Uf!

My faith has been restored: we live in a civilized business world where everybody can be a winner, sky is the limit etc.

More specifically, as far as the 700Mhz part of the sky is concerned, the breaking news are that there are no breaking news and no disruptive solutions:

Winners

US government has won

~ 20 billions of declining US  $.

AT&T has won

the C-block and the pride of carriers being carriers.

AT&T’s lawyers have won

significant fees and gem experience from lawsuits concerning the Openness clause.

Google has won

• the right to patch their apps on (carter)mobiles,
• access to the mobile advertising market (~ 3 billions d.US $)
• and saved ~ 5b.d.US $ to invest on their core business and on P&L  communication (partnerships and lobbying)

Consumers have won

• a stable thus fitter-happier-more productive market
• having the actors empowered and doing their best to focus on client satisfaction with the cease of this corporate battle
• a monetization of their mobile clicking
• federal income

(others)

… you’re welcome to brainstorm.

Geometry: Symmetry and a 3D market that moves in balance.

The equilibrium of this auction is a piece of art.

The main financial flows are organized symmetrically, in analogy of size.

This is my oversimplified prism:

• Big still pay the Big (B to B) : AT&T pays FCC
• MicroPlayers AKA “consumers” pay attention that pays Google (MP to G)

The notorious interoperability in telecommunications could actually apply to business models as well , since each one has found its place in this multidimensional world.

As you can see above  the 700 MHz space has been defined in 3D :

Little red axe: MP to G

Big red axe: B to B

The long red tail: their future interactions.

I commit to review my proposition to do away with auctions as sales procedures, taking off my hat to these infamous Google game theorists.

Hey guys, would you care to take a look into tougher games once you’ve finished with business peace?

Georgia

Judging from Vincent’s latest post (and the comments!) about why he thinks Android will suck, there are many misunderstandings about global smartphone markets. First of all, they are a small subset of all handset market – just about 10%. There are many who are blinded by their US-centric power-user views. The echo chamber of blogs doesn’t help much, especially because most blogs are also U.S.-based. This smartphone market share graph by Volker Weber is one of the best to illustrate that North America is totally different than other markets. The differences do not limit to smartphones, there are huge differences in mobile usage also.

The other thing to note is that the dominating player right now with more than two thirds of the market is Symbian, which is backed by, among others, the number one mobile manufacturer, Nokia. Both have summarily dismissed iPhone and Android as nothing more than niche (“iPhone is nice, but that’s about it”, “Just another Linux phone”?). They are also both usually missing from all reporting concerning Android and iPhone. Not taking them into account is like talking about PC industry and forgetting about Windows and Dell.

It’s always a good reminder that Nokia is also the world’s largest MP3 player and digital camera manufacturer. They also have more than half of the smartphone market. From a U.S. perspective this might not be so visible, because in the U.S. market the best selling smartphones are Blackberry Pearl, Motorola Q and Apple iPhone. If these are your idea of smartphones, do yourself a favour and familiarise yourself with Nokia’s Nseries (for consumers) and Eseries (for enterprise).

In the Open Handset Alliance’s FAQ, the alliance says that the benefits of an open platform for operators and manufacturers are lower costs and flexibility to offer services. For consumers, they promise cheaper prices, but given that most phones are given free by the operator or that it doesn’t actually make any business-sense to do give phones on a discount without a reason, this is probably a joke. Also, do not read too much into the “partnerships” in OHA, as many of those companies are also involved with Symbian and many other mobile initiatives.

The business model of your average mobile carrier is to make money out of you by offering you value-added services. The problem in the marketplace is that most people are just fine with voice and SMS. In the EU, many people feel that mobile data is still too expensive to the extent that the EU will probably mandate some price limits. Seriously, this is an industry that thought WAP and walled gardens were the future. Open competition is an anathema for them.

What the carriers with their monopoly mindset didn’t see coming was that internet is everywhere for far more competitive price and experience than what they can deliver. A surprise hit in Finland is a USB-device with 3G connection with gives you mobile broadband to your laptop with fixed monthly price. Why not just use your mobile’s Bluetooth instead is something a more technically oriented guy would think. But that’s why this guy can’t understand either why Google sees more search activity from an iPhone than from other handsets.

Many ISPs have started to adopt the mobile operators’ tactics now that the basic service is so low-margin. Of course, they can’t go as far as they’d love – you can’t imagine your ISP mandating what kind of computer you can use to connect to the net. In part, this is what the net neutrality discussion is about.

Google reported some time ago, that iPhone is by far the most used mobile user-agent. You can take this as a success story to Apple (and AT&T), but you could also see the sorry state of internet on mobile. A device with a tiny market share dominates internet usage? This is of course good news for iPhone carriers, who would love to have more customers like that. The question is, is the reason that using the web is so easy on an iPhone or because the iPhone owners behave differently? A little bit of both is always the easy way out, but whatever, the bottom line is that it brings more internet traffic revenue to mobile carriers. One point of warning, though, one reason for iPhone’s search dominance to keep in mind is only hinted in the article – the default search engine for many mobiles isn’t Google, but Yahoo! or even an operator’s own.

Then there’s the talk about the open platform of Android. One problem when talking about iPhone SDK and Android is that, right now, neither are “real” in the sense that so far all we have seen is hype. As a Symbian boss said, “We take [Android] seriously but we are the ones with real phones, real phone platforms and a wealth of volume built up over years”. In 2007, 141 different models and 77,3 million Symbian phones were sold. The fight between Android and iPhone SDK is pointless if you don’t include Symbian in it. It is open (to an extent), it’s free, there’s no AppStore (which is good and bad), there’s digital signatures (which is good and bad). And there are almost 9,000 third-party applications.

Want IM and VoIP on your smartphone today? Here’s a Gizmo client for Symbian S60 -platforms by Nokia (See the site for other cool apps if you happen to have a compatible phone). Do not forget the power mobile operators have over their networks, even that app can’t use VoIP on 3G, just on WLAN. Apple and Google are not mobile companies and that’s why they try to change the rules more to the their liking. This is a good thing, but history has proved these efforts have so far been very futile.

This Wired article on Motorola ROKR couple years back is a good reminder of some laws of the mobile market. Of course, the article didn’t age that well (which seems to be quite common at Wired), but the middle part with Nokia’s Vanjoki is worth a second read, especially now that Nokia is busy with Ovi.

PS. I’m a low-profit customer for my mobile operator, I have a simple SonyEricsson K610i with Opera Mini that I use web with like three times a year. I tried to use mobile internet while “outside the grid” (e.g. WLAN or DSL), but because I happened to be outside a major city (and 3G connectivity), the experience sucked a lot. We wanted to see a YouTube movie but were unable to. And this was 2008.

Hello again, Vincent here. Excuse me, I seem to be in a cranky mood lately, as far as technology goes, probably explaining my public rants towards the Facebooks and Scobles of this world. But I can’t let that stop me, here’s another one, aimed at Google’s Android.

Yesterday, Rich Miner, group manager for mobile platforms for Google, announced that he believed the distribution of Android to surpass that of the iPhone-OS. Maybe so, but I have little doubt that it will be equally, if not more crippled than the iPhone has been so far.

Three reasons:

1. hardware,
2. carriers,
3. and the business-model.

On the hardware-side, Google will have to design an OS for a number of mobile-technologies, ranging from Samsung to Motorola. The kind of legacy-support kind of reminds me of a number of other software-projects: Microsoft’s Windows, which is historically (maybe not currently) known for its software-vulnerabilities due to its legacy-support; and cross-platform web-ware like Adobe’s Air and Flash, and Sun’s Java, both not exactly top-of-the-line in terms of performance and elegance. But, cross-platform alone has never stopped developers from creating (mostly free) applications. So, my worries here are security and user-interface, and I expect the latter to especially suck.

The other side is the carriers, who have shown no qualms about enforcing their rules on both hardware- and software-manufacturers. Fact is that while iPhone 2.0 may become more open, it will be limited by Apple to not disrupt their business-arrangement with carriers. This is implemented in two ways: in the restricted range of applications that can be developed for the iPhone (e.g. very likely no Skype) and the distribution of said applications (centralised and approved by Apple or NO GO).

Finally, the business-model. When the iPhone SDK was released, it was reportedly downloaded more than 100,000 times. Very likely this happened for several reasons:

1. the market for Apple-products is notably less price-sensitive (k-ching, baby!);
2. iTunes as a store (easy $$$);
3. VCs like Kleiner Perkins are holding out carrots (omg, I’m gonna be rich);
4. and it has strong relationships with carriers (a big barrier for mobile software-publishing so far).

Will the same thing happen for Google’s Android? Let’s see.

• It’s Google, and we all know that the company does not have a history for charging for things.
• While Google has created ecosystems of “apps” with its iGoogle and Google desktop-service, I don’t think any of these are premium. Also, their video-store, its one commercial platform, has failed.
• Similarly, it’s releasing the OS for free under an Apache Software License, and we all know how easy it is to make money on open-source platforms.
• There is a fund, but it comes from Google, not exactly a signal that the market believes in Android’s commercial success
• It does have confirmed partnerships with carriers like China Mobile, Sprint Nextel, and T-Mobile, but how restrictive will these partnerships be?

And probably some other things I forgot.

I may be cranky, but believe me that I want software like Android to succeed. Just like I want a self-sufficient Linux OS (no, it doesn’t exist!). But Google’s strategy appears too fragmented, too focussed on the technology, and too little on the business of it. Maybe, maybe, Google is planning to become a carrier themselves. There have been plenty of rumours about that since the 700 Mhz auction. Instead, I expect that their main goal is to extend their advertising-platform as efficiently as possible to the mobile sphere, and that that would be incompatible with a large technology-push towards building physical networks.

What do you think? Thumbs up or down for Android and why???

Jason,

You sure don’t know me. I’m one of your anonymous 7,000 Twitter followers (my feed here), your whatever number of blog readers, and I’ve watched a serious number of podcasts featuring you. I think you do a fantastic job at sharing your passion for entrepreneurial adventures & your obvious will to change the world. I think Mahalo is a brilliant Wikipedia-style idea, and I have a lot of respect for your public speech & communication skills.

Same with your recent post on startup cost-killing rather modestly entitled 17 Really Good Tips to Save Money. Most of it was compelling, and I had all the office read it – I’m an entrepreneur too, I should’ve added before. We’ve decided on applying a number of them, starting with #3 ‘use lunchtime for meetings’, #2 on second monitors (especially to software developers), & most of the rest was already implemented but #4 & #12 which I fiercly disagree with.

• Your tip #4 says that startups should spend about 600$ on chairs & 100$ on desks. To me, this looks extravagant. Take a look at the picture right here. The leather-style chair costs 59 USD, and the table in front of it another 59USD. That is about 120 USD per work station at my company Emerald Vision (don’t worry, we’re no competition: we do exciting enterprise software. And sorry, website still in French & workin’ on an English version) vs. 700USD at Mahalo. Are you guys extravagant on the West Coast or what? I should add that my chair is by far the most comfortable chair I’ve ever bought. FYI, & I’m not getting any rebate or commission, it’s all from Ikea.

•  Second and last (because, as I said, I loved your post – but a couple little things), tip #12 says startups should buy a 3K-5K USD coffee machine. Come on Jason, no one is making 5K / month in my company as a stipend, and you want me to spend 3 – 5K in a coffee machine? Makes no sense. Here’s our ‘Help Yourself’ space at Emerald Vision. We purchased a 25 bucks American-style coffee machine that’s up and running day & night; a 20USD kettle to drink tea or instant coffee; Xuoan (photo blog here), a web graphic designer & SEO specialist who rents office space from us (see, we had already applied tip #6), brought his good old 130$ espresso-machine that does pretty good coffee, thanks. That’s less than 200 USD overall, & less than 500 USD if you add the fridge & the microwave. 500 USD for a fully equipped ‘Help Yourself’ corner at Emerald Vision vs. 5000 USD for a coffee machine at Mahalo. I think you investors would love working with us.

Before I finish this post, I just wanted to state clearly that there’s nothing either sarcastic or personal in these remarks. These are just 2 plain, sincere feedbacks on your tips (15 of them were just great). For 600$ a chair & 5000$ a coffee machine, I would’ve either tried to quit the digital & Clean Tech business to enter the furniture market in Silicon Valley, or at least tried to buy second-hand Philip Stark design chairs & coffee machine on eBay or so, or most probably provision it for when times get worse on the Web to show how we value cash, or give it out to top performers in the team as a way to show how we care about people working on building the next big thing with us.

I still and more than ever enjoy looking at what you do on an hourly basis on Twitter, reading great startup fish on your blog (like larger monitor = better productivity; or these very interesting thoughts on work-life balance in startups - I needed it bad). I hope you don’t take this post personally, & that we’ll have the chance to meet you some day here or there. Maybe you’re okay for the two of us to sit at a table, discuss treasury management & compare burn rates – all things being equal (we’re a very early startup compared to you). At Le Web 3 (or 4?) in Paris next winter? You may even come to our office at the very center of Paris & try on our wonderful chairs. Keep me posted.

Cheers,

Jeremy Fain

PS1: On #17, come on, do you really need a PR firm? A 15K USD / months one? or even 3 times 15K USD / year one? You, Jason Calacanis? You do more PR than all European startups together (I’m based in Paris, France). Save on this too, or be tough-as-nails bargaining every 6 months or so (tip #15) because they’re definitely not using so much bandwidth with you.

PS2: another French blogger, Hervé Kabla, wrote pretty interesting complementary remarks on his blog here - however it’s in French only, sorry about that.

As some of you have read from the news, a couple of days ago Trent Reznor of Nine Inch Nails released their new album for free on the net. The first part of the four part Ghost I-IV was uploaded to the Pirate Bay and is also available from its website.

Two days after the release, Ars Technica reported that the $300 limited edition, which was available on the site had sold out, meaning that NiN had made at least $750,000. In initial reporting many likened NiN’s approach to that of Radiohead’s In Rainbows, but as Ars points out, the strategy was different in many important ways.

First of all, Reznor uploaded the first part as a torrent, but even so, the album’s website was pretty soon on its knees – a reality check on the true adoption rate of bittorrent or web design/e-commerece mistake, as the free download section didn’t mention the torrent-option at all?

Secondly, and more interestingly, the whole album was released with a Creative Commons license and in the text-file accompanying the Ghost I goes so far as to say this:

We encourage you to share the music of Ghosts I with your friends, post it on your website, play it on your podcast, use it for video projects, etc.

This was missed by many news outlets, like New York Times and even The Register, which went as so far as to call people who uploaded the rest of the album to Pirate Bay as freetards and that they were robbing Reznor off “a cool $2m”. Sure, $2 million in that same opportunity cost money that copyright lobby is always talking about when talking about piracy. Unfortunately, opportunity cost is not real money.

Undoubtedly you’ll be able to find the complete collection on the same torrent network you found this file, but if you’re interested in the release, we encourage you to check it out at ghosts.nin.com, where the complete Ghosts I-IV is available directly from us in a variety of DRM-free digital formats, including FLAC lossless, for only $5.

FLAC? Blu-Ray? Creative Commons? Bittorrent? 320kbps MP3s that beat Radiohead’s 160kbps MP3s to the ground? It sounds like this band knows a thing or two about the interwebs.

So, this guys know what’s high-tech, but that’s not the end of the story. Now, limiting all the fun only to the first part would be traditional. Sharp-eyed fans were quick to note another thing on the website:

Ghosts I-IV is licensed under a Creative Commons Attribution Non-Commercial Share Alike license.

So, even though NiN didn’t make a big fuss about it, uploading and sharing the rest of the work was OK by them. Well, it was inevitable that the full album would hit the nets anyway. NiN simply encouraged their fans to get it from their website, apparently with good results. Paradoxically this approach means that each fan who gets the Ghosts I-IV from NiN’s website will make them at least $5 – while in Radiohead’s version, even then fan-income is not guaranteed, because the free version is always available (legally or not). So, the paradox becomes that by setting a fixed price they might end up better off.

It was really interesting (especially as a decision analyst) that fans were given five price-points, $0, $5, $10, $75 and $300 – each offering more value. In my opinion, this shows a good model for future internet distribution – differentiate between listeners and fans. This shift of focus from unrealized sales to realized value added sales was the innovation in this approach.

Unfortunately, it seems that this whole internet approach seems to work only for major, already known, bands. Hopefully things like SXSW’s massive 4 gig torrent Vincent mentioned earlier are ways to get the internet working for the smaller bands too.

Radiohead’s experiment really pales in comparison NiN’s. In retrospect, who could justify paying more than what was necessary – in this case nothing – for the same product while knowing there were people doing exactly that. Plain simply it didn’t make sense to pay for something if you could get it free. Note that in Radiohead’s model, those who wanted a CD or special editions were told to wait and go to a store, whereas all version were available at launch at ghosts.nin.com.

Then again, what else would you expect from the man who promoted his previous album with hidden USB drives at concerts and made the soundtrack for Quake – the game that pioneered internet gaming? NiN seriously raised the bar for the next high-profile band attempting internet distribution.

PS. If someone missed out on the Radiohead’s free In Rainbows, tough luck. It’s not available for download for anymore for any amount of money.

Hello again, Vincent here.

As some readers may know, I’ve both read and commented on Malcolm Gladwell’s Tipping Point, and found it an interesting book to think about the nature of communities and how certain individuals or groups of them are more influential in passing on ideas than others. That said, while I believe that such “influencers” exist, also from personal experience, I know fairly little about the science of it.

Similarly, Duncan Watts a research scientist at Columbia, working at Yahoo, questioned that principle, asserting that news travels fast, through whatever type of individual. I have no doubt that Yahoo has amassed vast amount of data on what source of del.icio.us bookmarks receive the most clicks, etc., and that the nature of the internet allows even the lowest of the lowest content-provider or -mediator (e.g. yours truly) to lead people to news.

A recent HBR-article gave me some insight into the complexities for companies to measure the value of such referential actions, something they call Customer Referral Value (CRV). It is calculated by estimating the number of successful referrals made by a customer, but differentiating between new customers that came because of his/her referral, and those that would have come anyway. It’s a fairly complex formula and requires some extensive market-research, but you can find a good overview in the HBR-article.

This is opposed to a customer’s lifetime value (CLV), the traditional way of measuring the value of customers, which looks at the amount that the customer’s purchases contribute to the companies operating margin, less the marketing costs to him or her, and projected over a certain period of time.

Using this methodology, the authors of the article measured both the CLV and the CRV of 9,900 customers at a telecom-company and came up with following results:

I added the totals myself, because I thought those would also be interesting. What you can see here is that those with the highest CLV also presented the highest total value to the business, though CRV added considerable value also. What’s also interesting is how these are distributed. The high value shoppers added relatively little in referential value, and only in the medium-levels do we see a high amount of CRV.

Through three one-year marketing-campaigns aimed at the high shoppers with low referential value, the medium CLVs with high CRVs, and the low of both, the company tried to stimulate the customers with lower values in either segment to do more, either by spending more or by referring more. The result was a 15.4 return on investment on the marketing-campaign, meaning that for each dollar spent on marketing to customers, $15.4 was gained in revenue.

Clearly, I could say more about how the authors went about it to make these kinds of gains in both CLV and CRV, however that’s why this nice article was written about it and I encourage people to check it out if they’re interested.

Are there implications for the Gladwell vs. Watts fight? In my opinion, either could be right. What Gladwell has merely done is open our eyes a little towards this whole viral marketing-thing, though certainly some companies were already busy with it. And what Watts is pointing out is that there is great value in building on top of existing networks, something I’m sure the telecom-company benefited from also. The greater lesson here is to look beyond the CLV of a customer, though that already brings a high value to companies, and focus on methods of stimulating word of mouth in innovative ways. How that is achieved depends on the type of business and the networks that it can use to communicate with its customers. Certainly, Milner cheese, which I wrote about a few weeks ago, offers one possible answer. Update: and so does the recent marketing-move by Etsy on Twitter.

This article is mirror-posted on my blog.

Hello again, Vincent here.

Let’s face it, even with nature knocking on our door, some accountant will still ask what this whole thing is going to cost. Science, facts, morality… it’s not enough. I compare it to smoking; even though everyone knows smoking kills, it took pressure—social, governmental, commercial—for people to quit. And the same applies to businesses going green.

Without further ado, here’s five pressures that make the business-case for companies to change.

1. Governmental pressure – let’s ignore for a fact that government is the one keeping its finger on the pulse of scientific research, social, business, and technological trends. But what is hard to ignore is that the government is actively pushing businesses to change, either by punishing the wrong-doers, by subsidising clean practices and technologies, or by providing new infrastructures around these new rules, allowing for businesses to dispose of their waste in better ways and use alternative, cleaner energy-sources.

2. Consumer pressure – like with smoking, not all consumers have been following the new green “religion” quite as passionately. That said, there are the early adopters, the geeks, the pressure-groups, that are insisting on businesses changing their ways. And those businesses are themselves customers to their suppliers and are doing the same thing to them.

3. Business climate pressure – apart from the above, two things will strongly pressure businesses to change: costs and competition. The rising cost of fuel, electricity, and water, etc., as well as the cost of disposing their waste, is a good incentive to implement technologies that help conserve energy and produce less waste. Similarly, as competition will do the same, businesses are forced to respond.

4. Knowledge-carriers – with the amount of scientific research being produced everyday, it was only a matter of time before methodologies would be developed to help businesses become greener. Since this is still a specialised activity, both commercial parties (consultants) and governmental institutions are there to advise companies on how to change.

5. New technologies – new inventions are constantly being brought to the market, that help businesses conserve energy or get it from alternative sources. Think: technology to monitor and regulate energy-use, water-conserving toilets, more efficient lights, green roofs, etc.

Anything I missed?

In a way, you can’t blame businesses for resisting. There have been lot’s of change-initiatives these last decades—from ERP to joint ventures—which have produced questionable, if not disastrous results. For change to happen, it must be driven by strategy first, because doing business is like doing war. There is a high price for failure and no one will be congratulating the loser.

But what is certain, is that eventually there will be no more choice. Those that are slow to react will do so at the cost of an unsympathetic government, of the competition racing ahead, and of customers dropping their support.

This article is mirror-posted on my blog.

Hello there, Vincent here.

One of the stories, I covered last week in my links on my blog, uncovered an interesting statistic. Only about 3% of retail sales in the US happens online. I don’t think these stats are at all coincidental. While I see a bright future ahead for the online retail of media-products, I find that what the internet cannot provide is the “closeness,” that is sometimes needed for evaluating certain types of goods, like food and clothing. I have commented on this before, implicitly, with a post on the web as a third place, and about the lack of cohesion that Facebook provides.

At the same time, as The New Yorker story reports, what the internet has changed is how we shop; it is much easier to research and comparison-shop than it was before the internet-days. A survey by Accenture found that ca. 66% of those surveyed compared products online, and another study showed that the internet played a significant role with ca. 75% of electronics purchases.

IInnovate has an interesting podcast interview with Scott Dunlap, CEO of NearbyNow, which has come up with an interesting way to exploit the informational advantages of the internet and mash that with the qualities of physical shopping. Following short video shows how their service works:

[youtube=http://www.youtube.com/watch?v=_FpKFYRKsY8]

Clearly technology has evolved a lot in the last few years, making this possible. NearbyNow works via the web and via mobile. I’m not sure if they are using any location-tracking & matching services, but certainly they are heading in that direction. On the retailers’ side, there is plenty of technology that makes this possible also. Electronic inventory and point of sale systems allow both for the checking of stock-levels and for consumers to reserve items to be picked up and tried on at a later date.

One issue that entered my mind, is that of efficiency. The way NearbyNow operates is through malls in the US, most of which are, as I found out, owned by 6 major companies across the nation. US’s scale-economies win again! In Europe, the situation appears a little different. Culturally, linguistically, technologically, and legally, it is a much more fragmented market, with far fewer malls also, and that may make it difficult for a unified service like this to operate as efficiently as it would in the US.

There is also the issue of too much transparency, which is worrying to some retailers, and addressed in the podcast-interview. But what does seem certain is that this is exactly the type of service that consumers value, and as such one that any consumer-centric business should encourage.

Will a service like this ever replace shopping in its entirety? No, I’m essentially betting my future that there are plenty of qualities *real* environments will continue to offer over virtual ones. But there is no reason, none at all, to try to integrate the good qualities that the web does possess—information at your fingertips—as elegantly and effectively as possible into those experiences.

This article is mirror-posted on my blog