ImaginativePRO Blog

MICROSOFT CEO STEVE BALLMER SPEAKS CANDIDLY ABOUT MOBILE, SEARCH, CLOUD AND SOCIAL NETWORKS

Microsoft Chief Executive Steve Ballmer sat down with The Seattle Times for a Q and A on the eve of the annual company meeting on Sept. 28, 2010. Here is the story.  But first, a video of Ballmer demonstration true leadership.

 

With the imminent launch of a new Windows mobile phone and an innovative motion sensor for the Xbox 360, this holiday season will be a crucible for Microsoft.

The software company already is the undisputed king of desk jockeys with Windows and Office, franchises that enjoyed successful launches in the past 12 months. However, the company this holiday will court app-loving hipsters with Windows Phone 7 and video gamers with the Kinect for Xbox.

On the eve of Microsoft's annual employee meeting Tuesday at Safeco Field, CEO Steve Ballmer sat down to talk about the coming phone war, how Microsoft plans to take more share from Google and how often he checks his Facebook page.

This is the edited interview:

Q: You're holding your employee meeting. What's the message you want to send to the 40,000 employees in the Seattle area?

A: We've been bold in our bets. We've got great stuff coming. We better continue to be bold in what we're trying to do from a product perspective. ... I'm going to talk about our boldness, whether it's Windows Phone 7 or Kinect or IE9 (Internet Explorer 9), some of the things we've done that are starting to pay off and to continue to be bold in our product development.

Q: Windows Phone 7 (a cellphone platform) is coming out this holiday season. How are you going to turn this into a billion-dollar business for Microsoft?

A: The place to start is, "Are we going to have cool phones out with our software on them this holiday season?" You put aside the questions of how you make money and blah, blah, blah. That's all interesting in the long run. In the short run (claps his hands and rubs them together), people gotta want these phones. I think they're going to look pretty good. ... If we start the popularity chain and start kind of the buzz around these things, we'll be able to make some money off them.

Q: What did you learn from the Kin (a mobile phone that Microsoft canceled shortly after it began selling this year)?

A: The No. 1 message from Kin is a message of focus. You only get so many things you can really talk about, communicate, work on with the consumer. You've got to be bold, you've got to look forward and you've got to stay focused. Kin was neither -- with 20-20 hindsight -- bold enough relative to where the market's going, and it just defocused activity from Windows Phone.

Q: I just saw a quote from Google CEO Eric Schmidt that Apple and Facebook are not his competition, Bing --

A: Bing is his No. 1 competitor! I read that today myself.

Q: He said, "Bing is a well-run, highly competitive search engine." What is your reaction to that?

A: He's right! Yeah, and he still has to compete with Apple and Facebook. Welcome to our world, man. It's a competitive world out there. We're competing, other guys are going to compete with them. We have good competitors. Apple is a good competitor, Google is a good competitor, Oracle is a good competitor, VMware is a good competitor. We partner with Facebook, but we also compete in some dimensions with them. Hey, it's OK, just get out there and work. ... We're his best competitor, and we're a very good competitor and we're going to do a very good job.

Q: You are now a very viable second player in search with the Yahoo partnership. How do you continue to keep gaining in search?

A: It's about the product (BING) and quality of innovation. We break the world into three buckets. There are things we just have to do that [the] competition is doing -- table stakes. Every day the Web gets bigger, you've got to index and be able to search more of the Web. ...

No. 2, there are places where we're just differentiating left and right. Our maps are better, our images our better, our picture is different. And Google keeps responding. In a sense, because we have lower share, it's almost easier for us to try new things. They have to sort of stay conservative, they gotta make a lot of money. If they change anything, the position on the page, maybe people won't click on their ad the right way. Boom, boom, boom, boom, we're just moving, floating, differentiating. ... They're starting to look at the stuff we're doing and copying it back. What is it? Imitation is the sincerest form of flattery.

And No. 3, there are things we need to do that just fundamentally change the game -- by betting on new devices, by betting on new business models. ... That's our job to be the disrupter in this business, and we're going to work hard at it.

Q: Are the layoffs over at Microsoft?

A: "Layoffs" is a very specific word. Are we always trimming and remapping? We're always moving people around. We try something, a project doesn't quite work, we'll cut that team, we tell people find a job someplace else in the company. We're going to continue to do that sort of thing. ...

Q: You've said the company is "all in" on cloud computing. How do you explain that to the average person thinking about buying the stock?

A: ... It's (CLOUD COMPUTING) the biggest profit opportunity in front of us. It's a profit opportunity because we can deliver more value to our customers on the cloud instead of at premise, which means we have an opportunity to make more money. And No. 2, as we embrace the cloud, it's also a chance for us to build market share, particularly against Oracle and IBM. ...

Q: When are we going to see Windows 7 on a slate device like the iPad?

A: When it's (SLATE tablet PC) ready. A Windows 7 slate shipped today. ... The question is when are we going to see additional form factors. We'll see some at Christmas, we'll see some after Christmas, and all through the next year. ...

Q: Windows 7 had a great launch, Office 2010 is out, you're gaining share in Bing, you have a new phone coming out. Why do you think the stock is idling?

A: I don't control the share price. I'm pretty optimistic. Obviously, the company actively continues to buy our shares. The company is investing shareholder money to buy the shares. It's an expression of our optimism. At the end of the day, the market's saying, "You've done a great job, you've got great earnings; prove it to us, prove that you've got the next generation." With some of the products we have delivered and are delivering, we've got our next shot at that next fundamental perception. But, man, we've delivered earnings, there's no doubt about that.

Q: How long do you plan to stay in your position as CEO?

A: I don't know. I'm working away doing the best job I know how to do. The company continues to grow. Outside my family, this is my baby. I want to make sure that, whenever I go, the baby's in great health. It's not a baby, it must be at least a teenager by now, young adult. I want to make sure the place is in very good shape.

Q: Do you have a Facebook page?

A: Yeah.

Q: I found a few "Steve Ballmer" pages, and wasn't sure whether they were real or fake.

A: I do, but I don't want to tell you which one it is because I don't want to get those friend requests. There's about 11 of them (Steve Ballmer pages). Not as many as there are Bill Gates, but there are a few Steve Ballmers.

Q: How often do you check it?

A: Every day.

Q: Really?

A: Oh, absolutely. I'm on Facebook every day.

COMMENTARY:  I find this interview interesting because Steve Ballmer talks about being "focused" in the development of products, speicifically the Kin smartphone which bombed shamefully.

Actually, I find that Microsoft is focused in some aspects, and unfocused in others.  In desktop and enterprise productivity software, Microsoft is very focused.  Microsoft Office components are meld together and very well integrated on the desktop, enterprise and the Internet.  They must have the same endeavor if they are going to go cloud-based.   The cloud version of MS Office must be gangbusters too, and at a price that is killer.  

As far as the Windows 7 Phone, it's too late Ballmer.  You missed your window of opportunity when the Kin bombed.   If you can't learn from mistakes of the past, then you are doomed to fail again.  The new Windows 7 Phone cannot be incrementally better.  It has to be superior in every way possible against the iPhone and Android phones.   In Ballmer's own words, "you have to be bold" which means being innovative, completely differentiated from the competition, and game-changing, like the iPhone was when it was first introduced.    

I weened myself off of the Google search engine when it first came out.  I still believe BING is a better search engine than Google.   Google realized this early on and has emulated the image viewing features of Bing, and recently added the Instant search feature, which I have to admit needs to be matched by Bing.   The deal with Yahoo certainly help drive traffic to Bing.   The next frontier?  A quantum leap in social search.  All three major search engines receive Facebook and Twitter feeds, but how are search results beneficial and add value for the web user?  Something to think about. 

Ballmer saw the future of computing, so his best strategic and long-term move was when he declared well over a year ago that Microsoft was moving towards a 100% cloud computing business model.   He should also be thinking about developing social games, platforms for developing mobile apps and integrating cloud within social networks like Facebook.  

Courtesy of an article dated September 28, 2010 appearing in The Seattle Times  

WHY CONSUMERS DON'T CARE ABOUT 3-D TELEVISION SETS

Consumer electronics companies are betting big on 3-D television. The 3-D landmark movieAvatar is the highest grossing film of all time, so it's no wonder Sony, Samsung, Panasonic, and Toshiba are aiming to bring that kind of box-office dough to the living room. Yet 3-D TVs haven't caught fire among consumers. Here's why it's the fault of marketers--not manufacturers.

At Best Buy's holiday preview event Tuesday, company heads discussed how 3-D TVs were a surprise disappointment for retailers. "The industry overall had higher expectations for 3-D than what we're seeing now," said Mike Vitelli, Best Buy president, Americas.

Indeed, adoption rates have been low. One recent survey revealed that 83% of respondents didn't consider 3-D TVs important enough to purchase. Having to wear 3-D glasses was a central complaint for consumers.

Best Buy, which has made 3-D TVs a centerpiece of its holiday offerings, doesn't think they're to blame. "It's a marketing problem," says Vitelli. "Both in stores and the way [it's] advertised currently, you get the concept that that's all it can do. It's limiting the consumer awareness and acceptance."

Best Buy CEO Brian Dunn agreed.

"One person said to me, 'Gee, I don't know if I would want a 3-D TV because if you don't have the glasses on, it's cloudy or fuzzy," Dunn said. "The truth is, a 3-D TV is your best 2-D TV as well. The 3-D is just a feature."

This is one message that the ads and promotional material have failed to convey to consumers. Try to think of a single commercial where the actors are not wearing oversize 3-D glasses, and flashy images aren't shown leaping from the screen toward laughing families or Justin Timberlake. You'd never know 3-D TVs work the same way as their 2-D counterparts, or that glasses are not required unless the content viewed is in 3-D.

"Marketing [needs] people to understand that it's a feature, like air conditioning in your car," said Vitelli. "Originally, air conditioning was a high-end feature. Now, it's ubiquitous."

COMMENTARY:  The problem with 3D TV is that it is not ready for prime time.   Wearing 3-D glasses for watching a two-hour 3D film at the movie theater is okay, but having to wear those glasses all the time to watch 3D television is unnatural and an inconvenience.  

Another problem not mentioned above: It's the content, stupid.  There simply isn't sufficient viewable 3D content available to make HD 3D television sets viable at this point in time.   Unless you have very deep consumer pockets, don't mind paying $5,000+ for a 3D television, and absolutely have to own the latest and greatest electronics devices,  then 3D televisions are for you. 

Both Toshiba and Samsung both recently announced plans to introduce glass-free HD 3D television sets.  Sony is probably developing one as well.  

Still, sufficient 3D content needs to be produced to make 3D television acceptable to consumers. This is a classic "chicken before the egg" conumdrum.   3D television content producers are not gong to put their eggs into one basket, until they know that there is sufficient public interest in buying HD 3D television sets.  But, consumers won't buy 3D television sets until there is sufficient content to make the investment worthwhile.  

This also raises a lot of other issues:   Will there be multiple 3D content standards like there is with HD DVD and Blue-Ray DVD?   Which standard will the 3D movie players manufacturers adopt?  Is this the best time to be selling $5,000 television sets?   The Great Recession may technically be over, but it sure doesn't fee like it.  

When HD television were first introduced you could play both regular HD DVD and Blue-Ray DVD's on the players, players were relatively inexpensive, and there was plenty of HD video content.  This time around, you don't have that content.  There was also a lot of pent-up demand for a new television viewing experience.   The recession forced HD TV producers to lower prices. Price competition set in and consumers switched as prices started coming down. 

Courtesy of an article dated September 28, 2010 appearing in Fast Company

 

ERIC REIS AND VENTUREHACKS FOUNDER BABAK NIVI ON THE DEFINITION OF A 'MINIMUM VIABLE PRODUCT'

Eric Ries and I recently sat down to talk about minimum viable products: the product with just the necessary features to get money and feedback from early adopters.

The minimum viable product (MVP) is often an ad on Google. Or a PowerPoint slide. Or a dialog box. Or a landing page. You can often build it in a day or a week.

I recorded the interview and synchronized it with some simple slides below. That’s my favorite way to consume the audio. You can also find a transcript and stand-alone audio below. Eric also highlighted some excerpts from the conversation on Lessons Learned and put together his own presentation on MVPs. Let me know what you think — I’m especially interested if you like the synchronized audio and slides.

What is the minimum viable product?

Nivi: First of all, this is Nivi from Venture Hacks, and I’m talking to Eric Ries from… where are you from?

Eric Ries: From the Lessons Learned blog.

Nivi: From the Lessons Learned blog, formerly from IMVU, formerly an advisor to Kleiner Perkins. We’re just going to have a discussion on a few topics of Eric’s and my choosing.

Nivi: First topic: What is the minimum viable product? Talk to me about minimum viable products.

Eric: OK, well let’s start with the question. Why do we build products in the first place?

In the end, we hope to be able to launch product to lots of customers and have them give us money so that we build a great business.

One approach to solving that problem would be, let’s build a product with the maximum number of features that will maximize our chance of success in the end. But the problem with that is you won’t get any feedback until you’ve already built all those different products.

All those different features, so you ship this product with a ton of features, and generally, by the time it’s done, it’s too late to make sure that you are on the right track.

The alternative would be, let’s do the release early, release often thing, and let’s get feedback as we go. The issue there is, if you just follow the release early, release often mantra, you find yourself running around in circles, because you ship code, you get some feedback from people, you do a focus group.

Some customers say, “Give me feature X,” “Give me feature Y,” now you’re kind of like, maybe sometimes you do what they want, maybe sometimes you’re going to do what you want, and then they get mad at you, and you’re chasing your own tail a little bit because you’re not operating against a clear, long-term vision of what you’re trying to accomplish.

The idea of minimum viable product is useful because you can basically say, look, our vision is to build a product that solves this core problem for customers, these kind of general feature areas, and we think that for the people who are early adopters for that kind of solution, they will be the most forgiving.

And they will fill in their minds the features that aren’t quite there if we give them the core, tent-pole features that point the direction of where we’re trying to go.

The minimum viable product is that product which has just those features and no more that allows you to ship a product that early adopters see and, at least some of whom resonate with, pay you money for, and start to gave you feedback on.

Nivi: So there is some set of customers out there, we believe, that just with these features alone, this product is useful to them.

Eric: Exactly right. And sometimes it’s useful to them because early adopters have the same kind of visioning power that entrepreneurs do, but because they can see what the end product is going to be.

NOTE:  To read the remainder of the interview between Eric Reis and Babak Nivi on the definition of a minimum viable product click HERE:

COMMENTARY:   I am glad that Babak Nevi wrote this piece and transcript of the interview with Eric Reis on the definition of a 'minimum viable product'.  

There is certainly a lot of wisdom that can be gained by inventors and entrepreneurs, but in real life many inventors or product designers develop things they think consumers need, rather than identifying real customer needs, then developing the product that fills and satisfies those needs. 

Another mistake inventors and entrepreneurs make is designing products that are incrementally or slightly better than those of competitors.    Developing a new product that is only slightly better is usually insufficient for consumers to switch to the new product, because the value-added intrinsic value and economic benefits gained from the new product are marginal at best 

Market leaders understand the importance of incremental design, value-added intrinsic value and economic benefits concepts, so they strive to design and develop products that are not incrementally better, but innovative and superior in value-added features and performance capabilities than those of their competitors.

SONY understood incremental design, value-added intrinsic value and economic benefits concepts, so they always waited until after competitors introduced their products and the market gained traction, before introducing competing products of their own.  SONY learned from the mistakes of others by listening to consumers and developing products that were technologically superior and game-changing.   

Steve Jobs of Apple understands these new product concepts very well.  Apple did not invent the first personal computer, portable music player, laptop computer, online music downloading service or tablet computer.  Steve broke away from established product design norms, designing and developing products with design continuity -- standard operating system, graphical interfaces, sleek and modern design, device connectivity, standard colors (white), and unique and innovative features.  

The original Apple  MacIntosh personal computer was equipped with an innovative and unique graphical user interface which used a "mouse" to navigate the screen.   The "Mac" became an instant hit and the Mac established Apple as a personal computer industry leader.  

SONY may have invented the portable music player, but the Apple iPod music player's innovative music dial, sleek and modern design and value-added features stole the market for portable music players from SONY.  SONY has never been able to recover and lost its market leadership.   

The Apple iPhone smartphone came equipped with a touchscreen pad instead of a keyboard, something no other smartphone competitor had.  The iPhone was a runaway best-seller, selling nearly 10 million units within the first year.  Today, the iPhone 4, its fourth generation, has vaulted the iPhone into the number two position in smartphone market share, ahead of #3 RIM BlackBerry and within breathing distance of #1 Nokia.

The iPad was not the first tablet computer either, but it incorporated the same operating system as the iPhone with a larger touchscreen, high-definition graphics, with the ability to run existing iPhone apps and with the addition of digital books and magazines, online videos, films and TV programs.   The iPad has become a runaway best sellers, selling 3 million units in the first 90 days.   

None of the Apple products listed above were perfect, but they definitely fit the definition of minimum viable product.  They were good enough to attract sufficient early adopters, gain valuable feedback to make incremental improvements, extend the product life cycle, and increase market share in the markets they entered.

The value-added product components is really what separates Apple from its competitors.   Their customer service is the best and they have won numerous awards.  Their Apple Stores are something to behold and each has a "Genius Bar" where you can have all your Apple product questions answered, have your new Apple products configured and your programs and data files transferred from competing computers. 

Inventors don't always need a working product prototype or website, but the idea has to fit into what I call the Big Five:  1) Fill a real need in the marketplace, 2) large potential market with barriers to entry, 3) compelling value proposition (patents, trade marks, disruptive technology, etc.), 4) experienced management team in the chosen industry and 5) a successful business model (customers and revenues preferably).

Courtesy of an article dated March 23, 2009 appearing in Venture Hacks

BOSE UNVEILS FIRST TV, WITH 16 MAGICAL, BUILT-IN SOUND-THROWING SPEAKERS

The new system throws sound better than a ventriloquist and boasts an ingenious universal remote (yes, it's possible).

Today, Bose unveiled its first TV, a 46" backlit LCD with 16 built-in speakers, which the company is touting as its most advanced product ever, the result of ten years of research.

But the first thing you'll notice (or won't notice) is that the speakers are nowhere to be seen -- they're actually behind the screen. That might sound like a trade-off -- sacrificing room-filling surround-sound -- but we've heard it, and it's no sacrifice. In fact, when you listen to the system, sound seems to magically emanate from invisible speakers all around you.

The technical key to the whole shebang is something called "Phaseguide" technology: Seven of those 16 speakers are linked with a single, nanosecond timing system. But sightly alternating the sound from each, the sound can seem like it's traveling through space, to your ear, from another point in the room. Additionally, a tube that connects those phased speakers points and directs the sound. In person, the experience can be totally strange: A Bose spokesperson, demonstrating the underlying technology, waved a laser pointer around the room while sounds issued forth -- voila, it seemed like the sound was moving around precisely the laser dot.

In addition, there are six compact subwoofers in a magnesium chassis, inside the TV which are placed facing each other, so that all the mechanical vibration cancels out. That ensures clean bass that does shake your house but remains deep and rich.

 

Yet from a design standpoint, what might be the most outstanding feature also happens to sound like the most boring:  A universal remote that allows any device connected to the TV to be controlled via a simple onscreen interface -- no more hunting for tiny remote buttons.

It works simply: When you plug in a new device -- which could be an iPod or a DVR or a DVD player -- the central media dock recognizes it and then recognizes what specific controls that device requires. Thus, for a Blu-ray player, these might include play, pause, fast forward, etc.

Then, you can bring these up on screen, with a touch-sensitive ring on the remote. Simply by scrolling your finger around that touch-sensitive part of the remote, you can move a cursor around the on-screen buttons. Click and you're there.

The only additional buttons the remote has are the common, universal one: Volume, Channel, Source, and Power.

The system will be on sale October 14th, for $5,349 at Bose stores only.

COMMENTARY:  I can hardly wait to checkout BOSE's new HD television.  Those 16 built-in speakers have to be a killer.

Courtesy of an article dated September 28, 2010 appearing in Fast Company Design

 

 

 

FOR MINIMALIST MOMMIES AND BABIES, BRINCA DADA DESIGNS MODERN DOLL HOUSES TO SPOIL YOUR KID ROTTEN

Toys that won't ugly up your living room have arrived. Who cares if kids don't want to play with them?

Ah, children. What sweet little darlings they are ‘til they go and ruin the clean lines of your DWR living room with their hideous plastic Barbies and Legos and stuffed animals tossed all over the place. You almost want to throw them out (the toys, that is).

One company has turned this niggling clash of sensibilities into a business opportunity. New York-based Brinca Dada (from the Brazilian “brincadeira,” which means “game” or “play thing”) sells dollhouses and mini furniture that look like they were taken from the pages of Dwell. Instead of Barbie’s Pink Dream compound, you’ve got a De Stijl-inspired townhouse and instead of frilly, fringy Victorian lampshapes everywhere, you’ve got recessed lighting -- made of LEDs, naturally. “Nothing brings a parent greater joy than seeing their children’s faces alight as they open the perfect gift,” Brinca Dada writes in its press materials. “But few modern parents would want that toy to stay in the living room forever. Until now.”

So here’s the company's marquee product. It’s called the Emerson house, named for the street the designer, Brinca Dada co-founderTim Boyle, grew up on. Built at a 3/4-inch scale, it’s got all the boring-adult luxuries: scored hardwood floors, cut-stone walls, wood beams -- even solar panels on the roof that power the aforementioned LEDs. The cost: $329.99. (Which could probably buy you three real houses in Detroit.)

Then we've got the Bennett House below, billed as “an oasis in the sea of glitzy toy houses." (It won't be available for purchase until next year). Eschewing color for simple lines and patterns, it's designed in the tradition of the Schroder House by Gerrit Rietveld, the grand-daddy of the De Stijl movement. “Townhouses are typically a stack of floors with a few windows on each floor, and no inside/outside relationship,” Boyle says on the company’s Web site. “I prefer architecture that reveals structure and engineering, hence windows extend past floors to show the weight and thickness of the structure.” Wait, is he still talking about dollhouses?

Brinca Dada sells matching furniture, too:

Obviously this stuff would be a blessedly minor intrusion on any design-minded household. But would children even play with it? Have you ever seen kids gravitate toward anything beige ... ever? Us neither.

Turns out, parents aren't dollhouse shopping for their kids anyway. See what we mean here.

COMMENTARY:  A lot of parents spoil their kids rotten.   These doll houses take kid spoiling to the next level.   Whatever happened to Lego's and Construct-A-Set?  Let the kids use their imagination and build their own toys and doll houses.   

Courtesy of an article dated September 28, 2010 appearing in Fast Company Design

 

 

INFOGRAPHIC: GLOBAL BRANDS THAT ROSE AND FELL DURING 2010

Apple? Hot. Harley? Not. But wait: Is that a whiff of bullshit we detect?

Recently, branding behemoth Interbrand released its Best Global Brands 2010, an annual report that quixotically tries to figure out exactly how much the world's biggest brands are worth and how they've changed over time.

You can see the full list here, but these infographics are a much nicer way to soak in the findings. To wit, they've taken two slices from the data. One is a chart of the year's big movers in brand value:

And the other is a chart of which industries, taken as a whole, are building on their brand strength:

Now, you might be wondering: How the hell does Interbrand quantify something as fuzzy as brand value? Answer: A magic black box, of course!

The formula for brand value first involves financial profits, multiplied by an index purporting to show the role of the brand in those profits. That produces "branded earnings" for a single year. Then, the number crunchers add a discount rate -- a rough gauge of how long a brand might stick around, pulling in its present amounts of cash. (Note that this is analogous to how corporate valuations are priced, as a multiple of earnings.)

That methodology sounds about right, the problem lies in the quantification. Both the role of a brand in profits and the discount rate (which is composed of 10 components) ultimately come down to judgment calls on the part of the study's authors. Not to say it isn't interesting -- the overall framework makes a lot of sense -- but the end result can smell a bit fishy. Dollar amounts and percentage changes give an illusion of solidity -- but it would be a lot more telling to see, for example, fine-grained quantitative stuff such as media mentions and how those respond to actual news announcements. And, come to think of, how the authors actually arrived at their quantifications.

COMMENTARY:   Internet and computer brands Google, Apple and BlackBerry generated the largest brand value or brand strength increases with 36%,  37% and 32% respectively.  Mobile phones are hot right now.  You can add apps and social games as well.  Google with the Android, Apple with its powerful mobile digital device product line and BlackBerry with strong sales of mobile phone lineup.  All three brands are very profitable.  That one was a no-brainer.  Financial services brands generated the second largest brand value or brand strength increases with J.P. Morgan, Allianz and Visa increasing 29%, 28% and 26% respectively.  Thanks to bailout money.   

I am surprised that Harley-Davidson's brand strength dropped by 24%.  I always thought Harley had strong brand loyalists.  But, where the hell is British Petroleum?  That's a brand that should've plummeted tremendously due to that Gulf of Mexico oil leak.  This is a great example where relying too much on a brand's financial performance can distort things.  

Courtesy of an article dated September 28, 2010 appearing in Fast Company Design

 

ASSOCIATED PRESS DEVELOPING CIRCULAR ADS APP TO HELP NEWSPAPERS COMPETE WITH ONLINE COUPON SITES

 

NEW YORK (AdAge.com) -- The Associated Press is developing an app it hopes will help newspapers keep their hands on a key source of their print revenue -- circulars and coupon inserts -- as readers increasingly read papers on iPads, smartphones and other devices.

The AP's app, tentatively dubbed iCircular, is actually meant to work in conjunction with the AP's white-label app platform, which member newspapers can use to publish apps under their own brands. Jane Seagrave, senior VP-chief revenue officer at the AP, confirmed iCircular, which is being built in collaboration with Verve Wireless, but declined to elaborate, saying the development process wasn't far enough along.

The question is whether consumers see circulars as an inherent part of newspapers, enough to peruse them in newspaper apps, or whether they'll migrate to rapidly proliferating digital coupon services -- much like consumers began to turn to Craigslist and other sites for classifieds.

It's an important question for newspapers because circulars remain so popular with both advertisers and consumers. The first half of this year saw newspapers' print ad revenue, excluding Sunday magazines, fall 3% from the first half of last year, according to Kantar Media estimates. But spending on inserts, which is tracked separately, grew 7.6%, Kantar said.

 

"Ad circulars ... are extremely important to almost every newspaper," said James Moroney, CEO and publisher at the Dallas Morning News. "With the decline of classified print advertising, as far as printed newspaper ad-revenue categories go, it is, if not the largest for a lot of papers, always going to be one of the two or three largest categories."

And because many readers buy the print edition partly or largely for the coupons, coupon apps such as GroceryIQ and Yowza Mobile Coupons could undermine the popularity of newspapers -- in print or in app form.

The AP isn't alone in trying to bring circulars and coupons to newspaper apps. The Toronto edition of the free newspaper Metro offers an iPhone app, built by a Toronto company called Spreed, that lists an "mFlyer," for "mobile flier," among its regular news sections. Clicking it last week let readers swipe through 18 pages of H&M clothes, prices and discounts, accompanied by social-media tools, a store locator and a button that opens H&M's mobile site within the app.

Then there's Zip2Save, the digital couponing service created by Suburban Newspapers of America, a trade association, and subsequently spun off as a separate business. Zip2Save sells national ads and uses the sales forces of 1,200 partner papers to seed local deals. The service, which launched online first, is testing mobile in five markets, with dozens more on the way. Its success would benefit its partner papers, although it could also help wean coupon-clippers from the association with newspaper brands and train them to use pure-play coupon apps.

And there are plenty of pure-play apps already moving in. Coupon apps like Yowza, no to mention text-services like Placecast, are inking deals directly with retailers and beginning to amass audiences. At barely a year old, Yowza has more than 5 million users. Couponing has also been borrowed by check-in apps such as Foursquare and Loopt Star; those services, too, already have millions of users.

A lot of the outcome will depend on execution -- how effectively, for example, a coupon app uses a consumer's location to deliver a relevant deal. Placecast uses text messages to serve deals when consumers are within a certain radius of a store. "The strength in mobile couponing is the ability to tie location to that coupon," said Alistair Goodman, CEO of Placecast. "Is the AP going to do that with their coupon technology?"

Mr. Goodman reports redemption rates from 24% to 65%, depending on the category. That's leagues above the average redemption rate for coupons across media, just 2%, according to Borrell Associates, the local-media research and consulting firm.

"It's unclear at this point who is going to win in the coupon game," said Mr. Goodman. "It comes down to the reach you can bring to the retailer.

Circulars and newspapers could continue their profitable relationship on tablets and smartphones, said Rusty Coats, a consultant in interactive media who works with Spreed. Even news-hounds among Sunday newspaper readers don't stop when the articles do, he said. "Once you get to the rear of the book, so to speak, your hand starts to wander over to the advertising, and the next thing you know you're reading the Best Buy," he said. "That translates very well to what you're doing on the tablet and how that might be laid out."

COMMENTARY:  

According to Coupons.com, in the wake of recent research indicating coupons distributed via FSI (free standing inserts) in newspapers rose 8.4 percent for the 12-month period ending June 30, 2010 compared to the year before, Coupons.com today issued new data that shows digital coupons grew 100 percent during the same period. The data shows that more than $1 billion in digital coupon savings was printed or loaded to a store loyalty card via Coupons.com and the Coupons.com network in the last 12 months, outpacing the growth of coupons distributed in newspapers 10 to 1.

“Consumers continue to crave savings, and more and more of them are tapping digital coupons as an important part of their savings strategy,” said Steven Boal, CEO of Coupons.com Incorporated. “We expect more brands and more consumers to increasingly adopt digital coupons, and we foresee substantial growth across the entire digital domain—with particular growth within social media and mobile environments.”

Printed Savings Exceeds $1 Billion

Printed savings from Coupons.com and the Coupons.com digital network for the 12 months ending June 2010 exceeded $1 billion. This includes savings printed or loaded to a store loyalty card and represents a 100 percent increase compared to $529 million the year before. In addition, printed savings in the month of June 2010 exceeded $110 million, the highest ever recorded by the company in a single month. Growth is attributed to several key factors, including continued consumer adoption of online printable, save to store loyalty card and mobile coupons and increased use of digital coupons by brand marketers, including manufacturers and retailers alike.

Increased Brand and Consumer Adoption of Digital Coupons

According to research from NCH Marketing Services, the Internet was the fastest growing distribution vehicle for coupons during the first half of 2010, indicating increased adoption by brand marketers. In addition, according to the most recently available redemption data from NCH, the Internet coupon category outperformed other types of coupons with regards to share of redemptions to percent of coupons distributed, making it the most effective coupon method for marketers.

Representing 20.8 percent of the U.S. population, 46.4 million American consumers are now using online coupons, up from 40.2 million in 2008. Of the 46.4 million online coupon users, 12.9 million do not read any part of the Sunday newspaper, an 18 percent increase over 10.9 million in 2008.

Additionally, indicative of trends in the consumer vernacular, Internet queries for coupons and related terms increased on search engines. Specifically, searches on Google for “Printable Coupons” increased 67 percent over a year ago. In addition, coupons are increasingly speaking up in the social media conversation, where consumers are sharing them within their networks and brands are using them to entice and reward Likes and followers. In a report by Razorfish, the number one reason consumers followed a brand on Twitter or Liked a brand on Facebook was access to exclusive deals or offers. Coupons.com has helped many leading brands with their social media presence, generating millions of coupon prints and encouraging millions of Likes and other engagement objectives.

Consumer interest in savings is expected to continue in better economic times. Research shows that even if economic conditions improve, 8 out of 10 U.S. adults plan to continue to engage in couponing activities.

To support current and continued growth of digital coupons, Coupons.com Incorporated is increasing its workforce and is looking to hire approximately 50 additional people, growing the company’s workforce by nearly 20 percent. The majority of the positions are located in Mountain View, California, with other openings across the country in regional sales offices.

Courtesy of an article dated September 27, 2010 appearing in Advertising Age

AOL ACQUIRES TECHCRUNCH FOR A REPORTED $30 MILLION, FORMER OWNER MICHAEL ARRINGTON STAYS

NEW YORK (AdAge.com) -- AOL CEO Tim Armstrong told Ad Age today that he wants a "build-first" culture at his company, in which the growth is sparked internally, like the world's oldest startup. So why did he also just pay a reported $30 million, including incentives, to buy TechCrunch, the tech and startup news blog founded by former attorney and impresario Michael Arrington?

Scott Gries

Tim Armstrong

It's an echo of AOL's 2005 purchase of Weblogs, a collection of blogs that included Engadget and Joystiq, but it's a different direction than AOL's more recent build-not-buy ethos. But AOL isn't done. Earlier today it announced its acquisition of video startup 5Min for close to $65 million, and it has kicked the tires on companies such as Mashable and Howcast.

So why did AOL choose to buy?

TechCrunch has a big 'quality' audience: TechCrunch claims its network of sites reaches more than 9.2 million readers every month, generating 30 million page views in the process. ComScore says it draws in about 7 million global readers per month. Either way, it's clear they're high-value readers. Unlike Engadget, the profile of TechCrunch's audience tends toward angel investors, venture capitalists, executives and people highly interested in technology news. "There's almost no overlap between the two," said AOL sales chief Jeff Levick.

TechCrunch brings more of an insider's readership, which AOL can potentially sell at higher ad rates.

But it's also a consumer audience: Even without AOL, TechCrunch has managed to land consumer advertisers such as Cadillac and Mercedes. "You get both audiences," Mr. Armstrong said. "We felt it's a two-for-one transaction."

TechCrunch has conferences: Along with TechCrunch's readers, the blog company's bi-annual Disrupt conference is a moneymaker, according to Mr. Arrington. Every tech startup pays money to set up a tent and make its pitch to the hordes of investors that show up. Also, bigger media outfits (such as AOL) come to see what the next big startup will be, presumably so they can buy it.

 

Michael Arrington

It may be profitable, or close to it:TechCrunch is a private company and does not publicly disclose its revenue figures, but Mr. Arrington has claimed in the past that the company is profitable, booking close to $10 million annually. That figure may not be far off, and given its relatively lean staff of around 32 people and its highly attended conferences, it's easy to see TechCrunch in the black.

AOL's internal startups have been problematic: AOL's best media properties, such as Engadget and Joystiq, were acquired from the outside. Meanwhile, its internal media startups have lacked focus. Said one AOL staffer: "Everyone in the company is very aware of the implications when Armstrong says he will continue to invest in things that are profitable, and that has implications for the existing properties."

OK, there's one potential pitfall: Mr. Arrington's big presence on TechCrunch cuts two ways. His voice, the loudest and best-known on the site, could be potentially troubling for his new bosses. Mr. Arrington becomes a part of the story when he publicly jousts with PR folks as well as executives, which may become a liability for AOL, a large, publicly traded company. It remains to be seen whether that voice will cause trouble for Mr. Armstrong.

Readers, of course, love it. But the other question, then, is whether news blogs built around a personality can continue to thrive after that personality's eventual departure is an open question for not just TechCrunch but Business Insider, PaidContent, GigaOm, Mashable, Venturebeat and ReadWriteWeb.

But Mr. Armstrong isn't worried: AOL has locked down Mr. Arrington for three years and Mr. Armstrong would like him to stick around "forever."

"A lot of these companies do start out as founder-driven, but we would expect Michael and the brand to continue to grow on a go-forward basis," he said.

COMMENTARY:    The TechCrunch acquisition by AOL was quite a surprise to me, and will increase the number of quality eyeballs for AOL advertisers.  That's the strategy.   AOL also wants to improve its technology news and information.  TechCrunch is definitely better than Engadget.   I  reference TechCrunch all the time and follow them on Twitter.   Anytime the owner of a business has a huge cultural presence and is the heart and soul of the business, you definitely want to insure he is around to run it.  I am glad to see that AOL is taking a hands-off approach.  Hopefully the deal is a win-win for both parties.  I look forward to TechCrunch mentions on AOL, since I use them for my business email. 

Courtesy of an article dated September 28, 2010 appearing in Advertising Age

HOW BUSINESS INTELLIGENCE STARTUPS COMPETE AGAINST THE BI INDUSTRY LEADERS

A handful of start-ups have ventured into the business intelligence market armed with user-friendly interfaces and more accessible formats, hoping to exploit a weakness among the companies currently dominating that market.

Business intelligence companies like Cognos Corp., Business Objects SA and Hyperion Inc. built multi-billion dollar businesses by helping corporations sort through, organize and make sense of data that's stored in disparate systems. But those feature-rich products were built for IT professionals and specially trained analysts.

Now a new generation of venture-backed companies, armed with innovative technologies and updated business models, is edging into that market by selling products aimed at all users.  Over the last year, venture capitalists have provided Series A fundings for companies that include:

GoodData Corp.,Indicee Inc., Predixion Software Corp. and Sisense Ltd.There are also several early companies, like Tableau Software Inc. and Adaptive Planning Inc., that are making progress in this space.

Though most of their products differ greatly, they're all chasing the opportunity to sell business intelligence to the individuals, departments and smaller businesses that haven't had access to the data they need.

They have some powerful competitors. International Business Machines Corp., Oracle Corp. and SAP AG collectively spent $12 billion in 2007 and 2008 to acquire Cognos, Hyperion and Business Objects, respectively--the three largest companies in the sector--and they'll certainly protect their investments.

The Need For Business Insights

Business intelligence systems pull data from multiple sources across a company, such as supply chain, inventory, billing and customer databases, and compile them for analysis and reporting to help companies perceive and analyze changes to their businesses.

Though many large corporations have a business intelligence system in place, this product, and the infrastructure costs and consulting fees that come with them, are beyond the budget of most medium-sized businesses or individual departments. Even for managers who have access to one of these systems, if they want data beyond regular reports, they need to work with the IT department on a custom query, which takes time and money to generate.

"You kind of have to know what you're looking for before you start looking," said Forest Baskett, a general partner with New Enterprise Associates. "There's a huge host of questions that would give you some insight into how to run your business that [aren't] being asked."

So far, customers are responding to the newer options in the sector. Baskett's firm has invested $15 million in Tableau Software, which makes desktop software that enables people to visualize and manipulate corporate data from different sources. It expects to finish this year with between $30 million and $40 million in sales, up from about $6 million in 2007, said Christian Chabot, its chief executive.

Qlik Technologies Inc. was a pioneer in getting business intelligence products to departments and smaller businesses. By building in-memory processing technology that enables individuals to sift through and analyze large data sets on their PCs, the company, which raised money from Accel Europe and Jerusalem Venture Partners, was able to reach the public markets and generate $157.4 million in revenue last year.

Though technologies like these would likely have been desirable many years ago, advancements in technology and changing expectations are making them happen now. Personal computers are much more powerful and able to handle data-intensive tasks better than in the early days of the powerful incumbents. Also, employees have generally become more computer savvy and have higher expectations of what software should be able to do.

"As a business user, I just want to click-click-click and get my answer," said Bill Soward, chief executive of Adaptive Planning, a provider of hosted financial planning and reporting software whose backers include Onset Ventures. The growing popularity of easy-to-use consumer applications has created an expectation that "business applications [will] work just as well and be just as intuitive."

Simple-To-Use Vs. Simplistic

Putting a simple user interface onto a complex data processing tool is challenging, however, and many companies struggle with where to draw the line between simple-to-use and simplistic.
"That's the challenge in this market," said Mark Cunningham, founder and CEO of Indicee Inc. "What is the sweet spot and how do we find it?"

Cunningham has spent nearly two decades looking for that sweet spot. In 1991, he and his brother founded Crystal Decisions, now part of SAP, with the goal of making business intelligence accessible to everyone by building a Windows-based product that would even let "mom run reports on her recipes," he said.

But to land large sales the company had to sell to corporate IT departments, which were made up of sophisticated users. Crystal Decisions began grafting new features onto its product to keep up with competitors and meet the demands of those sophisticated users. "All of a sudden, you turn around and your product's a mess," Cunningham said. "That's been the pattern in business intelligence for the last few decades."

Internet-based marketing and software-delivery methods are making it easier than ever for companies like Adaptive Planning, Indicee, Tableau Software and many others to reach under-served customers, but delivering the product over the Internet is not enough by itself to get the kind of growth venture investors seek.

For example, LucidEra Inc., which was trying to bring business intelligence to smaller companies using a software-as-a-service model, shut down last year after raising $22.6 million in venture capital. Its assets were sold to Pentaho Corp., which wanted to graft LucidEra's user-interface onto its open-source business intelligence software. Also, after five years in the market PivotLink Corp., one of the earliest software-as-a-service business intelligence companies, has yet to reach $10 million in annual revenue.

Offering a hosted version of Cognos or Business Objects may bring down the price of the software itself, but it has limited impact on the data integration and customization costs needed to get a business intelligence system up and running. That's why most venture-backed companies in this sector have narrowed their focus to avoid high implementation costs and ensure that their products can be used by the savvy and un-savvy alike.

Targeting Specific Data Types

In January, PivotLink expanded beyond its traditional, but hosted, business intelligence business, and began selling a set of pre-built templates called ReadiMetrix that are targeted to specific types of data (one for sales, one for human resources, etc.) to make it easier for individual users to get going. By the middle of the year ReadiMetrix accounted for about a third of its new customers, according to a company spokesman.

That's a similar model to what Cloud9 Analytics Inc. has pursued over the last two years by selling business intelligence applications built for sales and marketing managers. That company raised an $8 million Series C round in May from Mayfield Fund, InterWest Partners and Leapfrog Partners. Companies like Adaptive Planning, which is profitable with more than $10 million in annual revenue, and its venture-backed competitor, Host Analytics Inc., have focused on business intelligence for financial planning.

Others, like Indicee and GoodData Corp., whose backers include Andreessen Horowitz Fund and Global Catalyst Partners, have tried to limit the type and amount of data their systems can handle, in order to make them more accessible to the average person.

GoodData, which, like Indicee, launched late last year, focuses almost exclusively on data from other software-as-a-service applications and has a limited ability to handle data from sources larger than 50 gigabytes. Even with that data limit, GoodData is still able to address 90% of the market, said Sam Boonin, its vice president of marketing.

Meanwhile, it's unlikely that IBM, SAP and Oracle - the companies that dominate the business intelligence market - will do nothing as one or more start-ups chips away at their businesses, especially since the barriers for the incumbents to develop or buy new technology is very low, said Dan Vesset, vice president of business analytics at research firm IDC.

"It was a big investment [for the largest software companies to get into business intelligence] and they all need to get their money back," he said.

IBM, Oracle and SAP spent billions to acquire the three biggest companies in the sector in recent years, but a group of new companies is carving out a niche by offering more accessible, user-friendly formats. The new technologies are opening up the products to more medium-sized businesses.

COMMENTARY:  The business intelligence or predictive analytics software market is concentrated at the top by the Big Six, consisting of IBM, SAP, Oracle, Microsoft, SAS and MicroStrategy.  After this there are a few challengers, most of them niche players that concentrate in industry verticals like insurance, finance, retail and foodservice.  The remaining BI firms are as noted n this article, primarily BI startups that are fighting for the rest of the BI pie.  Some of the stars in the latter group include Tableau Software and and Qlik Technologies.  

I consulted for a predictive analytics software vendor in 2006, and during the course of my research discovered just how expensive business intelligence software can be.  Back in 2006, most users were large Fortune 500 and some of the larger medium-size firms.  These pricey Bi software applications were out of reach of small firms, so it is refreshing to find that several BI startups have been founded to serve the small business user.  

I have used some enterprise-level BI platforms like Oracle, My SQL, Hyperion and IBM Cognos, and have found those applications extremely cumbersome to use especially when combining data from different database formats.  Many times, I downloaded the information as an ASCII file format and uploaded into a spreadsheet, which I could then upload into the BI platform.  During this process, I found myself "cleaning" the data so that it could be in usable form for analysis purposes.  This has always been the cunumdrum with BI software applications.  A lot of them don't talk to each other, and a small vendor doesn't stand a chance unless your BI platform is compatible with that of the Big Six.  I actually ran into this problem while consulting with my client.  As a desktop BI app, it was fairly good, but lacked the ability to tackle large enterprise users.  

It's coincidental, and I will pat myself on the back for predicting that the BI market was greatly under served, especially among small firms, and that this would be a great opportunity for small BI startups to exploit.  Judging from this article, that is exactly what has happened.  With the growth of SaaS BI firms, the overall BI market has been able to grow reversing prior industry growth trends.  

Overall business intelligence software revenues for 2010 are projected to grow by about 7%, which is an improvement over 2009, when BI revenues grow only 4.5% due to the Great Recession.  The hottest BI segment is Software as a Service BI or SaaS BI, and according to IDC, this segment is projected to experience annual growth of 22% through 2013.     

Courtesy of an article dated September 27, 2010 appearing in The Wall Street Journal

FACEBOOK GAINING SIGNIFICANT SOCIAL ECOMMERCE TRACTION AS MORE MERCHANTS SIGNUP FOR ITS MARKETPLACE

Over the past year, an explosion of stores on Facebook Inc. and the site's growing number of partnerships with Internet retailers has propelled social commerce to an inflection point, says Ethan Beard, who runs the Web giant's developer network. Over the next 12 months, Beard expects social shopping activity to surge as merchants look to leverage the site's 500 million users.

"Social commerce will be big and disruptive," Beard said in an interview with Dow Jones Newswires, referring to the use of social media tools and content--such as user profiles, customer ratings and reviews, user recommendations and wish lists--to make online shopping a more social experience.

The degree to which social shopping will impact established online retailers, such as Amazon.com Inc. (AMZN) and eBay Inc. (EBAY), is a subject of debate. In August, U.S. Internet users spent 41.1 billion minutes on Facebook, surpassing Google Inc.'s (GOOG) 39.8 billion minutes for the first time, according to comScore Inc. (SCOR).

"It's inevitable that e-commerce and Facebook will overlap or collide," said Scott Wingo, Chief Executive of ChannelAdvisor Corp., a software maker that helps merchants sell goods on Amazon and eBay. "Facebook will be a top-three channel for all retailers within two or three years."

Beard said the U.S. e-commerce market, worth $133 billion last year, will continue to expand, providing ample opportunity for all competitors.

He argued that Facebook's push into social commerce will benefit established online retailers that choose to partner with it. For example, Amazon already lets customers sign in through their Facebook accounts, enabling the retailer to make recommendations based on people's profiles or remind shoppers of their friends' birthdays.

Amazon declined to comment about Facebook when reached.

An eBay spokeswoman said the company will benefit from the growth of shopping via Facebook because its PayPal payments service is now used on the social network.

Google did not respond to a request for comment.

About a year ago, 1-800-Flowers.com Inc. (FLWS) opened the first Facebook store. Facebook won't disclose how many companies have opened stores since then, but Payvment Inc., a third-party software provider, says it has helped more than 30,000 merchants establish sales channels on the site.

A recent survey of 135 top retailers and consumer goods manufacturers by research firm Altimeter Group found 86% of respondents are preparing to launch some sort of social commerce strategy by 2011.

For now, Facebook is letting retailers and third-party software makers take the lead in figuring out how to best meld social networking and online retail. Beard says brand name retailers like Levi Strauss & Co. are embedding Facebook's increasingly ubiquitous "Like" button into their sites. That allows them to tap into Facebook's huge vault of user information.

Children's clothing retailer Tea Collection used Facebook's Like button this summer to let shoppers vote on their favorite items, with the winning piece going on sale the next day. The retailer said the promotion enabled people to share their favorite items with Facebook friends, helping drive up visits to its Web site by an average of 300%. Revenue rose tenfold.

San Francisco-based Payvment helps small merchants set up storefronts on their Facebook fan pages, while Minneapolis-based Alvenda Inc. has bet on a model that lets big companies pitch products and services to people via their Facebook news feeds.

Last month, Alvenda helped Delta Air Lines Inc. (DAL) became the first airline to let customers book flights on the social network, a move Alvenda chief Wade Gerten says prompted scores of inquiries from airlines around the world looking to jump into social commerce.

COMMENTARY:  Judging from the number of online merchants Payvments, Inc., a San Francisco-based leader in social network powered ecommerce, that has assisted merchants to establish an ecommerce presence on Facebook, it certainly appears like social ecommerce could eventually become a threat to both eBay, Amazon.com and even Craigslist.  eBay is threatened less because it owns online payment service company PayPal, which serves merchants on Facebook.  

I really haven't paid a lot of attential to social ecommerce, but since Facebook is privately-owned, and there are thousands of individual ecommerce merchants, it's difficult to get a handle on their total gross sales, and how much Facebook is making off these stores, but I bet it's growing. 

Courtesy of an article dated September 27, 2010 appearing in The Wall Street Journal