Thoughts on "Winning in a Network Era"

Tom Friedmans' Video on The Other Side of Outsourcing

2006-04-29T14:07:00.000-05:00

Like many, I found Tom Friedman's book The World is Flat interesting, timely and thought-provoking. From an educational point of view, I find his video to be useful to get students and managers who have never been to India (especially Bangalore) recently to understand the social impact of outsourcing. The video is avaiable here.

Google's Experimentation: Overcoming Competency Traps

2006-04-25T07:28:00.000-05:00

I had posted earlier about Google's ambidexterity. One of the key features of ambidexterity is a balanced focus on experimentation and execution. We know they are good at executing (llok at their recent performance figures!). We also know that they experiment with labs, they let each Googler allocate time on a 70-20-10 basis. Now, we also know that they do selective, strategic experimentation to continually enhance user experiences. This post on Google's blog provides a peek into their experimentation practices.

In other words: there's an important role for continuous experimentation as part of strategy formation and execution. Successful companies not only capitalize on their core competencies but also figure out a way to overcome competency traps through selective, strategic experimentation.

The broader management message: Don't just focus on your core competencies. Focus also on what you are doing to overcome competency traps.

Nike, Google, Yahoo and Adidas

2006-04-25T06:07:00.000-05:00

Continuing on my reflections on the link between Nike and Google with the launch of Joga community.

I saw this website that features Adidas and Google Earth. Clearly, Google wants to be linked to both Nike and Adidas (guess whose importance is higher in these relationships!).

It raises interesting issues for co-branded marketing in the network era. Specifically, how to navigate multiple seemingly contradicting links withintightly embedded networks with blurring distinctions among the roles of suppliers, partners, customers, competitors and complementors. What makes this more important is that the roles of companies change over time. A partner today may be a competitor tomorrow. A customer today may become a competitor tomorrow.

Corporate Blogging: Practices and Perspectives

2006-04-24T18:52:00.000-05:00

The blogging fever has caught on.
We are steadily seeing many Fortune 500 companies with blogs. Here's are two useful sites: (1) site. and (2) site. What I find frustrating is that I have not seen any good categorization of the different corporate blogs. When I discuss blogs with managers, they are invariably puzzled:

(1) why should we blog? or encourage blog? is it not just a fad?
(2) what should be the limits? what about SEC requirements? what about trade secrets etc.?
(3) Is it an alternative to public relations and news releases?
(4) What about possible contradictions?
etc. etc.

I say that blogging is NOT one thing to all firms for all purposes. I refer them to read Naked Conversations. The book provides a good overview and nice examples. But I have not seen a good typology or taxonomy to take this idea further. Now, you may be wondering why we need a taxonomy of corporate blogs. It's simple: Not all blogs are the same nor do they have the same function, focus or objective.

Some blogs reflect individual opinions of rank-and-file managers (e.g., Robert Scoble at Microsoft) or Mike Chambers at Macromedia while others reflect more senior managers responsible for specific functions or even top management (Bob Lutz of GM or Jonathan Schwartz of Sun). Some blogs are active communities inside companies (Microsoft Channel9 or Googlers' blogs). Some are product or business specific blogs (e.g., Google Enterprise blog) while others are focused on a particular theme such as mashups or TV entertainment across a wider community not limited to a single company.

There are strong feelings about blogging. Jonathan Schwartz of Sun remarked:

“We've moved from the information age to the participation age, and trust is the currency of the participation age. Companies need to speak with one voice and be authentic. Blogging allows you to speak out authentically on your own behalf, and in the long run people will recognize that. Do it consistently and they trust you.”

There seems to be some recent interest in showing the value of corporate blogging. Some are beginning to compare financial performance of the companies with blogs with those that do not have blogs to see if there are strong financial performance differences. I caution against such simplistic categorization of performance effects as management research is full of ill-conceived studies that sought to establish links between management actions and financial performance. Simple categorization such as bloggers versus non-bloggers mask many confounding effects; the results may be more of an artificat of the study design than anything more specific about blogging.

So, let us not swing for the fences trying to establish financial performance efefcts of corporate blogging right away. Let us instead develop a typology of blogs and link them to more intermediate performance effects as customer perception of trust and brand preferences and market share increases. Some blogs may have different goals than market share or customer trust and we should link those to appropriate constituencies as such.

I believe that it is more than a fad but we need to understand it in some detail. Just as not all e-commerce sites have the same business model logic, not all blogs are the same.

A typlogy of blogs with appropriate performance metrics for each type will go a longway.

Google in Real Estate?

2006-04-06T05:30:00.000-05:00

I am not surprised that Google will want to play in the real-estate space. Google Maps, Google Local are good logical building blocks. It looks like they are quietly moving into this space. I found this blog to be a useful peek into what Google is trying to do.

Apple-Intel Link and Boot camp: Choosing the OS on a Mac

2006-04-05T20:31:00.000-05:00

Lots of eyebrows were raised when Apple announced in June 2005 that it will use Intel chips. Today (April 5, 2006) Apple announced Boot Camp (which caught a lot of Apple Watchers off guard):

CUPERTINO, California—April 5, 2006—Apple® today introduced Boot Camp, public beta software that enables Intel-based Macs to run Windows XP. Available as a download beginning today, Boot Camp allows users with a Microsoft Windows XP installation disc to install Windows XP on an Intel-based Mac®, and once installation is complete, users can restart their computer to run either Mac OS® X or Windows XP. Boot Camp will be a feature in “Leopard,” Apple’s next major release of Mac OS X, that will be previewed at Apple’s Worldwide Developer Conference in August.

“Apple has no desire or plan to sell or support Windows, but many customers have expressed their interest to run Windows on Apple’s superior hardware now that we use Intel processors,” said Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing. “We think Boot Camp makes the Mac even more appealing to Windows users considering making the switch.”

Shaw Wu, an analyst commented that this could be major game changer:

We believe this is a big deal and potentially could be a significant game changer," Wu worte. The analyst said a key reason why Apple has not gotten more "switchers" is likely due to a lack of strong Windows compatibility, but now with Intel processors and chipsets, they are able to offer full compatibility with Windows XP on Mac.

"Additionally, with support for both EFI and BIOS for booting, Microsoft Vista will also be supported on a Mac," Wu added. "We view this as an incremental negative for HP, DELL and other PC makers as Apple will be able to garner additional PC market share."

What I found interestign was: (1) Apple has no desire ..to sell or support Windows.. (2) this boot camp feature will be incorporated into the next release. So, Apple is serious about making its hardware accessible for those running Windows.

As Walt Mossberg of the Wall Street Journal remarked on his column:

You can't run both operating systems at the same time. Switching between the two requires you to restart the Mac; the operating system you're not using is shut down. That makes switching a little slow, but it also means that each operating system runs like a separate computer, with full control of the hardware. This allows Windows to run at full speed and protects your Mac files from the effects of Windows viruses.

With Boot Camp, you could choose to run a Mac solely as a Windows machine, with good results. But Apple doesn't expect many people to do this. Instead, it assumes Boot Camp users will still use the Mac operating system and Mac software 90% of the time, switching into Windows mode only to run a few Windows programs. Some customers may never use Windows on their Macs, and just see Boot Camp as a sort of insurance policy that allows them to switch to the Mac without fear that they'd lose future access to Windows programs.

First Apple made itunes work on Mac and PC. Then, it switched to Intel chips. and Now, it offers Boot Camp and lets the consumer choose which OS to run. Macbookpro may become attractive for many users, I think--especially those that never considered giving up their Windows operating system. Well.. as long as viruses do not multiply or worm their way from the Windows to the OSX partition!

Apple shares surged about 10% on this news.

The big question is: Will Bob Scoble of Microsoft buy a Macbookpro?

The bigger question is: Will Apple let third-party hardware vendors such as Dell, HP, Sony to offer both Windows and OSX or will it keep that closed?

Learning from Soccer: 'Official' verus 'Unofficial' Partnerships

2006-04-05T19:54:00.000-05:00

The Worldcup Soccer frenzy is bringing a new dimension to the theme of partnerships. We all know there are 'official' sponsors that pay literally millions of dollars to promote and be associated with big sports events such as Olympics and Soccer.

So, what does the World Cup 2006 bring? Well for a start: The FIFA World Cup official website is sponsored by Yahoo. I do not how much they paid for the sponsorship but I imagine it is significant. The official footwear sponsor is Adidas (not surprising since the event is held in Germany!). You can even personalize the wesbite by 'selecting your favorite team.' Yahoo has also created a toolbar for Internet Explorer. And needless to say: you can get live updates on your mobile phone.

So, what makes this interesting from a partnership point of view? It's not the official list of sponsors, which is impressive (Gillette, Coca-Cola, Deutsche Telekom, Master Card, McDonald's and others). It is how the non-sponsors are jockeying to create websites to allow the fans to create experiences that take advantages of some of the new functionality of web 2.0. Look at what Nike and Google are creating with Joga. The website indicates:

"Joga is a place to meet other soccer players, share your own soccer experiences and enjoy photos and videos from around the world."

Joga is an online community created by Google and Nike for anyone anywhere in the world who shares a love for soccer, the world's most popular sport. Joga is about getting to know your fellow fans; creating games and clubs; accessing athletes from Nike; and enjoying video clips and photos (you can even upload your own). You can strengthen existing friendships and begin new ones, join a wide variety of professional athletes and soccer communities, and even create your own to discuss soccer, exchange tips on the coolest moves, browse through various pitches worldwide, and plan your next game.

But most of all, Joga is about "Joga Bonito" -- Portuguese for "play beautiful." Are you ready to start down the path of soccer bliss? Join us, and show the world what playing beautiful means to you

It's worth watching how much fans embrace the unofficial Joga site (by uploading content and creating social network connections with other fans with the same favorite team or opposing teams) as opposed to the official FIFA Site. If fans indeed embrace Joga, will Nike stop spending millions of dollars on sponsored advertising and develop new robust advertising models linked to Google?

This is clearly a contest between Adidas and Nike for capturing the mind of the soccer fans for their products (footwear and clothes). It is equally a contest between Google and Yahoo.

Beyond soccer, it is a contest between official sponsorship and unofficial sponsorship--both aimed at co-opting the fans in co-creating the content and delivering a personalized online experience on the network using multiple channels.

Sun: Network is the Computer

2006-03-26T09:17:00.000-05:00

on-demand computing: Sun's take on it.

Network as the Locus of Innovation

2006-03-26T07:38:00.000-05:00

One of the big challenges of the network era is to understand the locus of innovation. It's no longer inside corporate hierarchy. It's in the network through a complex network of relationships. And this is where new models of innovation are emerging.

An article in today's NY Times illustrates how companies are innovating by tapping into the collective IQ and expertise of people. The new source of value creation is economies of expertise. This included product knowledge, process knowledge and service knowledge. More importantly, it's about reuse of knowledge with high leverage.

Some of the experiments underway today in the world include:

1. Rite-Solutions. The NY Times article illustrates their ide well..

At Rite-Solutions, the architecture of participation is both businesslike and
playful. Fifty-five stocks are listed on the company's internal market, which is
called Mutual Fun. Each stock comes with a detailed description — called an
expect-us, as opposed to a prospectus — and begins trading at a price of $10.
Every employee gets $10,000 in "opinion money" to allocate among the offerings,
and employees signal their enthusiasm by investing in a stock and, better yet,
volunteering to work on the project. Volunteers share in the proceeds, in the
form of real money, if the stock becomes a product or delivers savings

2. InnoCentive. This is a web-based community matching top scientists to relevant R&D challenges facing leading companies from around the globe. It also has an online forum enabling major companies to reward scientific innovation through financial incentives. It matches solution seekers with problem solvers.

I will post other examples here later as I try to develop a typology of locus of innovation in networks.

Microsoft Origami

2006-03-25T13:08:00.000-05:00

Here is a preview of what the product looks like in use. Th evideo in that link is a good illustration of the use.

this is another example of blurring boundaries across devices, functionality, size, operating systems, portability, applications. etc.

Will this be the next ipod? or is it enterprise-focused? May be hospitals, retail stores, shopping buddy in supermarkets... Worth watching when the products hit the market later...

Google Local (with Ads as an Experiment)

2006-03-25T12:55:00.000-05:00

Selective Ads on Google Local as one would expect..
how long before we see it on Google Mobile?? Reinforces my point about the dynamics of ambidexterity.

As Shimon Sandler says in his blog:

Wanna see it? Go to Google Local and
type in the search box, “booksellers
nyc”. You should see a little coffee cup in addition to the little red
ballons. Click on the coffee cup, and an ad appears for Barnes & Noble with their logo,
hyperlink, street location, and phone number. Sweet, huh?

Adobe: An example where blogging helps (but is it clear cut?)

2006-03-25T09:34:00.000-05:00

People often ask me: "when does blogging from a company help customers?" There are many different instances--most often to quell rumors.

I have always felt that direct blogs by engineers working on a project always help so that the customers know about the product and services. Here is a very good example of what Adobe is saying about their products that run on Apple with the Intel microprocessor.

Notice the legal disclaimer on the blog: [The views expressed in this blog are my own and do not necessarily reflect the views of Adobe Systems Incorporated.]

Has Adobe publicly commented on this? What if the blog contradicts it? Will it affect Adobe stock movement? Those are thorny and messy issues.

We are in the early days of blogging as streams of conversations in the dynamic marketplace.

Emergent Ecosystems for Next Generation Business Innovations

2006-03-25T07:13:00.000-05:00

My colleage Bala Iyer and I have been working on the concept of emergent ecosystems as a central concept to understand the network era. Our ideas are that:

1. Business requirements in the industrial era led companies to form ecosystems through alliances and partnerships through formal mechanisms (minoroty equity investments; joint ventures, joing marketing, joint R&D and so on). These resulted in designed ecosystems as different companies formed their set of linkages over time. Iansiti and Levin's book on the Keystone Advantage is a good reference. Business and academic publications have long focused on such ecosystems as ways to understand how companies create new capabilities and capture new sources of value. Researchers have used ex-ante assessments of how such designed ecosystems could create value through the lens of stock market reactions to the formation of joint ventures (see my work published in 1991 as an example).

2. Web 2.0 (especially mash-ups) creates possibilities that complement those formal relationships. And Web 2.0 is becoming real through creative efforts of many that are creating new and varied functionality. Links are formed as third parties innovate using data and applications from others to create new functionality. Bala Iyer's blog has pictorial representation of such mashups based on data assembled in the programmableweb site. These mashups create not designed ecosystems (through formal agreements between two or more companies) but emergent ecosystems through creative repurposing of data and applications. We need new lenses to understand the formation of such ecosystems as well as assessments of their value and impact. My colleagues and I are working on different ways to represent the dynamics of emergent ecosystems as well as assessing their impacts.

3. It is easy to dismiss many mashups as fun, playful creations devoid of any future business value (see a recent NY Times Article on how different venture capitalists are betting on this trend). More important: we need to understand the potential role of such mashups in creating new business innovations. What do sites such as housingmaps and zillow do to change the business landscape of real-estate? We need to understand their potential roles: Do they eliminate friction and ease commerce on the web as ebay did? Do they create one-stop shopping as Amazon did? and so on. In other words: not all mashups are the same (jus as not all websites are the same!). Richard MacManus offers a classification of Mashup business models; it is a good start. What we are trying to do is to come up with a classification that is based on the rigors of taxonomies reflecting underlying dimensions such that the models are mutually exclusive and collectively exhaustive (at least for now). More important: web 2.0 does not seem to have the frenzy of get-rich-quick through flipping companies through IPOs. Chris Anderson of the Wired Magazine gives his reasons why this boom is different.

Experimentation has just started.

4. It is clear that some companies such as Amazon, eBay, Yahoo, Google and Microsoft have started along the path of trying to understand how mashups enhance (and potentially destroy) their current offerings. Amazon seems to be building up the basic infrastructure to migrate their business model from e-commerce through books to something much broader and deeper. I find Microsoft's moves in this area interesting as they have so much to lose if they do not migrate their business models away from the physical world offerings. Track what these companies are doing to let the innovation community build creative, useful business models.

Mashups are more than creations in technology playpens. They could unleash emergent ecosystems that may shape how we craft successful strategies using the functionality of web 2.0.

Google's Talent Grab

2006-02-27T09:41:00.000-05:00

In the global, networked knowledge economy, talent is king. A lead indicator of business success is the concentration of talent: look back at Microsoft in the early 1990s. Look at the migration to silicon valley during the dotcom boom.

Now it is Google's turn: Looks like they have been steadily hiring an eclectic set of expertise--signaling the pervasive and expansive view of search on the network. It is a lead indicator of the range of experimentation that could be pursued by Google in the coming years. It fits in with their 70-20-10 way (allocation of time) for overcoming competency traps and complacency. It fits in with my earlier post on Google's ambidexterity.

Losing customers and market share is a lag indicator; Attracting critical experts is a lead indicator.

Microsoft's Strategy Evolution: Platform or Applications?

2006-02-18T10:14:00.000-05:00

When Microsoft starts offering software as services, will they still pursue a platform strategy?

The following are worthy of keeping in mind:

Office Live goes live today! by ZDNet's Richard MacManus -- Microsoft's
web-based office product, called Office Live, is being released in beta today.
Office Live will integrate with existing Microsoft Office products Jupiter
analyst Joe Wilcox has the early word on the release. He firstly points out that
Office Live is in no way "a hosted version of Microsoft Office". That's true,
but [...]

Office Live: Application suite or platform? by
ZDNet's Dion Hinchcliffe -- Fellow
ZDNet's blogger Richard MacManus wrote today about the release of Microsoft's
Office Live into beta. A lot of people have been tracking this development
because it seems to herald Microsoft's burgeoning seriousness about offering
versions of its core products as hosted online services. The feeling being that
if Microsoft puts its considerable muscle behind online business software, they
just might be able to dominate this space as well. But of course, the biggest
news about Office Live is that it isn't a port of its famed productivity suite
to the online world.

In a network era, third-party support is more important than ever before. So, I hope Microsoft continues to embrace its platform logic. Not abandon it.

Will Amazon's Move Change the Music Landscape?

2006-02-16T13:22:00.000-05:00

What's Amazon trying to do in music? Create a platform like Microsoft's Play For Sure? I doubt it. It looks like Amazon can leverage many things.

One is its brand: Amazon-branded mp3 players may stand out in an otherwise crowded consumer electronic marketplace but will selling itw own-branded mp3 player limit its ability to sell other branded digital music players? Will Apple stop selling ipod through Amazon? is the risk worth it?

Two: it is clear that Amazon wants to leverage its customer base: sure, it has gone beyond books but what proporition of its customers buy more than one category? two categories? more than two categories? More important is that it is seeking a subscription-based revenue model to compete against Apple and Yahoo. Time will tell if the subscription model takes off and who wins in that space.

Three: Amazon's success will depend on its ability to strike deals with music labels. It appears that it is in discussions with the following: Vivendi Universal SA's Universal Music Group; Sony BMG, a joint venture of Sony Corp. and Bertelsmann AG; Warner Music Group Corp.; and EMI Group PLC. If it can garner critical music content, customers may take it seriously.

Amazon knows how to orchestrate the interplay between direct and indirect network effects in physical e-commerce. So, I will not bet against Amazon. will it succeed in the digital space? The critical signs will be the nature and scope of relationships with the music labels. Worth watching for.

Wall Street Journal's observations about Amazon's foray into digital music are worth reading.

Among the manufacturers Amazon has mentioned as likely partners for a subsidized hardware offering is Samsung Electronics Co., whose flair for stylish design is raising hopes among music executives that the initiative could create a strong alternative to iPod. A representative at Samsung's headquarters in Seoul, South Korea, couldn't be reached for comment.

Amazon would face the same challenges as other music-player makers: buying enough flash memory to store content on small music-player devices and securing music content, says Mr. Crotty of iSuppli. Apple has tried to lock up available flash memory for its smallest music devices.

Amazon has been busy building technology for digital downloads. Amazon says it has hired 3,000 people companywide, including many software-development engineers who presumably are working on digital content initiatives, over the past year. That is more than Google and Yahoo, which hired 2,659 and 2,185 people companywide, respectively, last year.

The digital-music plan is one of several initiatives Amazon has been exploring to offer its content and products in digital form. Most recently, the company announced it will begin broadcasting a weekly Internet show featuring comedian Bill Maher and guests from the worlds of books, music and film.

A couple of key ways Amazon hopes to set itself apart would involve a subscription service, in which users pay a flat monthly fee for access to an unlimited amount of music. Subscription services, like those by Napster Inc. and RealNetworks Inc. are typically more profitable for recorded-music companies than "a la carte" download stores like iTunes, which doesn't include a subscription option. However, their subscriber bases of 500,000 to 600,000 are tiny compared with Amazon's 55 million customer accounts.

Amazon has discussed offering subscribers digital-music players that come preloaded with tunes suggested by the online retailer, based on factors such as the subscriber's personal CD-buying history on the site. The preloaded music could be kept on the player as long as the customer pays the monthly fee, but could also be swapped out for other songs during the course of the subscription.

Another likely feature: the portable players would be free or very cheap with a long-term subscription -- say, a year -- similar to the way cellphone providers subsidize the cost of new handsets when customers commit to service agreements. It's possible Amazon would price the subscriptions close to what competitors typically charge -- about $15 a month -- and has said it may offer discounted CDs to subscribers.

Existing subscription services have been hampered in part by the fact that none of them are compatible with the market-dominating iPod, which sold 14 million units in the fourth quarter of last year. In a recent conference call with Wall Street analysts, Warner Music Chairman Edgar Bronfman Jr. said subscription services' "growth and popularity has been impacted by the lack of an outstanding device."

In general, competition is good for consumers. What's clear is that we are far from robust business models and stable competitive interactions in the music network.

Shopping Phone--Instant Reviews at the Moment of Purchase

2006-02-16T12:07:00.000-05:00

I like the idea as it makes consumers have relevant information at the moment of purchase.

Toshiba Corp., a Japanese electronics company that makes DVD players, laptops and nuclear power plants, has developed mobile-phone technology that searches for product reviews on up to 100 Web journals, or blogs, in 10 seconds.

Just use the phone's digital camera to snap a photo of the bar code of a product you're thinking about buying.

The technology can decipher if the blog chatter is positive or negative and tallies the count to show if a product is getting rave reviews or being trashed by consumers. That's useful if you're in a store about to buy an item.

Some of the more frequently visited blogs will also show up on the screen.

The bar-code information is sent wirelessly to a Toshiba server, which gathers data on blogs from the Internet and analyzes them, and then sends a reply back to the cell phone.

Toshiba expects to have information on thousands of products covering just about anything you might buy at a store -- from toys to electronic gadgets to food.

Toshiba plans to test the software at Japanese stores next month and hopes to offer it as a service on cell phones before April 2007, although details aren't decided.

Blog searches and bar codes that link to Web pages are already available on personal computers and portable devices, but Toshiba officials say their technology is convenient for shopping because it's for cell phones and carries out real-time blog searches from bar-codes.

The question in my mind is: should Toshiba hold the data or partner with Yahoo, Google, Microsoft and others (perhaps AC Nielsen) and concentrate on what they do best--make the technology (devices and the software). What they need to do is to recognize the dynamic vibrant ecosystem and figure out their specific role in it. Perhaps they may refine their strategy after the tests in the Japanese stores in 2007.

Lessons from Google's Playbook

2006-02-16T10:36:00.000-05:00

Lessons From Google’s Playbook
N. Venkatraman
Version: February 15, 2006

Just as 1995 may now be marked as the Year of Microsoft with its launch of Windows95, history may one day in the future mark 2005 as the Year of Google. Over the last decade, much has happened, including the euphoric rise and crash of dotcom companies and the growing number of software developed by open source community embracing Linux. At the same time, the World Wide Web has evolved from simple static web pages to dynamic, personalized read-write web sites (loosely termed as web 2.0) that serve as backbone to a global, connected network infrastructure. Google’s capitalization has skyrocketed from its IPO levels in August 2004, while Microsoft’s capitalization has barely budged since 2000. The obvious question is: just as Microsoft dictated competitive moves in the post-IBM (hardware) era, are we now in a post-Microsoft (software) era with Google dictating and shaping key moves? If so, what can we learn from Google’s actions and moves thus far?

At a first glance, it may appear that Microsoft is in software while Google is a search engine; they should be seen as complements in separate but related areas, not as competitors. However, such industry compartmentalization—a central characteristic of the industrial era to demarcate distinct industries based on differences in products and markets served—misses the broader convergence underway now. Information and communication technologies are restructuring industries by blurring the lines between competitive activities in areas that historically were distinct. As Fortune noted in an April 18, 2005 article: “In December 2003, Bill Gates was poking around the Google company website and came across a help-wanted page with descriptions of all the open jobs at Google. Why, he wondered, were the qualifications for so many of them identical to Microsoft job specs? Google was a web search business, yet here on the screen were postings for engineers with backgrounds that had nothing to do with search and everything to do with Microsoft's core business—people trained in things like operating-system design, compiler optimization, and distributed-systems architecture.”

Additionally, many managers may initially look at Google as not being directly in their business space: comments such as “I am in manufacturing or in healthcare, and Google is not directly relevant for my strategy and operations,” are often heard. However, some of the lessons we derive by analyzing Google have broad relevance and applicability. Lessons from Google’s playbook are worthy of consideration by managers in most business sectors.

Shifting Cash Registers: From Product Platform to Service Platform
Microsoft’s spectacular success in the 1990s is based on architecting two product platforms: Windows Operating Systems for the personal computer and the Office suite of productivity tools. We can now look at how well Microsoft managed two interconnected network effects: the direct network effects based on the increasing number of end users for both product platforms, and the indirect network effects through the ecosystem of independent software developers creating software applications for both platforms. This cycle of greater end-consumer acceptance of the platforms, coupled with more applications available for the two product platforms, conferred Microsoft with insurmountable applications-barriers-to-entry. Competing platforms (Apple OS, Sun Solaris, IBM OS and others) with relatively low end-user penetration could not garner enough attention from the developer community to mount a viable attack against Microsoft. This cycle of interconnected direct and indirect network effects helped Microsoft to achieve impressive profit levels and market capitalization in the 1990s.

Google’s success thus far is also one of architecting a platform, but it is different from product platforms with complementary modules. Based on search, Google’s service platform is at the core of how consumers use the evolving functionality of the web, or more specifically how consumers live, work and play in the network era. As a service platform, Google still exploits the interconnected network effects: direct network effects of users employing Google to access the multi-billion pages indexed by Google’s search engine and the indirect network effects of companies advertising their services linked to specific search.
Microsoft’s revenue stream from its two product platforms is under attack from not only open source software (Linux) but also from the recent trend to deliver software-as-services. Microsoft’s direct revenue model, based on software license fee per user (seat), is challenged by the recent trend towards an indirect revenue model that is based on advertising revenue linked to search-enabled transactions. The danger that Bill Gates foresaw when he perused the list of open jobs on Google’s web pages was that a service platform could marginalize product platform. After all, Microsoft previously rode the wave of value shift from hardware to software with the introduction of the microprocessor and capitalized on Moore’s Law (faster-cheaper computers). It seems that Google is now seeking to capitalize on Metcalf’s law (the value of connections).

In November 2005, two Microsoft memos —one from Bill Gates and another from Ray Ozzie, CTO of Microsoft—communicated the urgency with which Microsoft should focus on the service platform logic. Those memos hint at the fact that Google (along with Yahoo, Amazon, eBay, Salesforce.com and others) are jockeying to control the cash register on the network in ways that could commoditize Microsoft’s product platforms and their established sources of revenue and profit margins. It appears that Google is directly attacking the business models that have helped Microsoft be a dominant force in the last two decades of the 20th century.

Google’s Four Vectors of Ambidexterity
A central thesis in strategy and leadership is that sustained success involves continually balancing exploration of new avenues while exploiting current opportunities and operations. Excessive focus on current operations traps companies into maximizing today’s opportunities today while failing to see the imminent discontinuous changes. Successful companies find mechanisms to overcome ‘competency traps’ or ‘learning myopia’ and adapt to shifts in business models.

Several management scholars have argued for the need for organizational structures that overcome competency traps: Michael Tushman and David Nadler coined the term ‘ambidextrous organization’ to bring attention to the design of structures to achieve ambidexterity; Clay Christensen and his colleagues refined these ideas further in their solutions kit to respond to disruptive technologies. To develop this idea further, ambidexterity can be viewed beyond organizational structure; it should also be seen through vectors of resource allocations to overcome learning myopia and competency traps.

In this article, I develop an operational framework of ambidexterity using Google as a case in point. Figure 1 is a two-dimensional representation of the key tensions of ambidexterity. The vertical axis is the experimentation—execution tension: how much of our scarce resources are allocated to explore new avenues relative to exploitation of current operations. The horizontal axis is the newer tension of internal control versus network-enablement: what activities should we carry out internally and what should we jointly pursue with partners or enable in the network through specific service offering. It is more than make-versus-buy decisions that define current business operations, but relationships that create complementary competencies for shaping new business models. Given pervasive interconnections among products, processes and services, this tension is central in the network era. A company’s success is intricately connected with the role of partnerships in the dynamic ecosystem.

These two dimensions accommodate the inherent tensions to be managed in order to create and capture value in the network era. Four vectors exist in this framework, each with its own domain of opportunity and strategic approaches. Unlike other two-by-two business matrices that specify decision makers to select one ‘magic quadrant,’ this framework highlights the full gamut of opportunities and actions. The management challenge is not selecting one vector; it’s about playing in all the four quadrants, as well as dynamically balancing the four vectors to win in the short-term, while positioning to win in the long-term.
I use Google’s recent actions to illustrate how these four vectors taken together create a compelling framework to win in the network era. However, the framework has larger implications and applicability beyond Google: it is relevant as a playbook for most corporations that find themselves crafting their strategies to recognize the ever-changing power and functionality of the Internet.

Vector 1 (Internal Execution)
Most know and recognize Google’s core offering: AdWords that appear when a search is carried out on Google (www.google.com). Google AdWords ads connect users to specific companies at the precise moment when they are looking for a product or services. The advertisers create their own advertisements and choose keywords to match ads to target audience; furthermore, they pay only when someone clicks on these ads. Google’s tagline “It’s all about results” shifted the focus away from monetizing eyeballs of visitors to clicks based on searches. Google leads in online advertising with a commanding market share of 46%, compared to 22.5% for Yahoo and 12.6% for MSN (based on Nielsen’s Net ratings, July 2005). Placed on the side of their webpage, AdWords displaying the results of a search are becoming as ubiquitous as advertisements placed in prominent places on the newspaper and magazine pages. Google’s revenue from AdWords was $2.28 billion for the nine-months ending September 2005 (compared to $1.05 billion for the same nine-month period in 2004). Besides the Google.com webpage, AdWords are also placed on Google Local and GMail messages, based on the content of messages using the same search algorithm. Despite initial controversy, GMail is steadily being accepted and embraced by users.

Internal execution of online advertising through AdWords is what has made Google successful so far. However, competition is gaining. Yahoo is a fierce competitor in this arena. Microsoft, having missed reading the signs of search-rendered-advertising, is fast catching up with its AdCenter. In order to stay ahead of competition, Google has acquired dMarc Broadcasting to extend the scope of Adwords to radio broadcasting.

Besides AdWords, Google is also in the midst of delivering Google desktop, Google Toolbar and Google Pack (a collection of software applications including Google Earth, Picasa, Screensaver, desktop and Google Toolbar for Internet Explorer). These are bold initiatives that directly challenge software product companies such as Microsoft and Adobe (Google’s Picasa challenging Adobe Photoshop Elements). These 'free' tools are complemented by revenue-earning tools based on Google Earth that can be used by managers in a variety of industries to enhance their operations (http://earth.google.com/industries.html).

Vector 2 (External Execution)
What makes Google different from its competitors is their early recognition of the need to go beyond their own website to influence search throughout the network. If Google were earning its revenue from advertisements only on its website, it would be just another passive portal (perhaps with a superior search algorithm). This vector highlights the complementary approach of capturing advertising revenue from search on partner websites. Google’s AdSense program distributes the advertisements for display on the web sites of Google Network—which include AOL, Netscape, EarthLink, AskJeeves as well as content providers like The New York Times, Wired, Business Week and blogs.

Going beyond internal execution, AdSense is an effective way to leverage the power of the partner network in order to maximize advertising revenue through its search service platform. Google’s AdSense allows websites to display relevant ads on their website's content pages and earn additional revenue—which they could not do without Google’s search platform. Customization of advertisements based on the content on a site enhances the likelihood that visitors would click through and thereby allow the site owners to earn revenue.

‘Ads by Google’ on web pages is becoming the network-era equivalent of ‘Intel Inside’ in the personal computer era. It has been financially successful for Google: for the nine months ended September 30, 2005, it earned $1.89 billion (compared to $1.06 billion for the comparative period a year ago). More impressive is the fact that this amount is nearly as much as what Google earns on its website with its AdWords ($2.27 billion). It is clear that AdSense and AdWords are two equally balanced complementary services that together define Google’s role in monetizing search today.

In addition, Google is making enterprise solutions available for companies to manage their internal information explosition. Google Search Appliance today has the capability to search 15 million documents, and it has the potential to make Google a dominant search engine inside many enterprises.

Vector 3 (Internal Experimentation)
The third vector recognizes internal experimentation initiatives. Since one should not extrapolate from the past to the future, innovation is critical for future success. Most companies explore new avenues, often extending their existing products into new markets or launching new products for their current customers. The problem often is not in the recognition of this vector, but on the relative emphasis given to experimentation versus execution—since scarce resources are often redirected from focus on creating new avenues for success to fix current operational crises.

We can array how companies stack up on their internal experimentation vector by one of two indices— input (e.g., R&D budget) or outputs (e.g., patents or new product launches). Google is in the midst of creating a culture of experimentation to ensure that the resource allocation to innovations result in successful services. Two mechanisms stand out: one is tracking how Googlers spend their time (approximately 30% of the time should be directed at extensions and innovations); the other is to involve customers who consider themselves lead users and enthusiasts in the product development and refinement. Taking a page out of the enthusiasm of the user community seen in the open source innovation movement, Google has been able to get rapid feedback from the user and developer community before launching its services. Google Labs and associated blogs provide a peek into the innovation playground where business ideas take shape. It’s early peek into the ideas that Googlers are working on; it’s also a systematic way for Google to get early feedback from passionate users tinkering with beta versions and providing continuous feedback.

Some of these experiments now in beta have the potential to fundamentally disrupt business models. Google News, which aggregates news stories from 4,500 global sources using computer algorithms bypassing human editors and updated every 15 minutes, is one example. A link allows the reader to go to the originator of the news story. Individuals can customize Google News by rearranging sections (thanks to the use of AJAX technology, ironically developed by Microsoft), and the headlines are delivered based on Google’s continuous analysis of click streams (personalized search within Google). By allowing Google Personalized newspaper and associated links to be shared with friends, this experiment is also tapping into the social network trend underway. Google News, currently in beta version (with no advertisements), could prove to be a major business challenge to news organizations like Reuters, New York Times, CNN (Time Warner) and Financial Times.

Vector 4 (External Experimentation)
The importance of this vector is based on the premise that robust business models in the network era are created using a portfolio of relationships. New business models are co-created with partner companies that bring complementary capabilities; thus, effective experimentation is not limited to what can be done inside one’s organizational boundaries.
External experimentation through ecosystems can be seen as a dynamic interplay between designed and emergent ecosystems. Designed ecosystems are best exemplified by Microsoft’s success with Windows with its core set of partners: Intel (microprocessors), Dell and Compaq (hardware), H-P (hardware and peripherals) and Accenture (system integration). This ecosystem enabled Microsoft to dominate in software as the computer industry shifted from vertical integration to horizontal layers of distinct capabilities (see David Moschella’s article in a previous issue of the Journal.)

Google is in the midst of designing its own service ecosystem with key partners: an alliance with Sun Microsystems for downloads of Star Office, a 5% equity stake in AOL, Google-Intel link for video downloads on the Viiv drive, relationships with Deutsche Telekom, Motorola and RIM (Blackberry) for aligning search in mobile phones .

At the same time, network era connections are emergent as companies use the available API interfaces to overlay data from different sources to create new services. These relationships are not formally structured but are triggered by the availability of API interfaces that make interconnection of services possible. Google Modules (www.googlemodules.com) are not official Google offerings but are software applications that allow end users to have a personalized Google web page. Google Video (http://video.google.com/) is an experiment to involve individuals and companies (e.g. CBS and Getty Images) to upload content that could be watched by others or downloaded for a fee: this has the potential to transform the media and entertainment industry from bundled offerings to pay-per-view of specific modules of entertainment.

More importantly, Google (along with Amazon and Yahoo) have opened up their APIs to allow third parties to create innovative mash-ups that could prove to be attractive business models in specific niches. Housing Maps is a prototypical mashup (http://www.housingmaps.com): Google Maps + Craigslist to create a visual housing search page via dynamic overlays of Craigslist home listings on Google Maps. Another popular mash-up is Chicagocrime.org (http://www.chicagocrime.org), a representation of crimes reported in Chicago overlaid onto Google Maps. Just as web pages proliferated in the early days of the WWW, without robust revenue or profit models, mash-ups are now burgeoning without coherent articulation of appropriation of value (www.programmableweb.com). However, these emergent connections have the potential to define a critical building block of service innovations in the network era.

Dynamics of Four Vectors
Metaphorically, ambidexterity is about balancing competing pull. These pulls are not static since the requisite set of winning competencies change: today’s core competence becomes tomorrow’s competitive parity, and new avenues of exploration become standard avenues for execution tomorrow. The focus is more than product innovations and extensions; it’s about business model innovations and adaptation of revenue and profit models.

Thus the activities in the vectors are not static. What appears in one quadrant at a point in time will move to another quadrant in the next time period due to competitive moves and reallocation of priorities. For example, Google Maps, Google Scholar, Google Desktop and Personalized Google Home pages have all evolved from beta versions in the lab to full-fledged offerings. However, the revenue and profit models are not firmed up since they do not support Google Ads yet. Similarly, Google is experimenting with direct payment for content (see Google Videos) to complement its core ad-based revenue models. The dynamic logic of ambidexterity is key for effective navigation in the network era. Google embodies the inherent dynamics of experimentation—execution cycle; it is also balancing internal activities with initiatives with a network of partners to make its search engine into an advertising engine with the power to be a central hub in global transactions.

Six Lessons from Google’s Playbook

What can we learn from Google’s playbook as played out thus far? Six lessons appear useful.

One: Are services threatening revenues (and margins) from your products?
The Microsoft—Google scuffle is really a battle of business models where revenue from products and services directly compete against each other. There appears to be a larger general trend where value is migrating from products to services: namely, closer to the point of consumption. IBM’s shift in emphasis over the last decade is another example of the broader shift in value away from points of production to points of use and consumption. This battle is not limited to software-enabled services; rather, it has implications for other sectors as well in manufacturing, logistics, healthcare and pharmaceuticals. It’s also timely to assess if one’s revenue sources from products could be bundled by someone else as part of a more comprehensive service offering.

The first lesson is: assess the breakdown of revenue and profit margin between products and services from an end-customer point of view. Are you participating in the value shift or are you losing out? Do not let your historical focus on products prevent you from thinking about services that are wrapped around your products.

Two: Are your occupying value hubs in networks as positions of strategic advantage?
The new business landscape for most industries is digital, global and connected. I have argued before that the business landscape is at the confluence of three powerful laws: Moore’s Law, which specifies price-performance trends in computing power; Metcalf’s Law, about the value of connectivity, and Bandwidth Law, which specifies steady increase in the speed of connectivity to the network (now growing at 50% each year). This new global infrastructure is created by faster and cheaper computing power, widespread connectivity and enhanced bandwidth creates new value hubs. Seeking to occupy a central value hub in the information network, Google is straddling traditional industries such as media and entertainment; publishing; advertising and mobile telecommunications, just to name a few. Additionally, many others— most notably, Microsoft, Yahoo, Amazon, eBay and Apple— are jockeying to position as value hubs in the network as well.
Today, the impact of these laws may appear to be limited to high-tech and information-intensive sectors. However, the inevitable trend is that the global digital network is the business infrastructure on which value will be created, consumed and captured. More companies find themselves recognizing the pervasive power of the network that is altering the competitive landscape. The second lesson is: strategically identify how to occupy an emerging value hub that is likely to be the new drivers of value in the network era.

Three: Are you fully capitalizing connections as core currencies?
The link from core competencies to profitability may be apparent in the industrial era, but it is far more complex in the network era. A major reason for the dotcom boom-n-bust is due to lack of clarity of core currencies that resulted in sustained profitability. In other words: where should companies place ‘cash registers’ in complex interconnected business models? Through its superior search algorithms, Google has created new currencies based on connections: the paths that individual consumers traverse on the network are linked to specific set of search words that advertisers could use to position their products and services. Both AdWords and AdSense are masterstrokes to monetize search-related queries. The network era seems to offer other ways to monetize connections: Amazon with its recommender system is based on linkages uncovered in purchase preference data; eBay with its success based on establishing connections with global buyers and sellers that initially fell outside the domain of mainstream commerce; Apple’s genius in monetizing the connections between music content providers and end users through itunes—which is fast approaching a billion downloads (read: connections). The myriad social networking initiatives (MySpace.com, Flickr, LinkedIn, Yahoo/360, Facebook and others) are seeking to create robust business models based on connections. Seeking to capitalize on the recent trend in mash-ups, The Washington Post hired Adrian Holovaty, creator of Chicagocrime.org mash-up, to explore how it can create currencies out of the news feed from Washington Post content.
The third lesson is: evaluate the potential of network connections as new currencies of value creation as your business embraces the network-era.

Four: Are you creating value potential through experimentation inside and with partners outside?
One cannot and should not extrapolate the future from the past. Companies often fail because they continue to refine business rules long after these rules have outlived their use and validity. Strategies are more than incremental adjustments of resource allocation patterns; they call for systematic experimentation to explore future business models. Beyond advertising, Google is exploring new avenues of revenue and profits, both inside their labs (labs.google.com) and through selected external relationships with companies such as AOL, Intel, Motorola and Research in Motion (makers of Blackberry). Moreove r, experimentation is underway to create robust revenue models using data made available through APIs from Google (and others). The Google print initiative with publishers to digitize printed books, despite its initial controversies, is to explore ways of monetizing information now stored in archaic ways with limited potential for exploiting the power of the network.
Experimentation is needed at a time when business models and profit sources are unclear and past rules do not seem to apply. Systematic experimentation to shape new business models is critical for companies to shape new ways of delivering value where competition may arise from unfamiliar quarters. Look at Reuters (http://labs.reuters.com/) and Adobe (http://labs.macromedia.com/) as examples of companies involving customers as part of experimentation. The fourth lesson is: approach strategy as experimentation carried out both inside the firm and using a select but varying set of partners to examine the full gamut of likely future courses of action.

Five: Are you capturing value through world-class execution inside and with partners?
Experimentation without execution is fatally flawed. When value is co-created as in the network era, it is important to device mechanisms to capture fair share of value created. Thus far, Google has exhibited flawlessly in its core service offerings both inside (AdWords) and outside in the network (AdSense). They are continually making sure that the advertisements placed on their sites and on partner sites are executed to maximize value for all concerned. Google Analytics and other tools allow the site owners to exercise control over their advertising plans and marketing strategies more than they could ever do in the traditional way.

Since 2000, the corporate sector is becoming brutally efficient and the broader implication for other sectors is that inefficiencies may not be long tolerated in a global network of competencies. Offshoring of jobs to India and China reflects the changing geography of work that recognizes the inherent efficiencies of the global business process network. The fifth lesson is: develop information-led approaches to execute strategies both inside and outside to extract fair share of the value.

Six: Are You Mapping your own activities on the four vectors of ambidexterity?
Finally, you may find it helpful to use the ambidexterity framework without any direct reference to Google. Map your key activities and resource allocations along the four vectors and see how well your profile compares against (1) your recent past; and (2) your competitors and others you benchmark against. Often, most companies find that their focus of attention is on the lower left (internal execution) and some on the lower right (sourcing and distribution agreements) vectors. This audit often serves as a useful trigger to rebalance the emphasis, especially if leaders recognize that the future is not a linear extrapolation of historical positions; and that past success does not guarantee future dominance. A balanced approach along the four vectors helps minimizing competency traps and overcome myopic views of business strategies.

Ambidexterity as a Leadership Challenge
How does Google balance the competing requirements of ambidexterity? In Eric Schmidt’s words: “Here's how it works…: We spend 70 percent of our time on core search and ads. We spend 20 percent on adjacent businesses, ones related to the core businesses in some interesting way. Examples of that would be Google News, Google Earth, and Google Local. And then 10 percent of our time should be on things that are truly new. we’re in the business of making all the world’s information accessible and useful. The test that I apply—and we do this every day, 70/20/10—is to ask how a feature will extend the core, the adjacent, or the innovative stuff to fulfill our mission.”

Overcoming the competency trap is not easy. Lotus created a separate company to spearhead the development of Notes when the bulk of management attention was focused on their flagship product at that time—The Lotus 1-2-3 spreadsheet. Edwin Land at Polaroid experimenetd with design teams to understand how their products could be rendered obsolete before their competitors could. 3M Company would focus on sales and profit levels achieved from new products introduced within the last 3 and 5 years. Google is using resource allocation through the 70-20-10 rule as a way to overcome complacency. The ultimate leadership test is whether such rules are adhered to under times of crisis to execute on current strategic direction. Google has not been tested under fire thus far; when it is tested, we will know how well it followed the rule.

Is Google on your Strategy Radar?
Why all this attention on Google today? Most companies recognized Microsoft’s role when they were developing their information technology strategies over the last two decades. However, Google is different: by virtue of its superior ability to trace, index and make available all kinds of data, it could impact business strategies in many industries. For example, Google Talk, Google Mobile and Google WiFi impact the global telecommunications sector; Google music and Google video influence the media and entertainment sector. Google News with its aggregation and personalization features are challenging the current business models. Google print is forcing publishers to wake up to the realities of the digital network. I urge that every company should include Google on its business and IT strategy radar screen.

1. Map your position in the network relative to Google. If you are using Google inside your company (Google search appliances) for managing information to enhance your current operations, then you are its customer. If you are using Google AdSense as part of your website operations, then you are a partner in Google’s advertising network. If you are using data from Google through Google API to create new mash-ups or new service offerings, then you are a co-creator of new business models using Web 2.0. Take a look at the budding initiatives in Google labs and assess what they could mean for your business operations. If you find that Google is marginalizing your product-service offerings, Google is a competitor to you. Your first step is to understand specifically, your role vis-à-vis Google: Supplier? Customer? Co-creator? Partner? Competitor? What is the role today and how could it change in the future? Many companies could benefit from considering Google as a way to organize their internal information and developing a cost-effective way to search and access internal databases and repsoitories. Some companies may benefit from taking a look at the variety of mash-ups that have been created by combining data from multiple sites to craete new offerings (www.programmableweb.com). While they may look like trivial applications now, they hint at the power of leveraging data from multiple sources to create new value propositions to consumers.

2. Conduct a management workshop focused on what Google means for your company today and what it could mean in the future. I have found that while there is general fascination with Google as a company, few managers seriously understand the potential role that Google could have on their business. Google’s role is multi-faceted, complex and potentially far-reaching. Its rise has occurred against the backdrop of some profound changes in the power and functionality of the web. Instead of dismissing the role of Google as being at the periphery, take the time to design a workshop to develop plausible scenarios that could fundamentally impact your business models. While the focus may be on Google as a central actor, it is useful to understand the roles of other players such as Microsoft, Yahoo, eBay, Apple, Salesforce.com and Amazon. What opportunities and/or threats do they pose? For example: Volkswagen is working with Google to examine using its maps technology as part of future GPS-based navigation system. At minimum, such workshops create general shared awareness of the trends that have propelled Google to being where it is today. Yet more importantly, such workshops serve as catalysts to understand the emergence of network era and the need to craft strategies that leverage the power of the network.

3. Develop a continuous monitoring system of network era moves by Google and others. In 2004, Google was mainly focused on search-related advertising through AdWords and AdSense. Today, the scope of Google’s service platform has expanded significantly and the initiatives underway in its labs hint at even greater impact in the future. Most media and entertainment companies may not have recognized Google as a relevant company as part of their strategic assessments in 2004 but today they do so at their peril: Google video is clearly poised to become a hub in this space. Since effective strategy involves early recognition of 'weak signals' and subsequent rapid responses, it is a worthwhile investment to assign someone responsible to monitor moves along the four vectors of strategic ambidexterity that Google is pursuing. Such early monitoring of moves by Google and others will prove useful and effective to shape and fine-tune your business strategy.

Superbowl Videos

2006-02-07T13:45:00.000-05:00

http://googleblog.blogspot.com/2006/02/this-bowls-for-you.html

What's core and what's periphery?

2006-01-13T15:49:00.000-05:00

before Google demonstrated the potential of online ads, few understood the upside monetary potential of online ads. Well.. Microsoft outsourced the search to Yahoo under the assumption that it is not core. however, when the current contract expires in June 2006, Microsoft will focus on creating the advertising platform--adcenter. Microsoft would like to become a dominant (at least one of three) player in this space.

Three search engines will jockey for ad placement in the network: Google, Yahoo and Microsoft. What'll the leaderboard look like in 2010?

What's core competence? what's the competence at the periphery? what's core now could become periperal tomorrow. What's peripheral now could become core tomorrow. Welcome to the Network Era.

Dell--AMD Link (AMD Inside Dell?)

2006-01-12T19:48:00.000-05:00

Now that we have Apple with Intel Inside, will we be far behind seeing a Dell with AMD?

Probably not. It appears that we will see Dell with AMD inside in 2006.

IBM chips on Microsoft Xbox 360

Intel inside the new MacBookPro with ads showing that Intel is finally set free.

Dell with AMD--a departure from the historical reliance on Intel (Dell is Intel's biggest customer).

Orchestrating a successful network-era strategy often calls for realigning relationships. Both Dell and AMD are jockeying to reposition themselves in the network.

Google Keynote at CES

2006-01-11T23:42:00.000-05:00

It is sometimes useful to go to the original source for the material on Google...

http://www.google.com/press/podium.html

Google's new Partnerships in 2006 (just the first week!)

2006-01-06T08:49:00.000-05:00

Google is beginning 2006 with a bang. First came, the Piper Jaffray estimate of a year-end stock price of $600. Then came the rumor of Google PC (whcih proved to be just that thus far!). Then Google announced a partnership with Intel to bring video search onto Intel's new Viiv platform as INtel is trying to move from being seen as Intel Inside to Leap Ahead. I believe that this relationship will be a major competitive threat to Microsoft's Windows Media. Then, Google and Motorola announced a relationship to align mobile search.

Strategy 2.0 is about orchestrating relationships in networks. Google is jockeying in the network to become a powerful competitor to Microsoft. 2006 should be an interesting year!.

Washington Post and Mashups

2006-01-04T00:00:00.000-05:00

Washington Post has a blog to figure out ways to make its vast amount of data available and useful for mash-ups.

Corporate Blogging: Practices and Perspectives

2006-01-03T22:47:00.000-05:00

This is a good site that tracks the degree of acceptance of corporate blogging and updated links.
Clearly, I expect that by the end of 2006, many more corporate blogs will be online (can you imagine any of the Fortune 500 companies without a website today?).

Blogs raise many questions that are worth pondering. What will be covered in those blogs? will it become a secondary PR channel or will it provide new insights into the company operations? Who will read those blogs--competitors or suppliers or cutsomers? or is it meant for journalists and general observers? will we see Wall Street analysts making stock recommendations based on what they read in the blogs or will they continue to rely on company presentations? Will mainstream media replace Letters to the Editors with comments on the blogs? will blogs become elaborate versions of the articles that may be limited in size due to page limitations of the print media??

Switching Partners in 2005

2005-12-26T09:54:00.000-05:00

In Strategy 1.0, partnerships were for the long-haul and called for tight-coupling. The end of a partnership often is seen as a failure.

Look at three of the recent changes in partnerships.

1. Apple-Intel link (the erstwhile tight coupling between Microsoft and Intel that created the Wintel platform is no longer contraining Microsoft or Intel to pursue new avenues)

2. Microsoft-IBM for Xbox (IBM is no longer grudging Microsoft for its launch of Windows and is supplying the chips for the new generation of videogames).

3. Palm Treo with Microsoft Smartphone (remember Palm software? it's now owned by Access--a Japanese company).

There may be more but these are big shifts that show that companies understand the requirements of loose-coupling and reconfiguration of capabilities in Strategy 2.0. Dell appears to be running an experiment to include Firefox browser instead of Microsoft's IE in the UK.

In Strategy 2.0, partnerships are dynamically adapted to suit changing market conditions and calls for loose-coupling. Sticking to old partners may not always be the best course of action.

Mashups:An Early Indicator of Web 2.0 Growth

2005-12-26T07:13:00.000-05:00

I have often wondered what could be some of the lead (early) indicators of tracking the growth (and acceptance) of Web 2.0. First indicator to look at the number of mashups. Second indicator is to look at the degree of use of these mash-ups (beyond serving as showcase of cool applications on the web).

Programmableweb is a goos source for tracking the number of mash-ups. I have not yet seen good statistics for the degree of use of these mashups but my guess is that it will be forthcoming.

A useful mash-up, in case you have not seen it is: mapsexoffenders.com.

Here is another idea that could widespread commercial appear all over the country--realtime information on parking availability. The Bay Area Map is in beta now and worth taking a look at now.

Realtime Ecommerce!

2005-12-26T06:39:00.000-05:00

If you like to feel in control of your online shopping and your packages are delivered not by one logistics company but by the top three (UPS, USPS and FedEx), you can still have an integrated look by using mash-ups at PackageMapper.

Personalization through Google_Modules

2005-12-26T06:33:00.000-05:00

We all know that one of the key distinguishing characteristics of web 2.0 is end-user customization--or the ultimate personalization--of homepage. Modules are beginning to appear that may change hoe people 'pull' information for their specific purposes.

Take a look at Google as well as Googlemodules and Widq.

Google-AOL: Pursuing a Market Referent for Valuation

2005-12-25T10:17:00.000-05:00

During the euphoric days of Web 1.0, dot-com companies used their inflated valuations (paper currency) to make outrageous deals--AOL-Time Warner is an exemplar.

Now Google is explicitly valuing AOL at $20 billion and has paid $ 1 billion as its share of the value. How will it 'realize' the financial value from AOL? Details are emerging from the deal that provide some clue to how Google (and AOL) may work to unlock value in 2008.

NY Times on December 24, 2005 reported that: "The filings say that starting two and a half years into the five-year agreement, Google will have the right to force Time Warner to register its shares in AOL with the Securities and Exchange Commission. This would allow Google to sell the shares on the public market. Time Warner has the option to buy the shares back for cash or Time Warner shares at an appraised value."

AOL is not yet a separate tracking stock--but could well be. At least, Google is not buying Time Warner just to get AOL!

Strategy 1.0 was about ownership of assets; Strategy 2.0 is about relationships in networks. Minority investment is one option for orchestrating these relationships.

Microsoft-Google Settle Kai-Fu Lee Lawsuit

2005-12-25T08:14:00.000-05:00

Microsoft and Google have settled their much publicized dispute over Kai-Fu Lee (former Microsoft employee, now works for Google in China). Microsoft said that the three parties entered into a: "private agreement that resolves all issues to their mutual satisfaction." Google confirmed the settlement and released a statement from Lee saying he was "pleased with the terms of the settlement agreement."

The real victory should be in the marketplace and not in the courts. So, this is good news for all-especially Microsoft. Notice that they have been steadily settling disputes--Real Networks and Sun--in recent months.

Now, Microsoft--hopefully-can focus on winning consumers to its new strategic direction and initiatives and their value proposistions.

Will 2006 be the year that we see uptick on MSFT stock?

Value Co-Creation in Web 2.0: NY Times and Google Maps

2005-12-23T10:49:00.000-05:00

A major principle in Strategy 2.0 is consumer as an active participant loosely termed as value co-creation.

NY Times invited readers to contribute their stories about the transit strike and created a mash-up with Google Maps. It is here.

Amazon's Alexa: a serious contender in Web 2.0?

2005-12-21T20:16:00.000-05:00

Amazon's market capitalization is no where near the stratosphere occupied by Google. It's seen as a serious online e-commerce player.

It has been developing a few tools that hint at broader play in the web 2.0 space.

http://pages.alexa.com/company/index.html

The Alexa Web Search Platform provides public access to the vast web crawl collected by Alexa Internet. Users can search and process billions of documents -- even create their own search engines -- using Alexa's search and publication tools. Alexa provides compute and storage resources that allow users to quickly process and store large amounts of web data. Users can view the results of their processes interactively, transfer the results to their home machine, or publish them as a new web service.

The second one is a9.

A9.com, Inc. researches and builds innovative technologies to improve search experience for e-commerce applications. A separately branded and operated subsidiary of Amazon.com, Inc., A9.com opened its Palo Alto, California, doors in October 2003. A9.com’s technology will power search on Amazon.com and other web sites.
since I am signed onto a9, thyey can trace my micro-moves (what I call as digital footprints on the web).

Since you are signed in to A9.com, you get access to several tools that personalize your search experience. Get the A9 Toolbar to take full advantage of these tools (you can easily uninstall it later). These include:

Your History: We allow you to record a trail of all sites you have seen. You can search that trail at any time. A9 Toolbar users can turn this feature on and off with one click.
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Amazon is also clarifying the payment model that underlies the robustness of Web 2.0 as a business infrastructure. Amazon Web Information Service

Amazon.com tests on-demand payment model by ZDNet's Phil Wainewright -- Amazon's Alexa Web Information Service has come out of beta and revealed its usage-based charging model - a vital step towards proving the financial viability of Web 2.0.

___________________________________________

Will Amazon get the premium of a search company in the near future? Will Amazon be able to parlay these developments to become a serious player in the web 2.0 space?

AOL-Google Link: a Critical Step in Strategy 2.0 Landscape

2005-12-21T19:42:00.000-05:00

Four Actors in Strategy 2.0: AOL, Google, Microsoft and Yahoo

Critical steps in how strategy 2.0 will shape up in 2006.

--------------------------------------------------------------------------------

December 21, 2005
AOL and Google Formalize Partnership to Include Shared Selling of Ads By SAUL HANSELL

America Online formally announced a revived partnership with Google yesterday, a deal that affirmed AOL's value less than a year after a chorus of calls for its parent, Time Warner, to shed the division as a lost cause.

Google said it had agreed to buy 5 percent of AOL for $1 billion and to provide advertising credits for AOL to promote its Web sites on Google's search service. Those advertising credits total $300 million over the five-year term of the deal, according to an executive involved in the negotiations.

In return, AOL agreed to continue to use Google as its Web search engine and to display its search-related advertising, as it has since 2002.

Richard D. Parsons, the chief executive of Time Warner, said the deal would help accelerate AOL's shift from selling Internet access subscriptions to running free advertising-supported Web sites.

"By sticking with our current partner, we have the best partner, the most technologically sophisticated and powerful company in the ads space, and we have deepened our relationship with them," he said. "We are aligned around the opportunities to drive more revenue in this fast-moving space than either of us could do separately."

Eric E. Schmidt, Google's chief executive, said the deal offered a way to accelerate its goal of expanding from simple text ads associated with search to a broader range of advertising formats including graphical display ads. Under the arrangement, AOL's sales force will be able to sell both search advertising and display advertising on Google's own Web site and the many sites on which Google places ads.

"We have not offered a complete advertising solution until this point," Mr. Schmidt said. "This is about expanding the network of our revenue and partners and advertisers, and we couldn't do that by ourselves."

Google beat out Microsoft, which had made an aggressive bid to win AOL as the premier outlet for its new search and advertising services. Microsoft had offered a large guaranteed payout for America Online and a joint venture to sell ads.

The Google-AOL deal involves a range of other forms of cooperation. Notably, AOL will allow users of Google's new Google Talk instant messaging system to chat with users of AOL's messaging network, the largest in the country. Until now, AOL has resisted linking its system with those run by its major rivals - including Yahoo and Microsoft, which recently agreed to link their own. It does connect to Apple Computer's message system and several services aimed at corporate users.

There will be a somewhat complex procedure to link the two systems, however. Google Talk users will need to add an AOL screen name to communicate with other AOL users.

Google will help drive users to AOL's Web sites by giving it the free advertising and by highlighting AOL's video programming in its growing video search service.

"If AOL is going to become a powerhouse again, it needs to return to growth," said Jordan Rohan, an analyst with RBC Capital Markets. "This is a first step. By partnering with Google, maybe some of the Google magic will rub off." But Mr. Rohan said the likelihood of this deal restoring AOL to its former pre-eminent position online is low.

So far, AOL's effort to promote its Web sites have hardly produced significant results. In November, 70 million people, or 41 percent of the Internet audience, visited AOL.com, the company's lead Web site, according to comScore Media Metrix. That is down from 48 percent of Internet users a year ago, before AOL started moving much of its better content from its paid service to the free AOL.com.

Time Warner investors appear not to be impressed by the deal. The company's shares have trended down since word that it had selected Google emerged on Friday. Time Warner formally announced its deal about 6 p.m. Tuesday. In after-hours trading, its shares rose by a penny, to $17.75. Google's shares reached $431.25, up $1.51 after hours.

Mr. Parsons has long made a priority of bolstering Time Warner's lagging stock price. Carl C. Icahn, the financier who has assembled a group of investors who own 3 percent of Time Warner's shares, has endorsed Mr. Parsons's goal, but sharply criticized his methods. Mr. Icahn has called for Time Warner to be split apart and has objected to the Google deal as an impediment to a potential spinoff of AOL.

Mr. Parsons said Google's investment in AOL did not reduce Time Warner's flexibility.

"Google's investment has nothing to do with setting the stage for a further action regarding the ownership of AOL, and it doesn't prevent it," he said.

Mr. Schmidt added that Google had made the investment largely because it expects to profit from it.

"AOL is going to do really well as a result of our partnership," Mr. Schmidt said, "and this is a way for us to share in the gain."

Copyright 2005The New York Times Company

The Wall Street Journal story provides further details:

December 21, 2005

Bumpy Road Led to Alliance Of AOL, Google

By JULIA ANGWIN
Staff Reporter of THE WALL STREET JOURNAL
December 21, 2005; Page B1

Two weeks ago, when Time Warner Inc. was on the cusp of signing a sweeping online deal with Microsoft Corp., a team of executives from the media company's AOL unit traveled to Microsoft's headquarters in Redmond, Wash., to make sure everything was in order.

When the executives returned, they reported back to Time Warner's top deal negotiator, Olaf Olafsson, with some less-than-satisfactory findings. They had found some of Microsoft's technology to be clunky, while the contemplated joint venture with the software king contained what they thought were financial pitfalls.

Mr. Olafsson dismissed their complaints as irrelevant -- a stance that infuriated some at AOL's campus in Dulles, Va. "Nothing in the fundamentals changed on that trip," he said in an interview.

Mr. Olafsson ultimately switched horses and instead reached a deal with Google Inc. That pact, which the two companies formally announced yesterday, appeased AOL. But the process that led up to it is just one more sign of the rocky relations between the online service and its corporate parent.

Although the decision about whether to partner with Google or Microsoft was critical to AOL's future, Time Warner took the negotiations out of AOL's hands and put them under the control of Mr. Olafsson. Negotiators from Microsoft and Google noticed tensions between the AOL camp and the Time Warner camp led by Mr. Olafsson, and occasionally received conflicting messages from AOL executives and Mr. Olafsson, according to people familiar with the situation.

Mr. Olafsson said AOL executives were involved in the talks all along.

Ever since AOL bought Time Warner in 2001, trading the online service's outsized stock price for Time Warner's top-tier media assets, relations between the two sides have been difficult. After the merger, AOL's business began deteriorating as many customers switched to high-speed Internet services offered by cable and phone companies, dragging down Time Warner's share price and ruining the retirement savings of many Time Warner employees.

Since then, nearly all of AOL's executives -- who had hoped to inject AOL's new-media ways into Time Warner's magazine, movie and TV operations -- have been swept out of the company. Richard Parsons, Time Warner's chairman and chief executive, has stabilized the overall corporation's operations, pared down its massive debt and invested in AOL's turnaround plan, which involves transforming AOL.com into a free "portal" site to compete with Yahoo, Google and others.

But many at AOL believe that Time Warner hasn't been a good parent, most prominently AOL co-founder Steve Case, who made his feelings public after he left the Time Warner board in October. Chief among their complaints is that Time Warner has only recently taken steps toward merging AOL's Internet service with Time Warner Cable's high-speed Internet service. In the intervening four years, AOL has lost millions of subscribers to Internet competitors -- including Time Warner Cable. Similarly, AOL hasn't rolled out its Internet telephone service in Time Warner Cable's markets, to avoid competing with that unit's own Internet phone offering.

AOL officials also weren't pleased when Mr. Parsons publicly floated the idea of selling or spinning off AOL, just as the division was launching the centerpiece of its turnaround plan, the revamped AOL.com.

In addition, they perceived Mr. Olafsson, who is Mr. Parsons' strategy chief, as an outsider. Mr. Olafsson, a 43-year-old physicist and novelist from Iceland, heads a group of 30 strategists. The former longtime Sony Corp. executive, whom Mr. Parsons calls "the Mighty O," had helped hammer out an agreement in 2003 under which Microsoft paid Time Warner $750 million to settle an antitrust lawsuit waged by AOL's Netscape division.

The new negotiations with Microsoft began in January, when Microsoft approached AOL about what it would take to get AOL to switch to using Microsoft's search technology on the AOL site instead of Google's search service.

Mr. Olafsson was aware of the anti-Microsoft feelings at AOL, where referring to Microsoft as the "Evil Empire" is not uncommon. But he found the attitude ridiculous. "Religious wars with companies are not something I subscribe to," he said. After negotiating the Netscape settlement, Mr. Olafsson became Microsoft's primary point person at Time Warner and shepherded the collaboration between the two companies on ways to fight digital piracy.

When he took over the Microsoft negotiations in the spring, Mr. Olafsson helped craft a plan that would have merged AOL and Microsoft's MSN online unit into a joint venture. The plan was contingent on the idea of separating AOL's online-subscription business from its advertising business. Microsoft declined to comment on the talks.

But many in the AOL camp felt the idea of splitting AOL into two was unworkable. Mr. Case felt so strongly about it that wrote a newspaper article opposing it after he quit Time Warner's board. Mr. Case believes AOL should be spun off as a separate company since Time Warner isn't willing to integrate AOL into its other businesses.

Mr. Olafsson then essentially scuttled the joint-venture plan, and instead helped Microsoft put together smaller-scale joint venture proposals, while talking with Google about options as well. In between, Mr. Olafsson received and rebuffed overtures from News Corp. Chairman Rupert Murdoch and Yahoo Inc. Chairman Terry Semel.

As the talks with Microsoft seemed to be nearing a conclusion two weeks ago, Mr. Olafsson changed his mind after receiving what he described as a renewed sense of commitment from Google. During a phone call with Google Chief Executive Eric Schmidt on Dec. 12, Mr. Olafsson said he heard for the first time some commitments about deepening the partnership beyond just using Google's search technology. "It turned it into a strategic arrangement instead of a commercial arrangement," he said. "We said to ourselves, 'This is the element that was missing.' "

Under the terms of the deal, Google will buy a 5% stake in AOL for $1 billion. AOL will continue to use Google's search technology and to share the revenue generated by ads that are displayed with search results. But in a change important to AOL, the online service now will have the right to sell those ads directly to advertisers instead of directing advertisers to Google. AOL also will be able to sell some ads that appear on Google's network of affiliated Web publishers, and Google will promote AOL's content when it displays search results to its users.

Write to Julia Angwin at julia.angwin@wsj.com1

URL for this article:
http://online.wsj.com/article/SB113512960036228044.html

Copyright 2005 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.

_____________________________________

The Washington Post article provides additional thoughts and perspectives on it..

$1 Billion AOL Stake For Google Approved

By Yuki Noguchi
Washington Post Staff Writer
Wednesday, December 21, 2005; D01

Time Warner Inc. approved Google Inc.'s $1 billion investment in its America Online Inc. unit yesterday, a deal aimed at giving both companies a greater share of the burgeoning online advertising business.

Company executives also characterized the deal, which gives Google a 5 percent stake in Dulles-based AOL, as an opportunity to cross-pollinate Time Warner's vast media library with Google's highly profitable online advertising business.

As part of the deal, Google also will tap AOL's instant-messaging customer base of 43 million users, integrating it with Google Talk, a recently released product with far fewer users. That pits AOL and Google against rivals Microsoft Corp. and Yahoo Inc., which next year plan to integrate their instant-messaging systems.

Google will also be able to access more of AOL's content, such as music videos and television shows, through its media services.

"There are a lot of aspects of this deal that will have big impact," Google chief executive Eric E. Schmidt said in an interview. "What I like about this deal is that it has an end-user component and an advertising component" with benefits for both, he said.

For months, AOL was courted by Google and Microsoft, both of which wanted to capitalize on AOL's strong consumer brand and its affiliation with Time Warner.

Time Warner chairman and chief executive Richard D. Parsons said yesterday that the company chose to partner with Google because it was more familiar with how AOL's and Google's businesses could dovetail.

"We knew more about how to tease out the opportunities for both sides," Parsons said. Over time, the Time Warner-Google partnership may include digitizing Time Warner's television shows, movies and print news to make them searchable and usable by online viewers, he said.

AOL is already Google's most lucrative advertising partner, because it uses Google search on AOL Web sites viewed by millions of users.

AOL, which built its business in the 1990s selling basic Internet access to consumers, this year shifted gears and -- like Google -- is trying to capture a huge audience for free products so it can make money by selling advertising.

Jonathan F. Miller, chairman and chief executive of AOL, called the deal a "broader alignment" that in the short term will help AOL expand its audience and advertising market share.

The deal gives AOL more freedom in how it sells advertising that appears on its own sites, as well as on tens of thousands of Google-affiliated Web sites. The instant-messaging partnership will also drive more traffic to AOL sites, he said.

Billionaire financier and Time Warner shareholder Carl C. Icahn has criticized the Google investment, which was first reported last week. Icahn, who has been lobbying Parsons to spin off AOL, said the expanded partnership with Google would limit AOL's ability to merge with another partner later.

Parsons flatly disputed Icahn's claim: "Well, you know, he's wrong."

© 2005 The Washington Post Company
_________________________________________________________________

Only the first moves have been played out...
Strategy 2.0 is heating up.

Best of Web 2.0

2005-12-21T08:29:00.000-05:00

Hinchcliffe's List is a great summary of what web 2.0 has accomplished so far. From social bookmarking to online to do lists to peer production and image storing, there have been so so many new applications.

I am reminded of trying to classify websites in 1995 when there were so few and everyone wanted to know how Amazon was different from Yahoo and AOL. Remember B2C, B2B (also C2B and C2C) and other combinations of alphabets? That seems so so far back (so web 1.0!). And remember, bricks and clicks? offline and online? etc.etc.

But the main business challenge remain: how to leverage the functionality of the web (whether it be 1.0 or 2.0 or later) to create robust business models?? So, as you see web 2.0 applications, think about the main challenge:

How will these dynamic interlinkages--especially tags and mashups--change the revenue model and profit models?

Reuters: Positionig for Web 2.0?

2005-12-21T07:21:00.000-05:00

I have been wondering about Reuters for a while. A venerable company in the information age that collects massive amounts of data globally that many many decisionmakers rely upon.

Looks like Reuters has taken a page from Google, Yahoo and Amazon to create a public face on their innovations to make Reuters more central to the network era.

Reuters Video through Affiliate Network

Create a more compelling user experience by adding Reuters video to your site. Our news video player has up to 20 of the latest breaking stories from around the world - updated throughout the day so the content is always fresh. The player is Windows and Macintosh compatible and takes just a few minutes to integrate into your site. Visitors can watch full news stories right in the context of your page; there are no pop-ups or software installs. Player features include fast forward, previous video, next video, play all and volume control with mute capability. During this pilot period, our player is free of charge to any site and may contain advertising.

Reuters Dashboard

Running on Windows (through Yahoo Widgets) and Mac (Apple Dashboard widget), Reuters instruments make it easy for you to access Reuters News, Quote an dother information.

Reuters Audio

A powerful entry into the audio segment of Web 2.0 with world news, podcasts and latest from news channel. I think this is worth watching to see how they compet against Apple and Yahoo.

Overall: I will be watching Reuters to see how well they make the shift to strategy 2.0. Afterall, they have huge amounts of data prime for mash-ups and dynamic personalization.

Web 2.0 in 2005

2005-12-20T14:53:00.000-05:00

1995 will be remembered for Netscape IPO and Windows95.

2005 will be remembered for Google, podcasting and may be Web 2.0. Clearly, a lot of attention is on the developments in Web 2.0.

Top Ten Web 2.0 Moments of 2005 by ZDNet's Richard MacManus -- It's been a huge year for the Web! A time of renewed optimism in Silicon Valley and an incredible number of new web applications. In a sense it all started with Google's IPO in August 2004, the success of which was a positive and affirming lead-in to 2005. We then witnessed a renaissance of startup activity, acquisitions and intense VC interest in the Web throughout the year. Here then is my list of the top ten defining moments for the Web in 2005. [...]

I hope it does not turn into another frenzy over inflated stock valuations but as am important step in the creation of the global business infrastructure for growth. I think 2006 will be a defining year to see how robust web 2.0 really is.

Too early to think of web 3.0?

2005-12-20T11:21:00.000-05:00

What to expect from Web 3.0 by ZDNet's Phil Wainewright -- Web 2.0 is just a staging post. Web 3.0 is coming, and it's going to recreate our notion of the application as well as upsetting a few applecarts along the way.

The topology of Web 3.0 is based on three (and a half) distinct layers:

API services form the foundation layer. These are the raw hosted services that have powered Web 2.0 and will become the engines of Web 3.0 — Google's search and AdWords APIs, Amazon's affiliate APIs, a seemingly infinite ocean of RSS feeds, a multitude of functional services, such as those included in the StrikeIron Web Services Marketplace, and many other examples. Some of the providers, like Google and Amazon, are important players, but there is a huge long tail of smaller providers. One of the most significant characteristics of this layer is that it is a commodity layer. As Web 3.0 matures, an almost perfect market will emerge and squeeze out virtually all of the profit margin from the highest-volume services — and sometimes squeeze them into loss-leading or worse.

Aggregation services form the middle layer. These are the intermediaries that take some of the hassle out of locating all those raw API services by bundling them together in useful ways. Obvious examples today are the various RSS aggregators, and emerging web services marketplaces like the StrikeIron service. I'll have a lot more to say about these emerging platforms in several of my posts. There will be some lucrative businesses operating in this layer, but in my view it's not where most of the big money will be made.

Application services form the top layer, and this is where I believe the biggest, most durable profits will be found. These will not be like the established application categories we are used to, such as CRM, ERP or office, but a new class of composite applications that bring together functionality from multiple services to help users achieve their objectives in a flexible, intuitive and self-evident way. I'll have much more to say about these applications when I write about some of the companies I've mentioned in more detail. But an interesting example just surfaced in Swivel, Halsey Minor's new venture, which Dan Farber has been covering in his blog this week. Dan quotes one enthusiastic early user who describes the 'wow' moment of starting to use an application and discovering that it delivers utility he barely even knew existed. To me, that's a fundamental characteristic of a Web 3.0 application.

Serviced clients are the 'and-a-half' layer I mentioned earlier. There is a role for client-side logic in the Web 3.0 landscape, but users will expect it to be maintained and managed on their behalf, which is why I've chosen to call these clients 'serviced'. Whether those clients are based on browser technology or on Windows technology is moot point that I shall also be returning to. After all, everyone will want to know what role Microsoft might play in Web 3.0.

What is clear is that the Web is becoming the powerful global business infrastructure. I am keen to map the implications of these for business model changes in the different industries that may be hugely impacted by these shifts..

Icahn Wants AOL--Google Agreement Derailed?

2005-12-20T10:40:00.000-05:00

NEW YORK, Dec. 19 /PRNewswire/ -- Carl Icahn today announced that he has
written an open letter to the board of directors of Time Warner Inc.
(NYSE: TWX). The text of the letter appears below.

To the Board of Directors of Time Warner:
Like all shareholders, I am not opposed to Time Warner entering into an
AOL transaction that creates long-term value. However, I am deeply concerned
that the Time Warner Board may be on the verge of making a disastrous decision
concerning an agreement with Google if this agreement would make it more
difficult in any way or effectively preclude a merger or other type of
transaction with companies such as IAC/InterActive, eBay, Yahoo!, or Microsoft
etc. etc... I believe there are and will be major opportunities to enhance
Time Warner's value in future combinations. However these transactions might
not be achievable if Time Warner enters into long-term arrangements that
preclude future flexibility such as an agreement regarding search
functionality. I also question whether Google is the best partner for
unlocking the value of the AOL asset. Indeed, a recent Goldman Sachs report
concludes, "In contrast to the conventional perspective, we believe that eBay,
followed by InterActive Corp, would provide greater incremental benefits to
AOL's option value with fewer conflicts of interest than Yahoo! while MSN and
Google would provide the least incremental benefits."
On the eve of a proxy contest, I believe it would be a blatant breach of
fiduciary duty to enter into an agreement with Google that would either
foreclose the possibility of entering into a transaction that would be more
beneficial for Time Warner shareholders or make such a transaction more
difficult to achieve. If, as is my belief other suitors interested in
transactions predicated on receipt of control of AOL have been foreclosed from
entering into negotiations, the Board's actions would be even more
questionable. The real risk for Time Warner shareholders is that a Google
joint venture may be short sighted in nature and may preclude any
consideration of a broader set of alternatives that would better maximize
value and ensure a bright future for AOL.
Once again, I am not opposed to the Board using its business judgment to
enter into a transaction with Google or another suitor so long as the
transaction does not destroy or impede Time Warner's flexibility to unlock
shareholder value in the near and long term. However, I want this letter to
serve as notice to Time Warner's directors that if they enter into a
transaction that has that effect, shareholders will seek to hold directors
responsible.

Google-AOL: $ 1 Billion Downpayment?

2005-12-19T08:11:00.000-05:00

--------------------------------------------------------------------------------

December 17, 2005
Time Warner to Sell 5% AOL Stake to Google for $1 Billion
By SAUL HANSELL and RICHARD SIKLOS
Rebuffing aggressive overtures from Microsoft, Time Warner has agreed to sell a 5 percent stake in America Online to Google for $1 billion in cash as part of an expanded partnership between AOL, once the dominant company on the Internet, and Google, the current online king.

At stake in this battle was leadership in Internet advertising, which is a growing threat to other media companies. The loss is a blow to Microsoft, which had sought AOL as a partner in its advertising venture to undercut Google, its potent rival.

Though Google is only seven years old, its lucrative search advertising business and its technical prowess could enable it to offer consumers free software and services that would directly attack Microsoft's core software business.

While the terms of the proposed five-year deal are largely set, it will not be final until it is ratified Tuesday by the Time Warner board, an executive briefed on the talks said.

Google has agreed to give AOL ads special placement on its site, something it has not done before. Until now, Google prided itself on its auction system for ads, which treated small businesses on an equal footing with its largest customers.

By agreeing to change its business practices for this deal, Google fends off what could have been a significant challenge from a combination of AOL and Microsoft and cements its position as far and away the largest seller of search advertising.

"This is Google's first test as a chess player in a major corporate battle," said John Battelle, the author of "The Search: How Google and its Rivals Rewrote the Rules of Business and Transformed Our Culture."

"They are saying, 'We will take some of our pawns and block the move to our queen by Microsoft,' " he said. "Until now, Google has said, 'We don't think about our competitors. We spend all our time building better products for our users.' "

Negotiations among the companies reached a fevered pitch Thursday night, executives briefed on the talks said, when teams from Google and Microsoft were in separate conference rooms in the Time Warner Center in New York and executives from the media company walked back and forth between them.

At the same time, Time Warner was holding its corporate Christmas party at the Mandarin Oriental Hotel, which is also in the Time Warner Center, overlooking Central Park.

At 9 that evening, Richard D. Parsons, the chief executive of Time Warner, left the party to tell Eric E. Schmidt, Google's chief executive, who was leading its negotiations in another part of the complex, that he would accept Google's recently sweetened offer.

According to one executive, Mr. Parsons called Steven A. Ballmer, Microsoft's chief executive, at 10:30 a.m. Friday to tell him that the deal that Microsoft had so eagerly sought - and had thought it had won - was going to Google.

Microsoft had proposed that it and AOL form a joint venture to sell advertising on their own sites and eventually on other sites. Now Microsoft will compete in the search business as a distant No. 3, behind Yahoo.

Representatives of Time Warner, Google and Microsoft declined to comment about the negotiations.

The deal is a coup for Mr. Parsons because less than a year ago, Wall Street and even people within the company were treating AOL as a declining asset and a drag on Time Warner. The deal is meant to confirm Time Warner's claim that AOL is worth $20 billion, a number many had said was too high.

Yet investors did not immediately see a Google investment as a sign that Time Warner's stock was greatly undervalued, as Mr. Parsons had hoped they would. Time Warner closed yesterday at $18, up 34 cents. Google closed at $430.15, up $20.95. Microsoft ended at $26.90, down 81 cents.

In the last year, Time Warner has pursued a new strategy to replace its declining profits from its Internet access service with advertising revenue from AOL.com and other free Web sites. It has enjoyed enough of a resurgence to attract the courtship of not only Google and Microsoft, but for a time Yahoo, the News Corporation and Comcast.

Time Warner ultimately chose to go with Google because its proposal was simpler than the Microsoft one. Moreover, the lucrative offer promised to help drive more traffic to AOL's Web sites.

Google has been providing Web search and search ads for AOL since 2002. In the new arrangement, Google will offer promotion to AOL in ways it has never done for another company, two executives close to the negotiations said.

If a user searches on Google for a topic for which AOL has content - like information about Madonna - there will be a special section on the bottom right corner of the search results page with links to AOL.com. Technically, AOL will pay for those links, which will be identified as advertising, but Google will give AOL credits to pay for them as part of the deal. They will also carry AOL's logo, the first time Google has agreed to place graphic ads on its search result pages.

Google will also provide technical assistance so AOL can create Web pages that will appear more prominently in the search results list. But this assistance will not change computer formulas that determine the order in which pages are listed in Google's search results.

Google will also make a special effort to incorporate AOL video programming in its expanding video search section and it will feature links to AOL videos on the video search home page. These links will not be marked as advertising.

An executive involved in the talks said Time Warner asked Microsoft to give AOL similar preferred placement in advertising and in its Web index and that Microsoft refused, calling the request unethical.

Mr. Battelle said that while each of Google's accommodations to AOL could be seen as consistent with past practices, "each of them represents a step closer to a slippery slope."

He added, "What they are giving away is the perception in the market place that Google isn't for sale."

An executive involved in the talks said that as recently as two weeks ago, Mr. Parsons told Microsoft executives that he preferred their bid. Still, that executive said, Microsoft had the impression that executives in the AOL unit preferred to work with Google. Yesterday, several AOL executives said that was true. A source close to Mr. Parsons said his only goal was to do the best deal for AOL's future.

But. a turning point, in Microsoft's view, was an article that Stephen M. Case, AOL's co-founder and the architect of the deal with Time Warner, wrote in Sunday's Washington Post calling for the company to be split up, two executives involved with the negotiations who were familiar with Microsoft's views said.

Mr. Case's argument was timed specifically to encourage a Google deal, said one person close to him. Mr. Case's longstanding animosity toward Microsoft played a part, this person said, but his main reasoning was that Google has proved itself far smarter about the Internet than Microsoft. That person said that Mr. Case thought that a deal with Google was the best of all the options other than spinning off AOL. Carl C. Icahn, the financier who, like Mr. Case, has been pressing Time Warner to split up the company, was not mollified by the Google deal.

"I don't want them doing anything that could preclude them from selling or spinning off AOL in the future," Mr. Icahn said. "But the real point is that Parsons shouldn't be running AOL, and I shouldn't be running AOL, either. As Parsons says, 'We're two guys who grew up in Queens 40 years ago.' Neither of us understands the digital world." Then he added, "But I could do infinitely better."

Edward I. Adler, a Time Warner spokesman, said: "We're not going to comment on every little thing Mr. Icahn says. The management team running Time Warner knows AOL's business in great depth and any potential transaction that we may or may not do will be done in the interest of all the shareholders."

While AOL's deal with Google is not as complicated as the proposed joint venture with Microsoft, Google is offering several ways to help AOL enhance its advertising sales business, executives briefed on the negotiations said.

Under the current arrangement, Google sells all the search ads that appear on AOL's sites. This year, Google's revenue from ads on AOL will be roughly $500 million, estimates Jordan Rohan, an analyst with RBC Capital Markets. Of that, Google will pay AOL about $430 million.

Under the new deal, AOL's sales force will also have the ability to sell search advertising that appears only on AOL's sites, even though those ads will compete for placement with those sold by Google. AOL's sales force will also have the right to sell some display advertising that will be placed on the vast network of Web sites for which Google sells ads.

AOL executives are attracted to the idea of offering marketers a full range of Internet advertisements, from splashy ads on the home page of AOL.com to text ads.

Larry Haverty, a fund manager with Gabelli Asset Management, a Time Warner shareholder, said the deal with Google was "very reinforcing to the idea that Parsons is doing what he can to highlight the values."

For Google, he added, "there are two good reasons to do this deal: one, it's chump change; and, two, it really makes life difficult for Microsoft."

Andrew Ross Sorkin contributed reporting for this article.

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Webwar 2.0: Microsoft as a Serial Adapter

2005-12-13T12:23:00.000-05:00

One of the biggest challenges in the business world is to successfully adapt to business discontinuities.

Bill Gates has successfully adapted his business model twice so far (in my count).

Adaptation 1: Shift from supplying MS-DOS for IBMPC to creating the Windows platform. This marked the shift from IBMPC era to the Wintel (Windows-Intel Era) circa..1985.

Adaptation 2: Shift from Desktop to the internet (Web 1.0). This marked the battle with Netscape. circa..1995

Adaptation 3: Embracing Web 2.0. circa 2005. The coming battled with Yahoo, Google, eBay and Apple.

Bill Gates memo to the employees makes this point clear.

From: Bill Gates
Sent: Sunday, October 30, 2005 9:56 PM
To: Executive Staff and Direct Reports; Distinguished Engineers
Subject: Internet Software Services

Microsoft has always had to anticipate changes in the software business and seize the opportunity to lead.

Ten years ago this December, I wrote a memo entitled The Internet Tidal Wave which described how the internet was going to forever change the landscape of computing. Our products could either prepare for the magnitude of what was to come or risk being swept away. We dedicated ourselves to innovating rapidly and lead the way much to the surprise of many industry pundits who questioned our ability to reinvent our approach of delivering software breakthroughs.

Five years ago we focused our strategy on .NET making a huge bet on XML and Web services. We were a leader in driving these standards and building them into our products and again this has been key to our success. Today, over 92% of the Fortune 100 are utilizing .Net and our current wave of products have XML and Web services at their core and are gaining share because of the bold bet we made back in the year 2000.

Today, the opportunity is to utilize the Internet to make software far more powerful by incorporating a services model which will simplify the work that IT departments and developers have to do while providing new capabilities.

In many ways this is not completely new. All the way back in 1998 we had a company meeting where we outlined a vision in which software would become more of a service over time. We've been making investments since then -- for example, the Watson service we have built into Windows and Office allows us and our partners to understand where our users are running into problems and lets us improve their experience. Our On-line help work gives us constant feedback about what topics are helping our users and which we need to change. Products from MSN like Messenger and Hotmail are updated with new features many times throughout the year, allowing them to deliver innovations rapidly. Our Mappoint service was a pioneer in letting corporations connect up to a web based API on a subscription basis.

However, to lead we need to do far more. The broad and rich foundation of the internet will unleash a "services wave" of applications and experiences available instantly over the internet to millions of users. Advertising has emerged as a powerful new means by which to directly and indirectly fund the creation and delivery of software and services along with subscriptions and license fees. Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses.

We will build our strategies around Internet services and we will provide a broad set of service APIs and use them in all of our key applications.

This coming "services wave" will be very disruptive. We have competitors who will seize on these approaches and challenge us – still, the opportunity for us to lead is very clear. More than any other company, we have the vision, assets, experience, and aspirations to deliver experiences and solutions across the entire range of digital workstyle & digital lifestyle scenarios, and to do so at scale, reaching users, developers and businesses across all markets.

But in order to execute on this opportunity, as we've done before we must act quickly and decisively. This next generation of the internet is being shaped by its "grassroots" adoption and popularization model, and the cost-effective "seamless experiences" delivered through the intentional fusion of services, software and sometimes hardware. We must reflect upon what and for whom we are building, how best to deliver new functionality given the internet services model, what kind of a platform in this new context might enable partners to build great profitable businesses, and how our applications might be reshaped to create service-enabled experiences uniquely compelling to both users and businesses alike.

Steve and I recently expanded Ray Ozzie's role as CTO to include leading our services strategy across all three divisions. We did this because we believe our services challenges and opportunities will impact most everything we do. Ray has long demonstrated his passion for software, and through his work at Groove he also came to realize the transformative potential for combining software and services. I've attached a memo from Ray which I feel sure we will look back on as being as critical as The Internet Tidal Wave memo was when it came out. Ray outlines the great things we and our partners can do using the Internet Services approach.

The next sea change is upon us. We must recognize this change as an opportunity to take our offerings to the next level, compete in a manner commensurate with our industry responsibilities, and utilize our assets and our broad reach to reshape our business for the benefit of the users of our products, our customers, our partners and ourselves.
Bill

Few companies have successfully adapted across distinct waves of change. The ultimate leadership success is to win under massive changes and guide the corporation through discontinuities.

One of the main reasons for the rarity of serial adaptation is what management scholars call as the competency trap--continued reliance on routines that made a company successful in the past with the assumption that it will work reasonably well in the future.

Bill Gates and Microsoft have shown that they can overcome the competency trap. His memo makes it clear. It's not for lack of recognition of the shifts. The question will be can Microsoft execute on their recognition: can they effectively respond?

Time will tell..

Making Live Real: Microsoft forges wide variety of links

2005-12-13T11:40:00.000-05:00

Look at what Microsoft has been doing quietly in adapting to the new marketplace..

1. Link with MTV for a new music service named (or codenamed) Urge.

MTV, Microsoft team up for digital music service
Tue Dec 13, 2005 11:28 AM ET

NEW YORK (Reuters) - Viacom Inc.'s MTV Networks and Microsoft Corp. on Tuesday said they would join forces to design and develop a new digital music service.

The service, to be called Urge, is due to launch in 2006, the companies said in a joint release, and will be integrated into a new version of Microsoft's Windows Media Player.

Plans call for the service to offer more than 2 million songs for download from major labels and independents, as well as original content and MTV Networks programs.

2. Link with MCI

REDMOND, Wash., and ASHBURN, Va. — Dec. 12, 2005 — Microsoft Corp. and MCI Inc. (NASDAQ: MCIP) today announced a global, multiyear partnership to provide software and services that enable customers to place calls from a personal computer to virtually any phone. The solution, MCI Web Calling for Windows Live™ Call, will be available through Windows Live Messenger, the upcoming successor to MSN® Messenger, which has more than 185 million active accounts around the world. The solution combines Windows Live software, advanced voice over Internet Protocol (VoIP) capabilities and the strengths of MCI’s expansive global network to give consumers an easy-to-use, convenient and cost-effective way to stay connected.

MCI and Microsoft are testing the service as part of a Windows Live Messenger limited beta with subscriptions initially available in the United States, and expect to jointly deliver the PC-to-phone calling capabilities to France, Germany, Spain and the United Kingdom in the coming weeks. Once subscribed to the service, customers can place calls to and from more than 220 countries with rates starting at $.023 per minute to the U.S., Canada, the U.K. and Western Europe during the beta testing period. Upon sign-up, MCI Web Calling customers will receive up to one hour of free calls. Final pricing will be determined when the product officially launches in 2006.

“Our new Windows Live PC-to-phone voice feature requires a partner that shares our vision for connecting people globally. We are thrilled to work with a proven global technology provider like MCI to provide the bridge between PCs and phones with high-quality voice services that enable people to communicate more easily, conveniently and inexpensively,” said Blake Irving, corporate vice president of the MSN Communication Services and Member Platform group at Microsoft. “Our customers are going to love this.”

“MCI Web Calling harnesses the power of MCI’s expansive global network with VoIP technology to support high-quality, cost-effective PC-to-phone voice connections around the world,” said Patty Proferes, senior vice president of Mass Markets and Corporate Advertising for MCI. “This is a terrific example of the expanded MCI and Microsoft strategic relationship as the two companies continue to develop and deliver next-generation services for our customers.”

Instant Messaging: More Than Text

The ability to see a contact’s presence information and send real-time text messages has spurred the growth of instant messaging (IM) services. Today, MSN Messenger customers can communicate with those people that matter most to them through text IM and free PC-to-PC voice and video features, and augment their communications with rich personal-expression features and activities.

The Microsoft and MCI technology builds on Microsoft’s PC-to-PC voice investments, and will enable customers to call from a PC to phones around the world, including mobile phones, by simply clicking on an entry within their contact list in Windows Live Messenger or typing a phone number into the Windows Live Call softphone, taking the instant messaging experience to a new level. Windows Live Messenger builds on MSN Messenger to help people develop even deeper connections with the people they care about through a variety of experiences — from communication to sharing information. Interested parties can learn more about Windows Live Messenger at http://ideas.live.com.

Customers will be able to sign up for MCI Web Calling via the Windows Live Messenger client. MCI will manage customer registration, terminating calls, customer account management, customer support and billing for the PC-to-phone voice service, and will work closely with Microsoft on delivering a high-quality software service and customer experience. Customers will purchase prepaid calling time from MCI in $5, $10 or $25 blocks for use with the service.

WebWar2.0 Continues with Yahoo Widgets

2005-12-13T09:01:00.000-05:00

The following from Yahoo is a good overview of Yahoo Widgets

The Yahoo! Widget Engine (formerly known as Konfabulator) is a JavaScript runtime engine for Windows and Mac OS X that lets you run little files called Widgets that can do pretty much whatever you want them to. Widgets can be alarm clocks, calculators, can tell you your WiFi signal strength, will fetch the latest stock quotes for your preferred symbols, and even give your current local weather.

What sets Yahoo! Widget Engine apart from other scripting applications is that it takes full advantage of today's advanced graphics. This allows Widgets to blend fluidly into your desktop without the constraints of traditional window borders. Toss in some sliding and fading, and these little guys are right at home in Windows XP and Mac OS X.

The format for these Widgets is completely open and easy to learn so creating your own Widgets is an extremely easy task.

For the "skinning" crowd, Yahoo! Widget Engine is a dream come true. You can easily change the look, feel, layout, even functionality of a Widget so that it matches your lifestyle, your desktop, or the pants or skirt you have on that day.

A Little History...
Some time in early 2000 Arlo Rose came up with an idea for a cool little application. It would use XML to structure images, and a scriptable language, like Perl, in such a way that someone who knew the basics of Perl could put together cool little mini-applications. The goal was that these mini-applications would just sit around on your desktop looking pretty, while providing useful feedback.

All he ever really wanted was to have a cool looking battery monitor and something that told him the weather, but he knew the possibilities for something like this could potentially be limitless.

Fast forward a couple of years when Arlo began working with Perry Clarke at Sun Microsystems. Over lunch one afternoon Arlo gave Perry the basics of this dream app. Perry suggested that JavaScript would be far easier for people to digest. He was right. It's the basis for Flash's ActionScript, and Adobe's scripting engine for Photoshop. Of all the choices, JavaScript made the most sense. Shortly after that lunch, the two began to spend their nights and weekends making this thing a reality.

It looks a lot like Apple Dashboard and Google desktop. Clearly it is a complementary offering on operating systems (WindowsXP and Macintosh OS) but increasingly taking over important parts of the operating system. Making it cross-platform across Windows and Mac, Yahoo is seeking to be the bridge (platform agnostic) and competing against Google.

WebWar 2.0 continues..

Steve Case Wants to Unleash AOL from Time Warner

2005-12-12T18:27:00.000-05:00

Steve Case has made his case clear in his Washington Post article on Dec 12, 2005.

My own research is about how companies need to rely less on vertical integration and explore more of virtual integration. In other words: instead of ownership of assets, corporations should rely on accessing complementary capabilities through relationships. This is particularly true in the context of fast-changing conditions.
So, what does it mean for AOL and Time Warner. In early 2000, Steve Case used inflated stock market valuation of his dotcom company to acquire tangible assets hoping to create cross-business synergies between content and channel. That never materialized.

Now, as we end 2005, we are at a point where dynamic web companies like Google, Yahoo, eBay, Amazon and MSN (part of Microsoft) are jockeying to win in what is now loosely called as Web 2.0. Interestingly, AOL could be a significant player if they can reposition to offer some of the services that we have seen come from Google, Yahoo and MSN recently. Indeed, the famous leaked memos from Microsoft show the importance of services on the web. AOL has critical assets that may be stymied by being part of Time Warner. So, Steve Case wants to unleash the full value potential.

Why has Steve Case changed his tune? The business characteristics have changed from 2000. It's no longer about bundling content and channel and locking-in customers. It's more about tailoring content and services to consumers based on knowing more and more (and much more than ever before) about consumers based on massive amount of individual data and search behavior on the web.

Web 1.0 was about vertical integration; Web 2.0 is about virtual integration.

Strategy 1.0 was about ownership of assets; Strategy 2.0 is about relationships in networks.

Leaving aside the Carl Icahn angle to the news, the real story from a business innovation point of view is as follows:
1. if AOL is carved out and sold to either Google or Microsoft, AOL as a brand may disappear and subsumed under Google or Microsoft over time (remember Hotmail? it will be Microsoft Live Mail in the near future!).
2. Whoever gets AOL will win in the short-term; so the winning bid may overpay to get it because each does not want the other to get it; so, AOL may fetch a premium in the short term.
3. If AOL is not for sale, then AOL needs to structure a very good business partnership agreement with either Google (with whom they have a current relationship) or MSN (who has been their competitor for sometime).

Choosing Google means continuing and evolving the historical relationship but with a more fierce and aggressive company; it may mean losing AOL's brand identity perhaps. Selecting Microsoft means working with an erstwhile competitor (MSN). But, Bill Gates has made friends with his erstwhile enemies before (look at Real Networks, Apple, Sun and others!). and the new management team at AOL can do as well. Both Microsoft MSN and Google have the technology to serve up personalized ads and content to AOL customers.

The stakes are high. The upside potential is clear. The downside is inaction. AOL managers would have failed if they do not to capitalize on their strong customer base now and simply let the customerbase defect elsewhere.

Meanwhile, Yahoo is waiting on the sidelines (It is officially out of the race)....wondering its strategic options and examining its competitive moves against both Google and Microsoft--knowing whoever the winner is will be stronger after forging new links.

See also John Hagel's edge perspectives blog on this--as usual quite insightful.

Times UK and Blinkx

2005-12-01T09:40:00.000-05:00

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/12-01-2005/0004225807&EDATE=

Search is big part of news media industry transformation. Will efforts by individual news media companies ever have the scale or reach or depth to be a strong threat against Google News?

Google Space: a Physical Location for a Focus Group?

2005-11-30T08:39:00.000-05:00

http://news.bbc.co.uk/1/hi/technology/4463634.stm

Google extends searching offline
Google may already be dominant on the web but now it is stretching its wings to the physical world as well.
Google Space, at Terminal One of London's Heathrow airport, will allow people to log onto the net and check e-mail while they wait for flights.

For Google, the space will be used to test its myriad product launches on the public.

"We see it as a huge focus group," said Lorraine Twohill, Google's European director of marketing.

"For many of our users, we have always been something in their computers and they have never actually met us," she said.

Core DNA

GOOGLE PRODUCTS AT A GLANCE
Google Earth - allows users to search the planet, via maps and satellite images
Google Toolbar - a search box in users browsers allows them to search from any web page
Google Mail - offers over 2000MB of free storage and allows users to search for any previous e-mail
Google Local - information about local businesses, restaurants, hotels and driving directions
Picasa - picture management service where users can also edit, crop and mail their stored photos to friends
Google Mobile - an SMS service which allows users to ask questions such as how to get from one place to another and get instant answers

With trained Google staff on hand at the booth, it will be a chance to road-test some of its new product launches and get invaluable feedback.

Depending on the success of the Heathrow "pod", Google could become a recognised physical presence in airports, stations and even high streets around the world, said Ms Twohill.

Google has been a phenomenal year of launches, even by the standards of a cutting-edge tech firm.

Desktop search, Google Earth, Google Mail, Google Local, Google Toolbar, picture management store Picasa and Google Mobile have all come online in recent months, as Google continues to expand its search catalogue to all aspects of daily life.

Also out of the labs this month is Google's personalised search, which, alongside a bespoke homepage which can be built to your own personal needs, also offers more personalised searching, remembering what you have previously looked for and selecting things it thinks you want to see.

While it may seem as if Google has its fingers in many pies at the moment, all its products are interlinked, said Ms Twohill.

"It all comes back to our core DNA of search," she said.

As well as moving into a physical space, Google is also likely to make a play for our pockets too, with Ms Twohill earmarking mobile - alongside personalisation - as important areas for the firm in the future.

Google's ever-expanding product portfolio has led some commentators to question whether it is making a bid to be the next Microsoft.

According to Ms Twohill, its ambitions are more modest.

"We are still a tenth the size of Microsoft and are not ready to be compared to them," she said.

It is true though that Microsoft is increasingly vying for a share of the search market and this can only be a good thing, she thinks.

"A space like search needs two or three key players. While search is not Microsoft's heritage, if it sets its mind to something it will do a good job and grow the space for everyone," she said.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/technology/4463634.stm

Published: 2005/11/24 11:20:49 GMT

© BBC MMV

Remember the old adage about offline-online (bricks and mortar) combinations during the fading days of the dotcom build up? Search is not just online; we know that.

Moreover: Google cannot infer how we use Google's suite of products from just click streams; they need to understand the emotions (frustrations and excitement!). What better way than focus groups at prominent locations like the Heathrow Airport!

See what Apple's retail stores did for Apple's revival (especially with ipods!).

A Hot Book on Google (with praise!)

2005-11-21T18:09:00.000-05:00

http://www.nytimes.com/2005/11/20/business/yourmoney/20shelf.html

Google Stock @ $400

2005-11-19T10:14:00.000-05:00

A milestone for Google's capitalization: It's over $100 billion--the best run up for a technology stock since the dotcom crash.

At $111 billion on Friday (Nov 18, 2005), it is above Cisco ($106 billion), eBay ($62 billion), Yahoo ($59 billion), Oracke ($65 billion), Apple ($53 billion) and Time Warner ($84 billion).

When will it catch up with IBM ($138 billion), Intel ($152 billion) or Microsoft ($298 billion)?

Or i sit a case of another over-hyped stock?
See BW article for a recent discussion about Google flying high--perhaps?
http://www.businessweek.com/technology/content/nov2005/tc20051118_307361.htm

Has anyone seen good analytical discussions on Google stock? Does it have any parallel with the dot-com frenzy or Enron?

Or does it defy any historical comparisons because we are truly in a new era where the old rules of value and valuations are being slowly and steadily dismantled?

Gooogle Analytics

2005-11-18T15:19:00.000-05:00

http://googleblog.blogspot.com/2005/11/circle-of-analytics.html

It will be interesting to see how this impacts marketing consulting industry

Google Sitemaps: Incorporating Webmasters into the ecosystem

2005-11-16T21:22:00.000-05:00

http://googleblog.blogspot.com/2005/11/knowledge-is-power.html

Clearly, Google needs to maximize its coverage of content. What better way than invite the site managers to provide information that makes it easier and more effective to tag relevant content! So, Google launches Google Sitemaps.
https://www.google.com/webmasters/sitemaps/docs/en/about.html

Will this create new form of stickiness with some specific sites? Will it create new drivers of indirect network effects?

Google Base: Taking on New Competitors

2005-11-16T10:06:00.000-05:00

http://googleblog.blogspot.com/2005/11/first-base.html

http://base.google.com/base/about.html

Watch out eBay.

Watch out Monster.com

Watch out Craig's list (http://www.craigslist.org/)

Watch out newspaper clasified ads..

and who else?? well.. every company should ask: what's our position relative to Google in the network today?

What's clever is getting people to upload their content in a categorized way to make it easily searchable and accessible to others. Another way to become the hub.

EBay created the platform to allow sellers and buyers link on the global electronic network for a wide variety of physical products.

Google Base may be the platform for linking people and companies for products and services on a global basis.

Google is in the 'connection business' and connections lead to transactions; and that's where they have put their 'cash registers' now (AdWords and AdSense) and that's where we will see more cash registers in the future.

To think of them as a search engine is myopic.

Microsoft in enterprise search--against Google and IBM

2005-11-16T00:19:00.000-05:00

http://www.redherring.com/Article.aspx?a=14481&hed=Redmond+Does+Enterprise+Search
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/11-15-2005/0004215927&EDATE=

http://www.bestsyndication.com/2005/R-Z/sullivan-rob/111405_search_platform.htm

Another move in the changing competitive space..

Google Labs vs. Yahoo Next

2005-11-13T21:57:00.000-05:00

Many are watching the coming web 2.0 battle by looking into the research and product pipelines of Google, Yahoo, Microsoft, Amazon and others. Although the technology industry is known for vaporware and pre-announcements of products with no clear sense of product launch dates, it is interesting to see the scope and shape of the new features by taking a peek into the labs.

Google gave us a long factory tour (informative and entertaining):
the video can be seen at: http://www.google.com/press/factorytour.html

the slides are located at
http://home.blarg.net/~glinden/Google-factory-tour-slides-2005-05-19.html

and updates of their beta services (and products):
http://labs.google.com/

Yahoo is working on a wide suite of services
http://next.yahoo.com/

Has anyone mapped these two (and other companies) in terms of the features and functionalities and the strengths and weaknesses of their different initiatives?

IBM and Blogging

2005-11-13T18:06:00.000-05:00

http://money.cnn.com/2005/11/11/technology/ibm_blogging/

We will soon see more IBMers bloggibg externally. It is estimated that about 15,000 IBMers blog internally and about 2,000 plus blog externally. The main focus--I guess--will be on maintaining the link with customers.

They are also riding the blogging wave with launch of new software tools to help companies keep track of how they are discussed and mentioned in blogs.

The news release reproduced below is useful to see what IBM is trying to do

IBM Software Tracks Blogs, Web Content to Capture Buzz, Spot
Trends Around Companies, Products and Marketing Campaigns
CAMBRIDGE, MA --
Nov 7, 2005 -- IBM today introduced a new software solution that enables
businesses to make sense of the explosion of information from emerging social
networks on the Web to deliver new insight into brand reputation and customer,
competitor and public opinion about their company.
The proliferation of blogs, news feeds, consumer review sites, newsgroups and articles published daily on the Web has created a phenomenon where public opinion about an
organization spreads worldwide, faster than ever before. These sources are
filled with insight from consumers, experts and competitors that can be analyzed
and used by businesses to make better decisions on products, services and
business strategies. This creates a tremendous opportunity for organizations to
carefully monitor their image and more quickly address business opportunities,
threats, quality concerns or changing public perception.
To help clients gain a real-time view of commentary and opinion about their business, IBM is
delivering a new Public Image Monitoring Solution, a software offering designed
with Nstein Technologies and Factiva, to allow organizations to analyze and make
sense of commentary, issues and information affecting their brand, providing new
insight into how they operate and make business decisions.
Companies can use the Public Image Monitoring Solution to track success of product introductions and marketing campaigns, to help determine focus areas for product and marketing improvements, and to conduct impact analysis by comparing consumer feedback and
industry trends to actual sales data and marketing investments. Organizations
in diverse industries can benefit from this solution. For example, a consumer
goods manufacturer could use this software to track response to new product
introductions by examining consumer product reviews and blog discussions about
the new product, drill down into information from regions of the world where
public sentiment about the product was less than positive, and identify hot
topics or trends associated with the product.
The solution leverages IBM's deep expertise in text analytics and semantic search technology from IBM Research and IBM Business Consulting Services' brand management practice. It
supports IBM's company-wide strategy to help clients identify, access and
extract valuable meaning out of information -- regardless of format, source or
structure -- thereby enabling them to make better, more informed business
decisions.

"Companies are seeking new ways to better understand how they are
viewed by customers, investors and other stakeholders who have an impact on
their brand reputation," said Jon Prial, vice president, IBM content management
and discovery. "This solution can help clients track and analyze the pulse of
the public in real-time, allowing organizations to be more responsive and
deliver better service to their customers."
The Public Image Monitoring Solution is based on IBM WebSphere Information Integrator OmniFind Edition, the first commercial platform for deploying UIMA-based text analytics solutions. WebSphere Information Integrator OmniFind Edition provides advanced intelligent
search capabilities, making it easier for companies to access critical business
information and greatly improve the relevance of their search results. By
extending customers' ability to gain real-time insight into their business
information, it enables them to make more effective decisions and be more
competitive in the marketplace. The solution also leverages multi-lingual
text analytics from Nstein Technologies which enables the extraction of advanced
metadata, allowing organizations to identify "hot topics" as well as analyze
tone, facts, opinions, events, locations, and indirect alliances to detect early
trends and emerging problems. In addition, the solution enables organizations to
incorporate content from Factiva, such as news feeds and published
articles.
"Understanding what is said about a company and its products can
provide tremendous competitive advantage," said Greg Gerdy, vice president and
director of channel marketing and strategy, Factiva. "Factiva is heavily
committed to the emerging market around mining content for value-added
intelligence. Our rich set of thousands of world-class news sources is a key
component in this market transformation, and having IBM as a driver will make it
happen much faster."
The Public Image Monitoring Solution is built upon the
Unstructured Information Management Architecture (UIMA), an open framework for
building sophisticated analytic applications that provide domain-specific
applications, analytics, taxonomies, and ontologies that can uncover latent
meaning, relationships, and facts buried in information sources.
The Public Image Monitoring Solution is currently available from IBM and Nstein
Technologies. IBM WebSphere Information Integrator OmniFind Edition version 8.3,
an enhanced version of the company's technology foundation for delivering
actionable information in context through enterprise search and text analysis of
databases, content management systems, file systems, collaboration systems and
external websites, is targeted to be available during fourth quarter
2005.

API War 2.0: Past Success is NO Guarantee for Future Success

2005-11-13T11:03:00.000-05:00

API War 1.0 was about winning in the software space.

Microsoft won by understanding the power of APIs to develop and nurture an ecosystem of independent software vendors (ISVs). It mastered product platforms through ecosystems in the software space. Much has been written on how Microsoft dominated the software sector by leveraging direct and indirect network effects.

Now, the game is shifting to services with different ecosystems.

Joel Spolsky's 2004 blog is useful to understand the tensions inside Microsoft as we go from that battle to the new battle.
http://www.joelonsoftware.com/articles/APIWar.html

Now, we are in API War 2.0. Microsoft is not fighting against Sun, SAP, Oracle and Real Networks. In fact, it has settled and patched up with many of the old enemies. Yesterday's competitors are today's partners because the game has changed. The battlefront has moved on.

in API War 2.0, the key competitors are: Google, Amazon, eBay and Yahoo. May be we should add IBM and Apple and few others to the list. They are jockeying to win in the services space. It's not about APIs to win in the software space but to use software to win in the services space. Gates/Ozzie memos last week is about preparing to win the next war.

The signs are clear. Past cash registers through Windows and Office cannot be defended for ever. Just being a winner in API War 1.0 is not a guarantee of success in War 2.0. Bill Gates and Co. know that. They have successfully adapted to technology-driven business shifts before.

What will the new services-led ecosystems look like? Will Microsoft be able to parlay its experience with the software ecosystems to create and nurture new services-led ecosystems?

Smart Marketing Through Results Driven Advertising

2005-11-11T20:26:00.000-05:00

Google has a clear lead in AdWords in the different industries: https://adwords.google.com/select/comparison.html

Smart Marketing is happening in the different industries with significant results that seem to favor the business practice introduced by Google.

See: http://www.google.com/ads/metrics.html. We are in an era of services that are based on micro-analysis of consumer behavior.

What do these initial results from the different industries mean for competitive shifts in these industries? Will we see winners and losers being defined by who is able to migrate to smart search? Are marketing strategies taking this into account?

Personalization--a Holy Grail of Web 2.0?

2005-11-11T17:48:00.000-05:00

http://google.blognewschannel.com/index.php/archives/2005/11/11/google-news-gets-some-history/

So, now Google can look at my click through news links (Google News) and serve up ads when the service moves beyond beta. Well at leats, I get to look through the search history and edit if I need to.

I have always wondered about the digital footprints and fingerprints that we leave on the web as we surf the web. Now Google trackes, traces and hopefully gives me some personalized service rather than misuse and abuse the trust that I place on them to 'know me.'

The ultimate holygrail of service is personalization at an affordable price point and the Web has always been a place to offer it. Web 1.0 barely scratched the surface of personalization (remember the early versions of My Yahoo or Pointcast pushing the feeds or Amazon's early recommender system). It's not about personalization at the margin by fine-tuning few categories but personalization as a core philosophy.

Web 2.0 will be markedly different if we achieve trustworthy personalization (where consumers feel that they have got something in return for allowing someone--Google or Yahoo or Microsoft--watch what they do on the network). or will we feel like we are watched by the Big Brother or dark-lord?

Web2MemeMap

2005-11-11T17:35:00.000-05:00

Web2MemeMap, originally uploaded by Tim O'Reilly.

I like this pictorial representation of web 2.0 showing semantic connections!

Tim's original text that goes with this figure is located at: http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html

Google Wallet

2005-11-11T12:39:00.000-05:00

if Google Wallet (Google Purchase or whatever the final label be) is launched, what will the impact be on e-commerce? That's a multi-billion dollar question.

Could Google create a more powerful link between advertising and purchase that has eluded us in the industrial era?

What will it mean for customer trust and privacy? Will they succeed where Microsoft's passport before failed?

Tracing and tracking digital footprints and handprints on the web is a monumental responsibility.

The screenshot on the right is from: http://www.googlerumors.com/2005/10/11/google-wallet-close-to-launch/

Google Inside

2005-11-11T12:15:00.000-05:00

If you thought Google was only about AdWords and AdSense, then you may have missed out Google's enterprise offerings [http://www.google.com/enterprise/gsa/index.html]. OK, it's tiny part of Google's revenue today and is easy to miss.

Google does not advertise its own products and services. So, how to persuade companies to try Google inside enterprises? How about a free trail? Apple has gloated how many switched from Windows in their ads before. They even tell you the top 10 reasons to switch: http://www.apple.com/switch/ You have seen other companies trying different ways to get you to switch (phone companies, utility companies, credit card companies, etc. etc.)

So, what is Google doing to get inside enterprises? Free trial: http://services.google.com/appliance/switch/

This is the official list of customers.
http://www.google.com/enterprise/customers.html
Does anyone know if this is accurate and updated?

Will we see a 'Google Inside' logo??

The Next Shift in Business: Many Names and Many Players

2005-11-11T11:53:00.001-05:00

There is a shift underway that has many different labels: service innovations, On-Demand, adaptive enterprises, software-enabled services and so on.

It's beyond browser web of the late 1990s. It's beyond e-commerce of 1999-2000. It's about the shift away from products to services; it's about a new logic of organization; it's about creating business models on the network (web) which is more powerful than ever before; it's ultimately about capturing significant value. Google seems to be defining the game and has captured the imagination of Wall Street.

Other companies are responding forcefully (or at least signalling that they are changing their business models).

The Gates/Ozzie memo captures this shift from Microsoft's perspective.
http://scobleizer.wordpress.com/2005/11/08/dave-winer-posts-full-text-of-bill-gates-and-ray-ozzies-memo/

Salesforce.com's response is summarized in the following link:
http://news.com.com/Gates+services+memo+draws+Salesforce.com+response/2100-1016_3-5944981.html?tag=cd.top They call it 'The Business Web.'

If you see response from other companies, let me know. I like to compile a list so that when the dust settles, we can impartially take a look at the shape and scope of this shift underway right in front of our eyes.

Who will succeed? will it have any parallels with the bom-n-bust of the late 1990?

Google Ads go Offline

2005-11-11T10:02:00.000-05:00

So, you thought Google was only going after the online advertising space (AdWords and AdSense)?
Think again...

https://adwords.google.com/publicationads/login

I think this is another example of experimentation today that could lead to exploitation of new revenue and profit streams tomorrow.

Winning WebWar 2.0

2005-11-11T07:25:00.000-05:00

Remember the distinction between "old economy" and "new economy" in the late 1990s? Amazon was the posterchild and Bezos was Time Magazine's Person of the Year (1999). AOL bought Time Warner and every company was going on-line (with .com added to their names). We tracked eyeballs as a way to monetize the worth of websites and did not care much for the price-earnings ratio. NASDAQ reached 5000 and we never questioned the sustainability of such a number!

That was web 1.0.

Now, there's a new distinction: web 1.0 and web 2.0.

Just like old and new economy companies, there are no good definitions to distinguish clearly between web 1.0 and web 2.0. But, the players jockeying in the new space are trying to craft new sources of value through services. If you want to see some latest ideas, follow the links below:

http://www.whatsweb20.com/
http://www.web2con.com/
http://edgeperspectives.typepad.com/edge_perspectives/2005/09/what_is_web_20.html

It's about blogging; it includes social tagging; it embraces open source and democratization of the web; it is about software-enabled services; it's about mash-ups through APIs; it's about personalization; it's about globalization and the world becoming flat; it's about media and entertainment; it's about mobile devices. And Yes, it is about the next generation of value creation and capture.

John Hagel's working definition is a worthy staring point: “an emerging network-centric platform to support distributed, collaborative and cumulative creation by its users.”

I alos like John's point about thinking about the impact of Web 2.0 on software companies and on business enterprises that are not in the software industry--like retailing, publishing, media, financial services, automotive and so on.

It's too early to say who'll win (remember all the doctcom predictions?). The Web 2.0 war is multi-faceted.

The leader-pack seems to be:

Google
Yahoo
Microsoft
eBay
Amazon
Apple

But there are many other startups that are striving to join the leaderpack. Who would you add to the list as companies to watch as potential winner in Web 2.0 in the software sector and in other industries that are faced with the challenges of developing their business models on the web.

The New Battlefront

2005-11-10T09:50:00.000-05:00

Well.. the new competitive battlefront is drawn. It's not software but services. it's not licensing fees from software but services that are linked to advertising. It's not services that IBM is going after but services that seem to be core to Google's rise to dominance and prominence.

Microsoft is clearly betting on the services space--while still hoping to maintain its current cash registers as long as possible (as every profitable company should do). But the mother of all battles is in the services space. Not in professional services that IBM is seeking to win but in services on the net where e-commerce is finally taking off and advertising is becoming the new currency.

Microsoft's new service space is www.live.com (in beta). It could be new wine in old bottle (to use an old cliche)--see the CNET News link:
http://news.com.com/Windows+Live+rooted+in+MSNs+past/2100-1016_3-5931344.html?tag=nl

Clearly Live can be personalized to suit individual tastes. Looks a lot like Google. It's not the appearance that matters. it's the content that matters. Will some content be preferentially available in Live? What will create the 'stickiness' with Live that will propel Microsoft to leapfraog over Google and Yahoo?

Just look at two recent announcements:

Microsoft annouced a partnership with AP News yesterday.
http://www.nytimes.com/2005/11/10/business/media/10soft.html

This news may have been lost in the midst of the so-called Gates/Ozzi memo leak. but watch out for announcements that lock up preferential content on Live.

Yahoo announced a link with Tivo
http://news.bbc.co.uk/1/hi/business/4415474.stm

This also might have been lost in the midst of announcements about new gadgets.

They signals the shape of convergence that may shake up media and entertainment. Just as Apple shook up the music industry and altered the pricing models of music, we are on the threshold of shaking up revenue streams in media and entertainment. Afterall, advertising is the bloodline for media and entertainment.

Who will AOL join with? It looks like the final choice is now between Google and Microsoft.

In Google's Company

2005-11-08T14:25:00.000-05:00

Who do you compare Google to?

That depends on the scope of services (search and non-search) that you consider and when you consider. Clearly, the core list is clear: Microsoft, Yahoo and AOL. The following link gives a good comparison.
http://www.tnl.net/blog/entry/Reading_the_Google_Tea_Leaves

If I were to add to this list, I would include eBay and Amazon for sure.

However, what makes Google interesting is that such straightforward comparison of features and services perhaps miss the larger point: Google has the potential to impact the competitive strategies of a far larger set of firms than these firms.

What about advertising? Clearly, search is a means to an end and Google has done a great job so far of monetizing search through advertising. So, what will the advertising industry look like in the next five years? What role will Google play in the lucrative part of media planning and media buy? Will it play a role in combining offline and online advertising?

Or what could Google News do to newspaper companies? Not that the newspapers will become extinct tomorrow but the ability of newspapers to have close customer connections will be diminished substantially. Where will customer loyalty migrate? Who will get to capture the cash register? What role for personalization of news for multiple sources and different formats?

Or look at media and entertainment in an era of mp3, itunes and podcasting. What will be the shape of on-demand multi-media entertainment in the future? What role will Apple have in the space? What role of Microsoft media server in high definition? Or its Xbox? Can Sony reshape itself in the age of Google to extract a fair share of its profits? What about other media companies such as Fox, ABC-Disney and NBC Universal? Cable and satellite operators?

There is a strong rumor that Google is working on a new payment mechanism along the lines of PayPal (or some variant). There are even rumored names (Google Purhase or Gbuy). When Google launches its beta version, we will know for sure and its specific distinguishing features. What will the impact of such a mechanism on financial services? And more importantly: how will Google use data from a payment mechanism to better target advertisement and fine tune its services?

I am also watching to see how Google will begin making money on the mash-ups that use various services from Google, Yahoo, Amazon and others (http://www.programmableweb.com/). Monetizing new services based on information linked across different sites could be new avenues for business innovations. I only hope that we will pay particular attention to the monetizing part that we seem to have missed during the dot-com boom.

So, who do you put on Google’s cross-hairs?

Programmable Web: Who is Leading Innovations?

2005-11-07T07:42:00.000-05:00

One of the new and exciting developments these days is about mash-ups with new websites that create business value by linking data from two (or more) websites.

There are over 100 APIs that are available for mash-ups and over 150 mash ups (most of them just creations of enthusiasts!) available now..

http://programmableweb.com/

Google, Yahoo, EBay and Amazon are leading today. Microsoft with its new emphasis on 'live' will surely be a contender to watch.

Mash-ups could usher in a new era of innovations. Instant, dynamic links across websites that allow consumers (and businesses) to zoom in to what they seek quicker than normal search.

Who will lead? What new business innovations are likely to emerge? Who will extract value? Where will the proverbial cash registers be placed?

Comments, suggestions, links and blogs are welcome.

Google's Ambidexterity

2005-11-06T21:07:00.000-05:00

What is ambidexterity in common parlance?

Ambidexterity is the ability of being equally adept with each hand (or, to a limited degree, feet). The word "ambidextrous" is derived from the Latin roots ambi, meaning "both," and dext, meaning "right." Thus, "ambidextrous" is literally "right on both sides".
http://en.wikipedia.org/wiki/Ambidexterity
In business jargon, ambidexterity represents "the ability to do two seemingly opposing things equally well." In simple terms, a firm is good at today's operations and is poised to do well in the future as well.
Professor Mike Tushman of Harvard Business School looks at ambidexterity as being simultaneously good at exploitation and exploration.

I find Google is a contemporary example of ambidexterity as it explores new avenues--look at Google Labs (http://www.labs.google.com/) while exploiting its superior functionality through adwords http://https://adwords.google.com/select/ and adsense http://https://www.google.com/adsense/

Looking through the lens of Google's 70-20-10 (the way Google employees allocate their scarce resources, time), 70% of Google's efforts are directed at exploitation of their current offerings while 30% are spent on exploring new avenues or vistas (no pun intended!).

I also find that Google is exploring and exploiting its innovations both inside the firm as well as through a set of network partners. Based on recent data from Google, we know that adwords and adsense contribute roughly equal to Google's topline.

We may indeed be seeing ambidexterity as a business concept at two dimensions: the traditional axis of exploration-exploitation extended to a new axis of internal-external. This 4-dimensional grid may define the trajectory and scope of Google's business. The services and tools are not exhaustive but illustrative.
Comments, links, suggestions and blog links welcome.

Google's Business Model as a Conversation Point in Boardrooms

2005-11-06T20:28:00.000-05:00

Microsoft was feared by other software companies. Most software companies developed their business strategies with an explicit (if not implicit) reference to Microsoft. Should they compete directly against Microsoft? Should they develop complementary products that ensure interoperability? Should they create formal partnerships and alliances with Microsoft?

In short: every software company had to figure out the best way to comptete-and-cooperate with Microsoft during the last decade.

Companies beyond the software sector saw the growing importance of Microsoft as we shifted to an information age but were not directly impacted by Microsoft. Their business models were not directly threatened by Microsoft; on the contrary, many companies in different sectors benefitted from superior operational and administrative efficiency.

But Google is different.

It is not just forcing companies like Microsoft, Yahoo eBay and Amazon to reassess their business strategies. It is forcing companies in many different sectors to think seriously about their business models. what will newspapers be like in the future if Google News become the pervasive model of customized news? what will media and entertainment business models with pervasive search and near-instant delivery of content to different devices?

New York Times today carried an article that begins to highlight why Google is to be taken seriously in other sectors.
http://www.nytimes.com/2005/11/06/technology/06google.html

This follows an earlier article about Google's potential role in advertising.
http://www.nytimes.com/2005/10/30/business/yourmoney/30google.html?ex=1131426000&en=e9c1a176c78c30b7&ei=5070

I am starting to understand business innovation challenges in the age of Google. Specifically, I am interested in how Google is redefining business models in different sectors so that we can develop principles of business models in a widespread networked era.

Welcome reactions, suggestions, interesting links and blogs.

Google-2084

2005-11-06T20:23:00.000-05:00

What will Google's business scope be like in a few years??

This image is taken from Randy Siegel's writing in the New York Times (October 10, 2005).

If this is indeed possible, then their market valuation is not so high! In fact, it is a steal. Talk about global domination--circa 21st century.

If you want a peek into all the domains registered to Google, here it is:

http://blog.searchenginewatch.com/blog/txt/google_dom.html

Can Google create and execute on this lofty goal?