (the only PC platform I have ever bought), is gaining popularity. Price pressure and popularity does not always do wonders to quality.
I currently use a 2-year old Powerbook G4 1.5Ghz of which the fan (right after the one year warranty expired) makes a noise like a sawing machine, and I had to reduce the speed of the processor to keep the fans from cooling. For work I purchased a $999 23-inch Apple flat-panel that produces stunning image quality and brightness, yet the ghosting of images on this expensive piece of equipment allows me to see which window was there 5 minutes ago. I expect the best from Apple and I am willing to pay a premium, but I am not willing to pay a premium for under-par quality.
Now, I am not picking on Apple because it is the worst performer in the consumer space, quite the opposite. Apple undoubtedly is the best performer in the business, but given that, Walt's comments make even more sense to me. Switching off of Apple is not an option for me, but griping is.
Update:
After unscrewing at least 20 screws on my out-of-warranty Powerbook G4 (directions courtesy of iFixit), I discovered that the reason why I had reduced the processor speed on my laptop for over one year and avoid the fan from coming on was created by, get this: a quality control sticker in the fan compartment that had come loose and was spinning along with the fan. A simple removal of the sticker solved the issue.
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Domain expertise is over-rated
Last week I sat in at a VC panel and the general partners from a few early stage VC firms who agreed that founders should have deep and many years of domain expertise in the companies that they are investing in. I disagree.
For one, true disruptive innovation does not come from compliance to an existing market. Apple, as a pure technology company, has proven it does not need to be a content expert to take the music business for a spin, and a massive overhaul. Real innovation starts with a healthy skepticism about current markets and its tactics. Coming up with new approaches to make money, and fundamentally changing the workings of paralyzed markets, is what makes my heart tick.
In my career I've always taken the disruptive standpoint. I became one of the most successful media experts for Oracle, not because of my prior domain expertise: I had none, but because of my drive to disrupt and look at the issues from a different perspective, one that is not necessarily tied to common acceptance. Finding and believing in OuterBay Technologies when it was unpopular and (yet) unsuccessful and creating a new market segment no industry analyst had heard of and starting immergo video communications without prior video communications knowledge and signing up big brand customers like IDG, blowing existing 20 year old production companies away, are living proof of why domain expertise is over-rated. SoftKinetic, the company I just became the CEO of, enables the next disruption in home entertainment no-one has travelled before.
The right investments are those made into people with guts, who vow to change how markets work and create disruption that unleashes new money. As Einstein taught us early on: imagination is more important then knowledge.
Cyclical innovation
Remember the Citroën ID19 and DS21? These cars produced in 1955 by the former research arm of Michelin, delivered a comfortable ride by providing hydro-pneumatic self-leveling suspension, directional headlights, and many more advanced technologies that now (fifty years later) seem to make their resurgence in modern luxury cars from BMW, Mercedes and Lexus. Likewise, on the technology side Data General provided in the 1980s integrated chat capabilities with the word processing software that ran on terminal based mini-computers, not unlike the capabilities of MSN Messenger, Yahoo! Chat and Google Talk. Many more examples like these exist; I must have seen the technology of MySpace probably twenty times over in the last 5 years. So, what makes innovation pop, or click....what is the right time?
To stay in the automotive realm, I often liken the traction achieved by cars on a dirt road (the entrepreneurial path to success) with the need for the driving weels to rotate at similar speeds. If the left wheel represents innovation and the right wheel represents market demand, it is easy to imagine how innovation pays off when both wheels move a the same or rapidly alternating speeds (client-server technology was one of those examples where the wheel of technology innovation was turning much faster than the wheel representing market demand). That uniform cadence provides a fair amount of certainty that the car will follow the entrepreneurial track you intend to pursue.
My point is the following: to investors, I urge you to look at technology and no matter how old, understand how its benefits apply to a changed market (yes, we need more economist VCs). To entrepreneurs, I urge you to look at markets and adjust the innovation (in most cases downplay it) to meet that demand. All of us in the Silicon Valley could use more macro-economic insight to make innovation work. Lets not just drive for short term exit appeal or stuff our own pockets, but create innovation that has a lasting impact on society.
In the interest of full-disclosure, the Citroën DS21 was my first car...
The industry-analyst cookbook
By Georges van Hoegaerden
I couldn't help but chuckle when I read today's updated report on the Secure Content Management (SCM) market by number-cruncher industry analyst IDC. Having dealt with some of the companies in the top ten of that report, I can tell you that the numbers they report to IDC are not only incorrect but paint a picture of growth and penetration that could not be farther from the truth.
Yet, investors and entrepreneurs use this data to engage in new ventures together. Business partners base their strategic picks on it. Customers bet their careers on it. Even the suppliers (of SCM solutions) use this data to prove to their business unit managers how much progress they've made; what was the last time you got away with writing your own report card?
The problem with the IDC analysis is that it pretends to show what the size of the market is, and the operators in it, by simply adding the sum of finagled realizations. But what about the size of the total addressable market? A top down analysis of the market means nothing if it doesn't intersect with a bottoms up analysis (how applicable this technology is to the market). How many computers could be protected with SCM versus how many are? Is the sum of realizations really equal to the sum of opportunities? I don't think so. There is plenty of opportunity for SCM vendors that think different.
So, not only does the analysis of the opportunity stink, the facts are doctored too. Let's be real, Secure Content Management is a bull market with room for 130 competing vendors, sounds like no-one has cracked the code yet. Entrepreneurs should approach security from a new perspective that crosses artificial boundaries defined by the major players, let us know if you need help.
I couldn't help but chuckle when I read today's updated report on the Secure Content Management (SCM) market by number-cruncher industry analyst IDC. Having dealt with some of the companies in the top ten of that report, I can tell you that the numbers they report to IDC are not only incorrect but paint a picture of growth and penetration that could not be farther from the truth.
Yet, investors and entrepreneurs use this data to engage in new ventures together. Business partners base their strategic picks on it. Customers bet their careers on it. Even the suppliers (of SCM solutions) use this data to prove to their business unit managers how much progress they've made; what was the last time you got away with writing your own report card?
The problem with the IDC analysis is that it pretends to show what the size of the market is, and the operators in it, by simply adding the sum of finagled realizations. But what about the size of the total addressable market? A top down analysis of the market means nothing if it doesn't intersect with a bottoms up analysis (how applicable this technology is to the market). How many computers could be protected with SCM versus how many are? Is the sum of realizations really equal to the sum of opportunities? I don't think so. There is plenty of opportunity for SCM vendors that think different.
So, not only does the analysis of the opportunity stink, the facts are doctored too. Let's be real, Secure Content Management is a bull market with room for 130 competing vendors, sounds like no-one has cracked the code yet. Entrepreneurs should approach security from a new perspective that crosses artificial boundaries defined by the major players, let us know if you need help.
Per-plaxo-ed
08.01.06
Target Audience:
Venture Capitalist
I am perplexed about Plaxo. With so many hot-shots of the Silicon Valley VC elite on the board, including Michael Moritz from Sequoia, Tim Koogle of Yahoo! and Ram Shriram of Sherpalo, this company still seems to be looking for its identity and even worse, its strategy.
So who is not paying attention here?
BlackBerry just got a make-over (by Cingular)
07.27.06
Target Audience:
Corporate
Did Cingular read my my rant about the ugly designs of Blackberry? The new 7130c from Cingular (not to be mistaken with the still ugly 7130 from other carriers) comes closer to what modern design for a PDA-with-phone should like like.
Having tested a ton of phones, PDA's etc over the years, the 7130c is a very attractive competitor to the bulky Palm Treo 650 and ... certainly more usable. The small dimensions of the 7130c cuts the size of the older Blackberry almost in half, a little thicker than the Motorola RAZR (which I love) and a bit taller, the 7130c still fits in the pocket of my pants easily. I like it so much, that I decided to get rid of my old Blackberry (on eBay) and my RAZR (although I'll keep it around, just in case) and combine two capabilities into one.
The 7130c with EDGE internet connectivity is actually fast enough to make it a delight to browse the internet (and visit the WAP site of CNN) and read e-mail, while waiting for the traffic light to turn green. The industrial design is good enough (not great) and appealing, the screen that is clearly visible in bright sunlight and adjusts automatically to your surroundings. This is absolutely the best screen I've ever seen on a mobile device.
Phone services are integrated into the PDA capabilities, but this part could be more intuitive. The heritage of the scroll menus from the Blackberry PDA platform complicates things beyond what is necessary. More 'special purpose' buttons would solve the problem. For now however, the Blackberry 7130c has become my new one-eyed king in the land of the blind.
Web 2.0: a technology foundation for free-markets
Many times the question comes up, what exactly is Web 2.0? Although we are not great supporters of buzzwords that have little real meaning, we are - just this time - tempted to put our big-thinking in the mix.
We believe it describes a set of technologies to support the immense popularity and growth characteristics of free-markets.
Free markets have been in existence at least since 1637, when dutch growers imported Tulips from Turkey and engaged in heavy bidding wars with buyers at the onset of the flower markets. [In the interest of "full-disclosure"; I grew up in Holland].
The Dutch auction (also referred to as "The Essence of Fairness" with respect to IPO markets) was created when ample supply was met with equally impressive demand, and a unique trading mechanism was developed. Apart from the details of the trading options (which eBay has adopted), we want to focus here on the dynamics of the market that are so different from the technology industry in its current incarnation.
The technology industry (still in an immature state) has built success around companies that identify and carve out a one-to-many relationship with customers. Successful companies like Microsoft, Oracle, Cisco etc. staved off early competition and now act as the single asset owner of the technology they sell to many customers, fearing little organic competition. We call them what they are; demi-cartels. A great position to be in and very profitable, but the technology market is about to get a shakeup, not dissimilar to what happened in the flower markets.
The creation and composition of technology assets, whether those assets are applications, databases, code or new media content, is emerging from the hands of specialists into the realm of a much broader set of providers.
technology taxonomy in
motion], it has to. Oracle loses a big
customer because it refuses to put up with fat
margins, exorbitant pricing and 20% support
fees and makes the switch to a little vendor
called MySQL. New online capabilities enable
Craigslist, where posting
classified ads is free of charge, to hasten
the demise of traditional newspaper classified
advertising. MySpace takes the need for people
to express themselves out of the hands of the
specialists.
New many-to-many market models arise and dramatically impact the old rules of the game. New content establishes micro-celebrities that drive the popularity of a free-market technology platform. The Pareto principle is dead (well, not really - its amplitude will change).
So, Web 2.0 is a platform strategy (rather than a proprietary stack) that enables many-to-many relationships between buyers and sellers of electronic assets. When transparency and integrity are key objectives in the creation of these marketplaces, Web2.0, with whatever technologies that represents, actually has a chance of becoming a buzzword we can speak fondly about.
Security 3.0: from after-market to security platform
04.21.06
Target Audience:
Corporate
By Georges van Hoegaerden
Internet security companies are the Jiffy Lubes of the auto industry, they require constant innovation to keep up with the changing product stack they attempt to optimize, but not own. Some companies achieve innovation through non-organic growth (Symantec), others build a set of urgently needed technologies that becomes bigger as customer requirements grow (Trend Micro, McAfee). But keeping up is a challenge, and I expect security companies and the stack owners to aggressively pursue acquisition strategies to round out and secure their own future. Stack owners (Microsoft, Oracle, IBM, Cisco) will become fierce competitors to security companies, if partnerships are not appropriate. Today's Security leaders need to change and look into new business strategies.
Looking at the security marketplace from a fresh perspective, I give the current marketplace a 1.2 grade on the following evolution scale.
Security 1.0: the internet is not secure by any stretch of the imagination, but neither is the conventional world. So, get over it. Security is also not an absolute science. Spam, Viruses, Exploits, Worms, Cross-site scripting etc. deliver a vast amount of opportunities to security companies that provide band-aids to the multitude and severity of security gaps. 83 Enterprise AntiSpam companies battle it out every day. Leaving it up to customers filled with fear, uncertainty and doubt to wade through a plethora of point products to select which one is best, and when. It's a jungle out there.
Security 2.0: a secure enterprise, shielded from some of the garbage on the internet, needs protection in the same way you secure your house. Depending on personal preferences that define the vigor and quality of security, securing the doors without securing the windows doesn't make a whole lot of sense. Security is really a risk management issue, a delicate balance in which no single piece of security, data type or communication channel prevails; the equilibrium of security techniques (AntiSpam, AntiVirus, AntiSpyware, Web Application Security etc.) needs to provides sufficient shelter and trust. Leading security companies need to move towards marketing that equilibrium and scope.
Security 3.0: while internal threats are becoming a force to be reckoned with, many security companies are developing a Security 2.0 strategy that incorporates content compliance and other technologies to protect company assets against the employees themselves. I believe security companies should focus on aggressively protecting against outside threats, yet stimulate and enable the internal exchange of information. Content compliance should be checked but not enforced. The integrity of your business lies in the hearts and minds of people, not technology. Moving on, Security 3.0 is a platform strategy consisting of a framework in which a multitude of vendors can provide plugins that separate threat detection from distribution. It will be a free-market in which the best technology will plug into a framework that allows this technology to be used on any type of information, in motion or at rest. I believe many stack owners and security behemoths will play a pivotal role in defining the key components of this security platform and new security specialists will define the new, and highly specialized, security threat detection capabilities.
Bottom line: plenty of acquisition opportunities continue to exist for emerging security companies as the incumbents and stack owners battle to own a large part of the security framework that is essential to instill trust with customers.
The size of after-market providers like Jiffy-Lube, AutoZone is larger than the market size of the car manufacturers, proving that after-markets will exist for quite some time. Security is still the after-market of the technology industry and I see no vendor changing that paradigm significantly today. New security vendors will continue to reap rewards and the incumbents will slowly move towards owning something they've never had, a technology (or platform) stack.
Internet security companies are the Jiffy Lubes of the auto industry, they require constant innovation to keep up with the changing product stack they attempt to optimize, but not own. Some companies achieve innovation through non-organic growth (Symantec), others build a set of urgently needed technologies that becomes bigger as customer requirements grow (Trend Micro, McAfee). But keeping up is a challenge, and I expect security companies and the stack owners to aggressively pursue acquisition strategies to round out and secure their own future. Stack owners (Microsoft, Oracle, IBM, Cisco) will become fierce competitors to security companies, if partnerships are not appropriate. Today's Security leaders need to change and look into new business strategies.
Looking at the security marketplace from a fresh perspective, I give the current marketplace a 1.2 grade on the following evolution scale.
Security 1.0: the internet is not secure by any stretch of the imagination, but neither is the conventional world. So, get over it. Security is also not an absolute science. Spam, Viruses, Exploits, Worms, Cross-site scripting etc. deliver a vast amount of opportunities to security companies that provide band-aids to the multitude and severity of security gaps. 83 Enterprise AntiSpam companies battle it out every day. Leaving it up to customers filled with fear, uncertainty and doubt to wade through a plethora of point products to select which one is best, and when. It's a jungle out there.
Security 2.0: a secure enterprise, shielded from some of the garbage on the internet, needs protection in the same way you secure your house. Depending on personal preferences that define the vigor and quality of security, securing the doors without securing the windows doesn't make a whole lot of sense. Security is really a risk management issue, a delicate balance in which no single piece of security, data type or communication channel prevails; the equilibrium of security techniques (AntiSpam, AntiVirus, AntiSpyware, Web Application Security etc.) needs to provides sufficient shelter and trust. Leading security companies need to move towards marketing that equilibrium and scope.
Security 3.0: while internal threats are becoming a force to be reckoned with, many security companies are developing a Security 2.0 strategy that incorporates content compliance and other technologies to protect company assets against the employees themselves. I believe security companies should focus on aggressively protecting against outside threats, yet stimulate and enable the internal exchange of information. Content compliance should be checked but not enforced. The integrity of your business lies in the hearts and minds of people, not technology. Moving on, Security 3.0 is a platform strategy consisting of a framework in which a multitude of vendors can provide plugins that separate threat detection from distribution. It will be a free-market in which the best technology will plug into a framework that allows this technology to be used on any type of information, in motion or at rest. I believe many stack owners and security behemoths will play a pivotal role in defining the key components of this security platform and new security specialists will define the new, and highly specialized, security threat detection capabilities.
Bottom line: plenty of acquisition opportunities continue to exist for emerging security companies as the incumbents and stack owners battle to own a large part of the security framework that is essential to instill trust with customers.
The size of after-market providers like Jiffy-Lube, AutoZone is larger than the market size of the car manufacturers, proving that after-markets will exist for quite some time. Security is still the after-market of the technology industry and I see no vendor changing that paradigm significantly today. New security vendors will continue to reap rewards and the incumbents will slowly move towards owning something they've never had, a technology (or platform) stack.
Blackberry needs a new industrial designer
04.17.06
Target Audience:
Corporate
Apple's latest Aperture software personifies how the technology industry fuels its own growth by creating new software that drives new incremental hardware requirements. Managing an increasing library of 16,000 photographs is what I do when I am not working or playing with my family. And when Apple's Aperture came out late last year, I jumped on the promise to manage those assets (or liabilities in some cases) more effectively. While I had the bottom-of-the-barrel of Aperture's hardware requirements, a not so shabby 1.5Ghz Powerbook, the expansion with 2Gbytes of memory and a 160Gbytes replacement hard-disk seemed a foregone conclusion. But not so fast, Aperture's performance that is. Even this configuration leaves you yearning for a large flat-panel, so the windows and photographs can be displayed in sizable fashion and with the clarity they deserve. An Intel Dual-Core wouldn't hurt either.
The bottom-line is, a two year old, top-of-the-line Powerbook is suddenly on its last leg. I can only wonder what upcoming updates of Microsoft Office, Adobe CS3, Dreamweaver and others will do to my geriatric Powerbook. Desktop software is still an important catalyst, fueling new hardware replacements in a slowing PC market. Software and services will live alongside each other for quite some time, in the interest of PC manufacturers and admittedly, end-users.
Tips for Aperture enthusiasts:
Two tips that will smooth a transition and took me two months to figure out: 1/ Remove all videos from the iPhoto library, Aperture will abort, in my case after 14 hours, if you don't. 2/ De-fragment your hard-drive after a successful import, or simply copy the main Aperture library to a backup disk, remove the original and copy it back. The Aperture import process fragments the library dramatically; I ended up with a Library of over 6,000 file fragments, absolutely killing performance.
The brains are in the service
04.10.06
Target Audience:
Macro
By Georges van Hoegaerden
Recently I was asked to think about how to improve the phone features and functionality in an ever commoditizing "Terminal market" (an Ericsson acronym). There is a lot at stake here; lots of people buying phones, 2.2B of them to be exact, not enough of them buying the associated internet service.
Improve the specs and make it look good is the easy answer to that question. That is, if you are building a phone not a PDA. In a PDA you can pull technology, services and memory into a bulky enclosure and rely on nerdocrats to buy them; not a large market. So how do you build a phone that is just as smart and fits in the enclosure of a RAZR? Or smaller? Research shows that people buy cool looking phones, rather than bulky ones stuffed with functionality.
The answer in my view is services. Just as the power of the iPod stems from the iTunes library on your desktop connected to the iTunes store, phones should become re-play devices to services provided on the backend. The phone should be an iPod geared towards managing and replaying service data; contacts, calendar items, music, news are pushed out to it automatically, pictures are taken, stored and uploaded automatically to your section of the "store", ready to be shared and, yes, sold. Enabling free market principles to the content distributed by these services, completes the value chain and drives growth of the platform, regardless of phone.
Phone manufacturers need to learn how to build a value chain, not just a phone. Business innovation is just getting started.
Recently I was asked to think about how to improve the phone features and functionality in an ever commoditizing "Terminal market" (an Ericsson acronym). There is a lot at stake here; lots of people buying phones, 2.2B of them to be exact, not enough of them buying the associated internet service.
Improve the specs and make it look good is the easy answer to that question. That is, if you are building a phone not a PDA. In a PDA you can pull technology, services and memory into a bulky enclosure and rely on nerdocrats to buy them; not a large market. So how do you build a phone that is just as smart and fits in the enclosure of a RAZR? Or smaller? Research shows that people buy cool looking phones, rather than bulky ones stuffed with functionality.
The answer in my view is services. Just as the power of the iPod stems from the iTunes library on your desktop connected to the iTunes store, phones should become re-play devices to services provided on the backend. The phone should be an iPod geared towards managing and replaying service data; contacts, calendar items, music, news are pushed out to it automatically, pictures are taken, stored and uploaded automatically to your section of the "store", ready to be shared and, yes, sold. Enabling free market principles to the content distributed by these services, completes the value chain and drives growth of the platform, regardless of phone.
Phone manufacturers need to learn how to build a value chain, not just a phone. Business innovation is just getting started.
