Outinnovating on the web

This is the financial results period in the US and yesterday both Yahoo and eBay reported their earnings which generated disappointment as their stellar growth rates and cocaine-like margins are slowly falling victim of gravity. In yet another good article, Richard Waters, the Information Industries Editor for the Financial Times, explains why the web behemoths are facing difficult challenges ahead as smaller companies keep on out-innovating them.

And before you go any further, Apple also announced its financial results for the quarter and they indeed managed to sell 270k iPhones during the first 30 hours, which means that they actually sold 2.5 devices per second nonstop! Even though it is less than expected, they maintained their forecast that 1 million devices will have been sold come October.

Technorati Tags: Apple

Brands struggle to address consumers’ multiple digital identities online

Back from Cannes, a French article on how the numerous identities we now have when online make it difficult (yet interesting) for brands to address consumers.

Les publicitaires cherchent à comprendre les identités numériques

About human nature, perception, emotions, irrational behavior and how Google tackles all that

I think I just love the guys at Saatchi & Saatchi! First they introduced the concept of Lovemarks, in which they basically explain why brands have to commit more to the consumers in order to create this emotional link that differentiate pure utility brands from the ones that add more value (hint: one category usually manages to derive substantially more margins, guess which one).

Then there is this article I came across while on the plane today. As often, it can be found in the Financial Times, you just have to admire this newspaper for its constance in quality!
It is written by Lord Saatchi himself (or at least he signed it) and does a very good job at explaining why us being mere humans makes marketing more of an art than a science. Our irrational behaviors and the role played by emotions in our everyday choices makes quantifying customers’ needs very tough, let alone addressing the right message at the right moment in time – those of you interested in marketing and framing behaviors should check this excellent blog.
It gives strong kudos to Google in that it understood before most that presenting prospective customers with the right message at the right time is priceless.

One has to admit that they/we are not quite there yet, but they certainly changed the way the industry thinks about the Internet and for that they certainly do deserve credits. 

Google data versus human nature
By Maurice Saatchi – Lord Saatchi is an executive director of M&C Saatchi 
Published: May 30 2007 03:00
Copyright The Financial Times Limited 2007

Now I am going to tell you about a scorpion. This scorpion wanted to cross a river, so he asked the frog to carry him. “No,” said the frog. “No, thank you. If I let you on my back, you may sting me and the sting of the scorpion is death.” “Now, where,” asked the scorpion, “is the logic of that?” (For scorpions always try to be logical.) “If I sting you, you will die and I will drown.” So the frog was convinced and allowed the scorpion on his back. But just in the middle of the river he felt a terrible pain and realised that, after all, the scorpion had stung him. “Logic!” cried the dying frog as he started under, bearing the scorpion down with him. “There is no logic in this!” “I know,” said the scorpion, “but I cannot help it – it is my nature.”

Orson Welles told this story to show the importance of understanding human nature. If the frog had known the scorpion’s true nature he would still be alive.

Today, the world’s great consumer goods companies are agog at the potential of the Internet to identify “human nature”, measure it and control it; at how Google’s systematic, logical computation can lead the advertiser into an earthly paradise of universal enlightenment – where all the problems of selling and marketing are solved by the same method: the method of data.

Haunted by the pronouncement of the founder of Unilever that, “Half my advertising is wasted but I don’t know which half,” marketers have long sought a set of testable rules about selling as robust as the laws of physics. So they are understandably mesmerized by the possibility that the wastage involved in the $600bn (£302bn) spent annually on advertising can be eliminated at the touch of a button.

First, under the Yellow Pages model of advertising known as “Search”, advertisers are relieved of the burden of addressing those who are not interested in buying their product. If I am selling washing machines, why waste money on costly advertisements for people who are not in the market for a washing machine at the time? How much better if I could talk only to people who are just about to buy a washing machine.

Second, the advertiser is said to have been disadvantaged by lack of data about human nature. The proponents of this theory point out that the amount of data stored on computers last year is equal to the sum of all previously recorded human knowledge; 74,000 times all the books in the US Library of Congress. So now, they say, we can go beyond mere “demographics” and “buying habits” to reach our target market. You could always reach women in Vogue, and gardeners in The Gardeners’ Chronicle, but now Internet data technology can provide “personal profiling” or “strategic targeting” – an intimate knowledge of who you are, your true nature. As the founder of Google says, it can tell you: “What to do tomorrow.”

No wonder people are so excited about all the saving of money this knowledge could bring.

Unfortunately, it will not work out quite like that.

All of us know that the sensations produced by the same object can vary with the circumstances. Lukewarm water will seem hot to a cold hand and cold to a hot hand. Colors look very different through a microscope. Even the sun in the heavens we see only as it was eight minutes before.

The commercial proof of this was best explained by Britain’s most successful newspaper publisher, the late Viscount Rothermere. When challenged on why he did not conduct more research among Daily Mail readers to find out what they wanted, he said this type of data would be unhelpful. Newspapers were emotional items, he said, because: “Getting someone else’s newspaper is like getting into someone else’s bath after they’ve just left it.”

He said it was not that easy. If it were, it would have been the researchers sitting behind the desk of Lord Northcliffe, the Mail’s founder, not him.

It is an inconvenient and stubborn fact that outside Newton’s universe, where physical laws govern reality, the world is conditioned by perception. And, as Freud’s Law of Ambivalence stated, human beings are so complicated that they can love and hate the same object at the same time.

People do not know what they want until a brilliant person shows them. Henry Ford confirmed the point. Asked if he had carried out research before he invented the Model T Ford, he replied: “If I had asked people what they wanted, I would have built a faster horse.”

Human nature is not amenable to prediction based on the trends or tendencies prevailing at the time. It is amenable to startling creativity of the kind practiced by great artists, directors, writers, musicians, actors, who know how to touch a chord in humans everywhere. They are the people that are needed to help advertisers navigate the Internet because, as Aristotle knew 2,000 years ago: “Fire burns both here and in Persia. But what is thought just changes before our eyes. The decision rests with perception.”

If anybody should know this it is the founding geniuses of Google – the living embodiment of the irrational human dream of “two men in a garage” who change the world. 

Technorati Tags: digital advertising, e-marketing, google, saatchi, web 2.0

Boom time for MBAs: Rastignac, here I come!

An enlightening view of the job market in the US from the Financial Times which once again makes me wonder: what the hell are we doing in France to catch-up?
Anyway, there is a flight to NYC leaving in 3 hours, gotta go…

Boom time for MBAs in US as companies step up recruitment drive
By Rebecca Knight in Boston
Published: May 29 2007 03:00
Copyright The Financial Times Limited 2007

This recruiting season at top US business schools is the most competitive since the bursting of the technology bubble, as private equity firms, hedge funds, and real estate companies join investment banks and other traditional seekers of young talent.

According to school officials, not only has the number of companies recruiting at business schools increased, these companies are also making more visits to campus, and devoting more time and effort to wooing newly minted MBAs.

Recruiting at business schools reached its peak in 1999, but after the technology boom subsided, recruiting and hiring was lacklustre for several years. It has recently started to pick up, and this spring, it is “the healthiest in years”, according to Jonathan Masland, of Tuck School’s Career Development office at Dartmouth College.

“Things were still better during the bubble than they are today, but that was irrational,” said Mr Masland.

For instance, the number of companies that came to Tuck this year increased roughly 30 per cent from last year, while the number of office hours offered by companies that recruit at the school was up nearly 70 per cent from the year before.

While big banks and consultancies conduct most recruiting at business schools, boutique investment management groups and real estate companies have recently become a strong presence. In addition, said Mr Masland, consumer packaged goods companies such as Pepsi, as well as information technology companies such as Google and Microsoft, had also ratcheted up management recruiting.

Janet Raiffa, an MBA recruiter for Goldman Sachs, described this year’s recruiting season as “extremely competitive” with “more students getting multiple offers”. “Firstly, the market is very strong, and many banks are growing the size of their US programmes,” she said. “Secondly, more financial services employers are expanding internationally and seeking MBAs for a wider array of global locations.”

Ms Raiffa said Goldman Sachs was reaching out to “groups that may not have been previously tapped”. In the past two years, for example, the bank has added events for military veterans on MBA campuses as well as hosting video links with London for MBAs interested in job opportunities in Europe.

At the Wharton School at the University of Pennsylvania, the number of company visits is up nearly 10 per cent, and the number of positions posted has risen a similar amount. “The philosophy within certain industries is changing, and there is a new appreciation of, and demand for, the different MBA skill set,” said Chris Higgins, senior associate director of MBA career management.

The competitive recruiting season has translated into an improved job market for new MBAs. By the end of February of this year, more than 80 per cent of graduating students at Columbia Business School had secured jobs. Three years ago, that figure was 54 per cent.

Technorati Tags: job market, MBA, business schools

Looking for the “un-Vista”: say hello to J. Allard!

So today we are launching our next wave of “core” products (Windows Vista, Office 2007 and Exchange 2007) and for all I know it may well be the last one to be released as such. In a world where software seems to be increasingly moving online and new entrants keep on disrupting the traditional “packaged” approach, a company with 64% of its bottom-line depending on the operating system, a ”traditional” product if there ever was one, looks like game. Or does it?

True, Windows Vista, as a project, has probably gone over the limit of what is humanly possible. Think for a second that there are over 65 million lines of code… an 86% increase compared to Windows XP the previous version! It is commonly accepted that even good programs cannot have less than 1 bug in every 10,000 lines… so regardless of the zillions tests done there may well be over 6,500 bugs hidden somewhere in Windows Vista.
True, Office faces tough competition from cheaper (hell, some even look like they are for free!) alternatives and most users do not use more than 5% of the 1,000+ functions of the productivity suite.
True, Google has a market cap of over 155 billion dollars and a net margin close to that of drug dealers.

Yet, for some reason I strongly believe things are changing for the better and what lays in front of us is not as bad as what the wisdom of crowds does claim. Take a look at this very good article from Business Week and tell me what you think!

The Soul Of A New Microsoft
Edgy thinkers like J Allard are looking far beyond Windows for the next big thing
By Jay Greene, with Peter Burrows in San Mateo, Calif.
December, 4th 2006
(c) 2006 BusinessWeek

At 3:32 p.m. on Oct. 19 an e-mail flashed across the screens of the 230 Microsoft employees working slavishly to bring the Zune music player to market. The sender was their brash team leader, J Allard, 37. The message included a link to an old video of Steve Jobs on YouTube, mocking Microsoft’s creativity. “The only problem with Microsoft is that they have no taste,” the Apple Computer boss says. “They have absolutely no taste.”
Allard was using one of the oldest motivational tricks in the book–his version of a football coach posting an opponent’s quote on the locker room wall. “I for one…want to see this guy eat his words,” Allard wrote. “Those are fighting words. He is speaking to every one of us and saying that we don’t get it.”

Zune hit store shelves on Nov. 14–a mere eight months after Allard’s team got the go-ahead for the seemingly impossible task of toppling Apple’s iPod music player. Contrast that with the five years and some 10,000 Microsoft Corp. workers it took to give birth to the latest version of the company’s Windows operating system, Vista, which begins selling to corporate customers on Nov. 30 (and to consumers in January). From the start, Vista has seemed like an anachronism–packaged software in a Web 2.0 era where ever more applications are moving off the PC and onto the Internet, some springing forth in a matter of weeks. Microsoft Chief Executive Steven A. Ballmer vows that this time-consuming process of cranking out code, which created complexity and bogged down development, will never be repeated.

No one’s suggesting that Zune will have anywhere near the impact of Vista. In its early form, it is clearly no iPod killer. It’s bulkier and more of a battery hog, and the Zune Marketplace doesn’t offer as many songs or videos as Apple Computer Inc.’s iTunes does. Plus, you pay for them with a confusing point system instead of dollars and cents. Zune will be lucky to sell 3 million units its first year and is sure to lose money for the foreseeable future. Vista, on the other hand, should run on about 76 million PCs by the end of 2007, says Roger Kay, founder of research firm Endpoint Technologies Associates. Vista sales should help fuel an $11.5 billion contribution to operating profits from Windows in the current fiscal year, says Credit Suisse First Boston analyst Jason Maynard.

But maybe the point is that Microsoft needs to find its un-Vista. Several of them, in fact. The software giant is entering perhaps the greatest upheaval in its 30-year history. New business models are emerging–from low-cost “open-source” software to advertising-supported Web services–that threaten Microsoft’s core business like never before. For investors to care about the company, it needs to find new growth markets. Its $44.3 billion in annual sales are puttering along at an 11% growth pace. Its shares, which soared 9,560% throughout the 1990s, sunk 63% in 2000 when the Internet bubble burst, and they have yet to fully recover.

Reigniting growth will require a cultural shift at a company that has long shaped its strategy around maintaining its Windows operating system and Office word-processing and spreadsheet monopolies. That calls for a new breed of leaders who can push the company in directions it hasn’t gone before. “Things are different from the desktop world that most of the Microsoft guys grew up in,” says Michael A. Cusumano, a management professor at Massachusetts Institute of Technology who has written extensively about the company.
No one leader will replace William H. Gates III, the iconic software geek who came to define an era and plans to leave the company in June, 2008. But a cadre of execs is positioned to step up. Steven Sinofsky, the longtime head of the Office unit and onetime Gates technical assistant, has been put in charge of speeding up the Windows product cycle. Ray Ozzie, a relative Microsoft newbie and computing industry icon, is working to Web-ify many of Microsoft’s products.

The soul of the new Microsoft, though–its Geek 2.0–may just be Allard, the vice-president for design and development at its Entertainment & Devices unit. Allard looks and acts nothing like the prototypical Microsofty. Over the years he’s swapped his plaid shirt and khakis–something of a Microsoft uniform–for edgy jackets made by Mark Ecko and other designer wear. He loads up his nine iPods, and now his Zune, with songs from hardcore bands like A.R.E. Weapons. And he’s a downhill mountain biking maniac who has broken several bones after flying off his bike.
More important than his cool quotient, though, is that Allard gets things done–fast. Zune is only the latest example. At the turn of the decade, he led the software giant into the video game business with Xbox, a risky gambit that’s just starting to pay off. Xbox is now a solid No. 2 to Sony Corp.’s PlayStation, and analysts expect it to turn its first profit in the next fiscal year.
Allard is one of more than 100 Microsoft vice-presidents, but he has played an outsized role in shifting perceptions about whether the company can innovate in areas other than packaged software. In June, when Gates announced his plan to focus full time on his charitable foundation, he anointed Allard, along with a handful of others, as the leaders he expects to clear new paths.

Already, Allard and those like him are having an impact. They’re showing that strategies to move the company beyond Windows can emerge and be accepted by top brass as nonthreatening. A key moment came six years ago, when Allard insisted that the new Xbox video game console be developed without using Windows. In one meeting, Gates berated him for suggesting that the operating system wasn’t up to snuff. But Allard argued that it wasn’t specialized enough to handle video gaming. Gates eventually relented, in a decision that is widely seen today as a key to the console’s success.
Even Ballmer, once pigeonholed as a micromanager, seems increasingly willing to distribute power and let those underneath him try new approaches. “I would have been hell-bent and determined six years ago to call Xbox the Windows Game Machine,” he says. “My natural tendency would have been to call Zune something that was related to Xbox, since we had some consumer franchise. And yet we’re really building consumer marketing muscle, and those guys are really teaching and educating us on new ways to do things.”

Never afraid to speak his mind, Allard started pushing buttons way back in 1994, when, as an eager 25-year-old programmer only three years on Microsoft’s payroll, he penned a sea-changing memo titled “Windows: The Next Killer Application on the Internet,” which found its way to Gates. The note, now part of Microsoft lore, helped awaken Gates to the potential and threat of the Web. “I’m a pain-in-the-ass change agent,” Allard says.
That’s exactly what Microsoft needs if it hopes to again set the tech agenda. Windows and Office will deliver more revenues in coming years than the exports of many small nations. But Web spitfires such as Google Inc. and Salesforce.com have the wind at their backs. And while Microsoft continues to recruit top talent, it also continues to see key leaders move on: executives such as Vic Gundotra, a top evangelist in its developer division, who will soon join Google, and Brian Valentine, the longtime leader of the Windows server business, who now works for Amazon.com Inc.

[...] The giant of Redmond is starting to take an Allard-like fresh look at many of its older product lines, as well. Webification can be seen seeping into all corners of Redmond (Wash.) headquarters. Its leading proponent is Ozzie, who developed Lotus Notes in the 1980s, then joined Microsoft in 2005 when it acquired his Groove Networks. Ozzie quickly emerged as heir to Gates’s role as technology sage. Under the year-old “Live” strategy, Microsoft is blending services it launches on the Web with programs consumers run on their PCs. That way, Netizens get a better experience using Web services when they harness Windows and the processing power of PCs. Take Windows Live Mail, a small software program that lets users view various e-mail accounts–even Google’s Gmail–in the same window. Because it runs on a PC desktop, it’s easy to include zippy features such as automatically completing an e-mail address after you type in a few keystrokes. Microsoft will give away services such as e-mail, limited Web hosting, and perhaps one day that portable jukebox in the sky Allard dreams of, making money from advertising and subscriptions.

Challenging Google on the Web and Apple in music are stretches for a company that critics say lacks a culture of innovation. But while nearly all the profits are from the old products, the growth opportunities are in the businesses Allard and Ozzie are igniting. Xbox, for example, should ring up $4.6 billion in sales in the fiscal year that ends next June, says Goldman Sachs & Co. analyst Rick Sherlund. That number should climb 67%, to $7.6 billion, in fiscal 2009. He estimates that Zune sales will climb from $250 million to $575 million over the same period. By that time he expects the Home & Entertainment unit, which includes Xbox and Zune, to kick in $1.2 billion in operating profits.
Lately, some outsiders who work with Microsoft detect signs that the culture is slowly shifting as well. “They’re definitely in the middle of a strategy re-look,” says Hewlett-Packard Co. chief strategy and technical officer Shane V. Robison, who chats with Microsoft brass. “It will be a fairly orderly evolution, but there’s a lot of new discussion that I’m seeing.”

Will Windows Vista be the last rollout of its kind?

As Xmas nears upon us, so does Windows Vista, the latest operating system from Microsoft. Wether Vista is a good OS or not is irrelevant at this point… at least it seems to be the WSJ perspective. The following article stresses the impact the Internet has had on traditional software vendors and the resulting shift in Microsoft’s business model in particular. In my opinion it raises crucial questions not only about Microsoft’s future offerings but also on an entire industry on the verge of unprecedented change.
It is indeed an interesting time to wok in this industry… maybe they were right to call it “Web 2.0″ after all. Not because of all the bells and whistles of  user-generated content but rather because of underlying tectonic shifts and their overall impact on the economy as a whole.

Life After Vista: Can Microsoft Retool for Web?
By Robert A. Guth
November, 27th 2006 – (c) 2006 – The Wall Street Journal

MICROSOFT CORP. on Thursday will begin offering large companies a long-awaited version of Windows, pitching the operating system as the start of a new generation of software. Now the question is: Will Windows Vista be the last rollout of its kind?

Windows Vista is a critically important upgrade to the software that runs hundreds of millions of PCs world-wide, intended to deliver greater protection from viruses and other Internet-borne attacks and includes features Microsoft says will make PCs easier to use. Expected to filter into businesses and homes over the next year — it will be offered to consumers in January priced from $199 to $399 — Vista is a central pillar for Microsoft’s overall growth and an engine of the $200 billion PC industry.
But the company’s developers are already facing a tricky challenge over what to do for an encore. The crux of the issue is how Microsoft’s signature Windows product should adapt to the Internet, and to rivals such as Google Inc. that are using the Net to deliver competing offerings at unprecedented speed.

Microsoft contended with that greater agility during the lengthy development of Vista, which is coming out five years after its predecessor, Windows XP. In that lag, a series of software and service innovations planned for Vista were rolled out first by Google, Apple Computer Inc. and the Mozilla Foundation, the nonprofit that makes the Firefox Web browser. Google, for instance, in 2004 pumped out a free “desktop search” tool for finding information on a PC. Mozilla’s Firefox browser included a feature called “tabbed browsing” for displaying multiple Web pages at the same time.
Microsoft couldn’t keep pace, though it believes it has now matched those technologies. Vista, for instance, includes a series of features to help users find and organize files and use a mouse to quickly flip through open windows of information. The new version of Internet Explorer has tabbed browsing.
“A five-year gap will not happen again,”vowed Steve Ballmer, Microsoft’s chief executive, in an interview last week. The company is working on new development processes so “we can add things with greater and greater agility,” he said.

The fundamental question Microsoft faces is whether the PC will continue to play a central role in tasks people now use it for, from storing music to watching videos and writing documents. In recent years, the spread of high-speed broadband Internet access and a host of new technologies have made it easier than in the past for people to use the Internet for such tasks. Consumers tap services like Flickr, an online photo site, and YouTube, the huge online video-sharing site, to store pictures and videos online — not on their PCs. Increasingly, applications such as email and word-processing are offered as Internet services that don’t require much, if any, software running on a PC. They also don’t require the companies to release whole new versions of software as Microsoft does in its Windows and its Office line of programs. Google regularly updates its search and email services with little fanfare.

Microsoft executives are tight-lipped about how Windows will change, but it’s likely a major redesign of Windows is in store. That means a delicate dance for the company as it tries to retool its software for the fast-changing Internet while trying to preserve one of the richest cash cows in business history. How that balance is handled in the next few years is of interest to thousands of Microsoft customers and the vast industry of Dell Inc., Hewlett-Packard Co., Adobe Systems Inc., Symantec Corp. and others that build their own businesses around the software. For Microsoft, Windows is still its largest business unit, contributing $13 billion in revenue and profits of $10 billion in its most recent full fiscal year.
Mr. Ballmer insisted that there has never been a greater need for software that gives rich capabilities to PCs and other devices used to get online — even though those programs may increasingly collaborate with software that resides on a server somewhere on the Internet. Windows “has a bright and healthy future,” he said.

Microsoft has been adjusting to the Internet since the mid-1990s. The rise of browser software and Web sites prompted predictions that Internet services would become the primary way to store data and handle day-to-day chores for businesses and consumers. Some companies, such as Oracle Corp. and Sun Microsystems Inc., predicted that PCs would be replaced by simpler terminals that just ran Web browsers.
As it turned out, the Internet provided another big reason to buy PCs, as consumers bought them in order to access the Web — and Microsoft benefited. But Google proved that, for companies, the combination of Web services and online advertising could be at least as lucrative as PC software.
Mr. Ballmer was quick to note that Internet offerings increasingly don’t depend on the Web alone. For instance, companies like Google are increasingly developing software to allow work to be done when a user isn’t connected online. Playing to its strength in software, Microsoft has been laying the technical foundations for its own combinations of software and Internet services, he said.

Under the brand name Windows Live, for example, Microsoft plans to offer online services that complement Windows. A separate set of services called Office Live will be aimed at small businesses. Those services are still taking shape, though Microsoft already has an online service called Windows Update that allows users to automatically receive software fixes, security enhancements and other features.
In another shift, the company is trying to make its software more flexible by breaking it into individual components, work that started while developing Vista. After two years of development, the software became so big and unwieldy that in 2004 Microsoft started the effort over, trying to rework Windows so it could be structured as individual pieces that could be changed or removed without disturbing the rest of the software.
Microsoft is likely to offer more components in the future. To try to stay in step with Google, for example, Microsoft could release search software for finding data on a PC over the Web without having to wait until the next major release of Windows. “We still have more opportunities to be even more componentized,”Mr. Ballmer says. Another area of focus, he said, will be to continue to enhance Microsoft’s Internet Explorer browser so it can handle more sophisticated graphics, video and application programs that are delivered over the Web.

Few of these details have been decided, Microsoft insiders say, but how the Windows development is carried out will be largely up to Steven Sinofsky, a senior vice president that Mr. Ballmer tapped this year to manage Windows development. Mr. Sinofsky, a former technical assistant to Microsoft Chairman Bill Gates, is noted for his work with Microsoft Office, the suite of programs that is Microsoft’s second-largest business. Mr. Sinofsky so far has largely focused on finishing Vista and preparing supplemental software for Vista expected next year.
But he has already put his stamp on the division, last summer quietly cleaning house of an old guard that managed the troubled Vista project. Mr. Ballmer has given Mr. Sinofsky wide latitude in choosing how to structure Windows in the future, say people familiar with the situation. Microsoft declined to make Mr. Sinofsky available for this article.

Meanwhile, a cadre of respected Microsoft computer scientists and programmers formed a group under Chief Software Architect Ray Ozzie to start building software that could be a critical piece of what Windows might become, say people familiar with the work. That group, says a person familiar with the matter, sees the future of Windows as much more as an Internet service than software that runs on a PC.
Mr. Ozzie has discussed ways of simultaneously exploiting PC software and the huge data centers full of server systems that Microsoft is building to deliver Internet services. For example, a feature in Office 2007 — a suite of programs arriving along with Vista — allows users to publish their calendars to a centralized service, allowing other authorized Windows Live users on the Web to view the entries.
Some people familiar with the situation see the possibility of tensions between Mr. Sinofsky’s group and efforts like the one under Mr. Ozzie. In a similar tug of war in the late 1990s, one internal faction lobbied to use Microsoft’s Internet browser software to radically retool Windows for the Internet. But that faction lost out to a more PC-centric view of the Windows mission — an outcome that some Microsoft insiders say is one reason the company fell behind in the Internet services Google and others now lead.

“I think that Microsoft is leaving the door wide open for Google to deliver a broader solution on their online platform”

Yet again, another interesting happening in the small world of online services and the race for global dominance between Google and Microsoft. There is also the question about “less is more” and the very large feature set offered by Office vs. its competitors, which keeps ringing a bell …

Google’s Free Web Services Will Vie With Microsoft Office
By Kevin J. Delaney and Robert A. Guth
October, 11th 2006
(c) 2006, The Wall Street Journal
Just as Microsoft Corp. is about to roll out the latest version of its cash-cow Office applications, Google Inc. is beefing up efforts that could win away some of the customers Microsoft is targeting.

Google’s latest move, expected to be announced today, is a plan to bundle its existing word-processing and spreadsheet offerings — online applications that people can use through their Web browsers – under the name Google Docs & Spreadsheets and more tightly weave them together. The services, which are available free, offer more-limited functions than Microsoft’s word processor and spreadsheet programs, which people use the old-fashioned way on their personal computers.
Google Chief Executive Eric Schmidt told reporters last week that Microsoft’s hold on customers who aren’t “professional users” of its core Office product “may be vulnerable.” The Web search giant is targeting average consumer users and organizations such as universities as it continues to expand email, calendar, spreadsheet and word-processing services that overlap with Microsoft offerings.

Google’s push comes as Microsoft puts the finishing touches on Office 2007, the latest version of its ubiquitous set of business programs, due by the end of the year. The programs, taken together, are Microsoft’s largest generator of revenue and profit after its Windows operating system. They are also deeply entrenched in the world’s large and small businesses around the world.
Free equivalents of Office have existed for years and failed to crack Microsoft’s market share, But over the past two years, a growing number of Internet companies, including Google, have started to make concerted efforts to pick away at the business, which accounted for $11.8 billion in revenue for Microsoft in the year ended June 30.
Working in favor of these Internet interlopers is a continuing shift by businesses and consumers to software used over the Internet. For decades most computing tasks were handled with software that was installed on computers. Microsoft defined that era with its Windows operating system and its Office suite of applications.
In recent years, though, as high-speed broadband Internet connections have spread to homes and offices, an increasing number of computer users have begun experimenting with software applications hosted over the Web. With just a Web browser, they can use software over the Internet that’s free or available by subscription.

Kyle McNabb, an analyst at Forrester Research Inc., says that Google’s moves are less about grabbing market share today than about changing behavior and getting consumers accustomed to free online software that they now buy from Microsoft. “Google is helping set the expectations that you don’t have to go buy these things,” he says. “This is going to have an impact over five to 10 years.”

Microsoft Vice President Antoine Leblond says that Microsoft doesn’t have plans to roll out an online version of Office. Instead, he says, the company is building online services designed to work with Office, a strategy that would tap the benefits of online programs without cannibalizing Office. “The future of software is going to be the combination of client applications [like Office] and [online] services,” Mr. Leblond says. “It’s not going to be one or the other – the black or white approach.”
Mr. Schmidt said last week that Google was “not in the business of building Office,” which he said was well suited for “professional users.” But the comments by Mr. Schmidt, who has long played down any competition with Microsoft, make much clearer Google’s likely core target market: users at home, in educational settings, and at small- and medium-size businesses. It could also include professional users who rely on Google for personal applications. Mr. Schmidt said Google’s calendar application is better than Microsoft’s for family members sharing their schedules, primarily because it is free and allows such sharing to take place easily online.
Google has rolled out a range of free online services. Some of them carry advertisements, and it hopes others will entice people to use its ad-supported services more. In contrast, Microsoft licenses Office to businesses and sells it to consumers for about $400.
Microsoft plays down the potential threat to Office from Google, arguing that online software can’t have the same full features that computer users demand. It can also be slow, and many businesses are loath to entrust core business functions and data to outside companies.
Microsoft’s Mr. Leblond says that Google will also find it increasingly difficult to add new features to its programs, in part because the programs rely on browser software for many of their functions. So for instance, printing is much more limited than printing from an Office program, he says. “The technology they are using has some inherent limits,” he says. “They are going to hit up against these limits.”

But Google says it isn’t trying to match all the features of traditional productivity software. “We believe that 90% of users don’t necessarily need 90% of the functions that are in there,” says Jonathan Rochelle, a product manager for Google Docs & Spreadsheets.
With the Google products, a user can save any documents on Google’s servers, accessing them from anywhere that can connect to the Internet. Other key differences with Microsoft: Besides being free, Google services make it easier for users to share files and work on them simultaneously, Google executives say. One important similarity: The Google services can generally save and open files in Microsoft-compatible formats.
“We’re building a different way of dealing with complex, powerful information that is online all the time, on every device, and fully shared,” explained Mr. Schmidt.

Google is now trying to drive a shift toward this sort of consumer usage. The Mountain View, Calif., company earlier this year bought Writely, a Web-based word-processing service, and rolled out its own spreadsheet product. In August it began offering Google Apps for Your Domain, a package that allows organizations to tap email, calendar, instant-messaging and Web-page creation services that run on Google’s computers. Google executives had said that word-processing and spreadsheets were “good candidates” to be added to that offering, which is geared toward organizations and small businesses.
Google’s Gmail email service had 9.7 million U.S. visitors in September, and its Calendar service had 896,000, according to comScore Networks Inc. The research firm didn’t have usage statistics for Google’s word-processing or spreadsheet services.
Rick Sherlund, an analyst at Goldman Sachs, thinks that Microsoft will need to respond more directly to Google’s moves. He predicts — despite Microsoft’s denials — that the company will offer a lower-end version of Office over the next year that’s aimed at consumers and small businesses.
“I think that they are leaving the door wide open for Google to deliver a broader solution on their online platform,” Mr. Sherlund says. Microsoft needs “to be serious about trying to shut that door on Google.”

Web 2.0: the French touch

As I often do, please find below an article from 01 Informatique on the Web 2.0 phenomenom, the French way. It relates the IE-Club conference I mentionned in one of my previous posts and discusses the French Internet scene in the context of Web 2.0 and the comeback of early-stage venture capital.

Web 2.0 : la French Touch
Par Xavier Biseul avec Hubert d’Erceville et Olivier Roberget
October, 6th 2006
01 Informatique – (c) 2006 Groupe Tests, 01net

Des hommes, des idées, de l’argent, du haut-débit et des technologies matures. Depuis quelques mois, le Web hexagonal connaît un renouveau grâce à des start-up comme Netvibes ou Dailymotion.

Oublié le funky management et les business plan griffonnés sur un coin de table. Les entrepreneurs labellisés web 2.0 ont tiré les enseignements des dérives de la première vague. Fin septembre, jeunes pousses high-tech et investisseurs se retrouvaient à l’IE Club pour accueillir le gratin du Web hexagonal. Soit quelque 300 participants venus acclamer ses stars d’hier (Kelkoo), d’aujourd’hui (Meetic) et de demain (Netvibes).
Les raisons de cette euphorie ? Une conjonction extrêmement favorable. Le haut-débit et les nouvelles technologies – Ajax,RSS/Atom,widget,podcast – tiennent enfin les promesses de la première vague internet.
Le Web classique laisse la place à un Web «APIsé» dont le contenu est structuré autour de XML. Et pour porter les nouveaux services, on trouve derrière des hommes rompus à la création d’entreprise, un financement «intelligent» et, surtout, des utilisateurs mûrs et réceptifs à l’innovation.

La revanche des « serial entrepreneurs »
Récidivistes pour la plupart, les créateurs cuvée 2006 ont connu l’échec ou la réussite au prix de lourds sacrifices. Le parcours de Pierre Chappaz est, à cet égard, exemplaire. Le fondateur de Kelkoo a créé Wikio, «moteur de recherche d’actualités dirigé par les internautes». Investisseur dans Netvibes, page d’accueil personnalisable, il en est aussi le codirigeant.
«Les entrepreneurs ont aujourd’hui une gestion plus saine et rationnelle des ressources allouées, observe Ouriel Ohayon, directeur général du fonds israélien LGiLab. Pas question de brûler 95 % du cash en marketing.» Une prudence qui n’exclut pas l’ambition.
Pour réussir dans le Web 2.0, il faut penser mondial. Traduit en 50 langues, Netvibes revendique près de cinq millions d’adeptes. Il fait appel à des développeurs Ajax du monde entier et vient de recruter son directeur technique, Jean-François Groff, qui a partcipé à la mise au point du Web dès 1991.
Comment monétiser une audience de masse ? Essentiellement gratuits, les services Web 2.0 se sont lancés dans une course à l’audience propulsant la publicité en ligne comme source de revenu légitime. Mais d’autres modèles sont étudiés : services «premium», location de plates-formes en marque blanche, affiliation ou intégration de contenus tiers. Rien de nouveau, mais la plupart des services ont moins d’un an et se cherchent encore.
Faute de business plan viable, certaines stars – même si elles prétendent le contraire – pourront toujours envisager une autre porte de sortie via un rachat. Vers, par exemple, les médias traditionnels qui n’auront pas su prendre le tournant du Web 2.0. A l’image de News Corp qui n’a pas hésité à débourser 580 millions de dollars pour s’emparer de MySpace. Tandis que YouTube serait déjà valorisé 1,5 milliard de dollars !

Des technologies qui serviront à l’entreprise
Autre piste à explorer : le passage de services connotés grand public au monde de l’entreprise même si celui-ci tarde à se l’approprier pour des questions entre autres de sécurité. «En 2006 et 2007, beaucoup de projets pourraient rapidement éclore, notamment dans le domaine de la gestion de la relation client ou de la maîtrise des actions marketing», estime Jean-Christophe Gougeon, responsable du pôle «Technologies logicielles» à la direction de la Technologie d’Oséo.
Un pas que pourrait aisément franchir Netvibes. Via des flux RSS sécurisés, il est en effet possible de syndiquer les ressources de l’entreprise. La frontière entre la maison et l’espace de travail étant de plus en plus floue, le portail servirait de lien. Dans ce cadre, le problème apparaît cependant plus politique que technique.

Des investissements privés en hausse de 195 %
Côté gros sous, la machine à financer s’est remise en marche. Selon l’indicateur Chausson Finance, les capitaux-risqueurs français ont investi 68 millions d’euros dans le Web au second semestre 2005. Soit une progression de 195 % ! Internet fait ainsi jeu égal avec le secteur des logiciels.
Dans ce domaine justement, Microsoft France apporte, à travers le programme «Idées», des dons en nature mais aussi un partenariat avec une vingtaine de sociétés de capital-risque. Les 40 start up soutenues par l’éditeur ont déjà reçues 40 millions d’euros. Des levées de fonds encore raisonnables, mais on peut s’attendre à un effet d’entraînement. Après Netvibes qui a levé 12 millions d’euros cet été, DailyMotion, le YouTube français, vient de boucler un premier tour de table de 7 millions d’euros.
Le financement public n’est pas en reste. Pour inciter les entrepreneurs à se lancer dans des projets Web 2.0, Oséo a ouvert le champ et la définition qu’il avait de l’innovation. Les expertises se feront non plus seulement par rapport à l’état de l’art de l’innovation, mais aussi sur la capacité du projet à améliorer la compétitivité des entreprises.

En clair : plus besoin de proposer d’innover dans la technologie pour obtenir un financement. Les jeunes pousses peuvent créer des modèles de développement autour d’une innovation managériale, organisationnelle ou de service. Tous les projets connotés Web 2.0 ont ainsi plus de chance d’être aidés en 2006.

Attention à la casse !
Si les acteurs du Web 2.0 se développent sur des fondamentaux plus sains que leurs aînés, il n’y aura pas de la place pour tout le monde. Le ticket d’entrée étant particulièrement bas – une plate-forme Lamp (Linux, Apache, MySQL, PHP), une communauté de développeurs freelance voire bénévoles – de plus en plus de concurrents se positionnent sur les mêmes créneaux. Attention à la casse. Selon le fameux cycle de la courbe «hype» de Gartner, le Web 2.0 surfe au sommet de la vague.
S’en suivront, les inévitables phases de désillusion et de regain d’intérêt avant d’atteindre le plateau de la maturité. En attendant, les détracteurs du Web 2.0, «concept fourre-tout en bêta perpétuel», s’en donnent à cœur joie. Le site Dead 2.0 donne onze conseils aux porteurs de projet pour ne pas sombrer. Incubateur en ligne, Neodia.fr propose, quant à lui, de créer sa start up 2.0… en six clics. Frais et impertinent. Très Web 2.0.

Quelques stars françaises

The links to these sites can be found there. 

- DailyMotion : Vidéos en partage, sur le modèle de YouTube.

- Feedback 2.0 : Encore en bêta. Echanges entre une entreprise et ses clients sur ses produits, ses services.

- Jamendo : Diffusion gratuite de musique en ligne ou en P2P tout en respectant les droits d’auteurs des artistes.

- JobMeeters : Site de recrutement reposant sur la cooptation.

- KopiKol : Un concept simplissime – l’échange de liens URL entre internautes – qui fait mouche aux Etats-Unis avec Digg.

- MobiType : Agrégateur de blogs sur téléphone mobile.

- MyOwnDb : Gérer en ligne votre base de données puis partager la si vous le souhaitez.

- Netvibes : Page d’accueil personnalisable par flux RSS, agrégation de contenu.

- Webwag : Même concept que Netvibes. Créé par Franck Poisson, ancien DG de Google France.

- Wikio : Moteur de recherche d’actualités fondé par Pierre Chappaz.

- Yoono artage d’information, de sites, de contacts au sein de communautés

Une définition du Web 2.0
Tim O’Reilly, qui a popularisé le concept, en proposait une définition exhaustive il y a un an. Résumé.

- Être un pur produit Web. Plus besoin d’être téléchargé puis installé, le service s’utilise directement en ligne.

- Tirer parti de l’intelligence collective. Les utilisateurs deviennent producteurs de contenu, voire de ressources (bande passante, espace disque). Codéveloppeurs, ils participent à l’amélioration de services en «bêta perpétuelle».

- Capitaliser sur la richesse des données. Elles doivent être uniques et non réplicables. Exemple : la notation des internautes sur DailyMotion.

- S’appuyer sur des technologies souples et interopérables (RSS, Ajax). Elles autorisent la réutilisation de modules, leur couplage, la syndication de contenu. – Se libérer du PC. Les applications peuvent être portées sur un assistant personnel, un téléphone mobile, la télévision.

- Voir grand. En se fondant sur le principe qu’il faut non seulement viser le coeur du marché, mais aussi sa périphérie.

The digital democracy’s emerging elites

Yesterday I attended the IE-Club conference that took place in Paris. The most notable speech was the one Marc Simoncini, the man behind Meetic, gave. He talked about the entrepreneur spirit and the 4 pilars required for an economy to foster such climate: seed money (think VC), technology (it’s all there anyway), entrepreneurs (wanna quit this safe job of yours?) and society (French people tend to think “entrepreneur” and “mafia mobster” are synonymous). To him, it seems this fragile virtuous cycle has just begun here in France.

Interestingly enough, a day before this event took place, an article from my favourite newspaper, the FT, touched on the emerging elites of the ‘web 2.0 economy’. Here it goes.

The digital democracy’s emerging elites.
By JOHN GAPPER
September, 25th 2006
(c) 2006 The Financial Times Limited.

There are no prizes for guessing the most popular (and sought-after) types of internet enterprise at the moment. Anything that can be labelled Web 2.0 – social networks such as MySpace and Facebook, news aggregators such as Digg and Reddit and user-generated sites such as Wikipedia and Flickr – are the new new media.

Facebook is the latest such company to think of selling itself, with companies such as Yahoo and Viacom being asked to cough up Dollars 1bn (Pounds 526m). With News Corporation’s purchase of MySpace last year for Dollars 580m now being regarded by Wall Street as a master stroke, other media companies are trawling for their own Web 2.0 acquisitions to transform themselves in the eyes of investors.

The hoo-hah over Web 2.0 companies is more than a matter of financial credibility. These companies, unlike most newspapers, magazines or television operations, do not employ professional writers, editors and producers to create material for their audience. Instead, they encourage their users both to contribute content and to select the most interesting things to display to others. Old media “gatekeepers” (such as the people who edit this column) are out of fashion and what Jay Adelson, chief executive of Digg, calls “collective wisdom” is in. As Rupert Murdoch said last year of young internet users: “They don’t want to rely on a god-like figure from above to tell them what’s important . . . They want control over their media, instead of being controlled by it.”

But such democratic rhetoric (what one critic has dubbed “digital Maoism”) ignores one awkward fact. While anyone is free to launch a blog, contribute to Wikipedia or publish photographs on Flickr, a relatively small number of activists often dominate proceedings on Web 2.0 sites. Although they are unpaid, they can nonetheless achieve an elite status reminiscent of the old media’s professional gatekeepers. An illuminating spat occurred last month at Digg, which encourages its 500,000 registered users to submit news stories from around the internet and vote for (or “digg”) the most interesting. The most popular rise up its rankings and are displayed on its home page. It is the kind of thing that might have pleased the original Diggers, an 18th-century English sect that believed people should form self-governing communes. After protests that a group of about 20 Digg activists were promoting the stories they liked by supporting each other’s choices, the site changed the algorithm that helps to rank stories. Kevin Rose, Digg’s founder, said it would give more weight to “the unique digging diversity of the individuals digging the story” – in other words, make it harder for a cabal to distort the results. That created outrage from the other side, with its activists complaining that they were being accused unfairly of cheating. Its top user, ranked by success in promoting stories to the home page, threatened to abandon the site. “I bequeath my measly number one position to whoever wants to reign,” wrote the user known as P9. He was persuaded back and is still ranked at number two. Mr Adelson insists that Digg is more democratic than some other sites because it is easy for anyone to contribute: users simply click to vote. Others, such as Wikipedia, demand more effort and have narrower participation. Jimmy Wales, the latter’s founder, estimates that 70 per cent of editing is done by less than 2 per cent of registered users.

At one level, the fact that an elite often emerges within Web 2.0 sites is neither surprising nor sinister. The same thing can be seen in physical communities such as political parties. Relatively few have the patience or inclination to attend meetings and work on projects. The result is that groups of like-minded people who are particularly dedicated to the cause gradually gain dominance. All the other slackers (or lurkers, as people who browse community sites for news and information without themselves contributing are known) gain a free ride at the expense of not controlling the agenda. “Things will always be done by the people who most want to do them. I don’t think we will ever be shielded from that,” says Clay Shirky, a consultant and academic.

But it does, as Nicholas Carr, a technology writer, says, “contradict a lot of the assumptions promulgated about the great egalitarianism of the web”. There is not much of a logical distinction between someone who edits stories for money and someone who does so for recognition and social status. Indeed, Netscape has lured away some of the most active Digg users by paying them to submit stories to its site instead. These are early days for Web 2.0 sites so it is difficult to predict the degree to which new media will come to look like old, with small groups of people filtering content for mass audiences. The optimistic view is that technology will make it so easy to switch among filters that gatekeepers will have less power. Digg already allows people to see stories that have been recommended by their friends rather than all of its users. Still, the fact that there is an “A-list” of bloggers who garner a large proportion of internet links and traffic indicates that just because the web is an open medium it is not necessarily an egalitarian one. This generation of consumers has learnt to be sceptical about how information and entertainment is edited and filtered by groups of professionals. It ought to remain on its guard in the Web 2.0 world as well.

Long tail trend poses a challenge for conventional media owners

Yet again, another interesting article from the FT about the latest Nielsen Netratings survey of Internet brands. Interestingly enough, the web 2.0 brands are growing very fast and the media industry is getting nervous.

Consumer content on the internet increases.
By CARLOS GRANDE
September, 15th 2006 – (c) 2006 The Financial Times Limited.

The sharp rise in consumer-created content on the internet was underlined yesterday by figures showing five of the 10 fastest-growing online brands were websites for people publishing and sharing their own material.
When Nielsen/Net Ratings, the data company, did the same survey for 2005, only one of the top 10 fell into the consumer-created category.
Analysts believe the changing market reflects the greater availability of broadband internet access, which makes it easier for consumers to distribute home-made material such as video or photographs via the web.
They said the trend posed a challenge for conventional media owners investing in and charging for content.
However, sceptics argued that many consumer-created web brands have yet to show they can recover their running costs from revenue streams such as advertising.

The latest figures, which cover the period from January to July, are notable for the growth of YouTube.com, the website which encourages people to upload and share video clips for free.
Nielsen/Net Ratings calculated that YouTube’s unique UK audience – the number of individuals looking at the site at some point over the month – was 3.58m in July, up 478 per cent from January. YouTube is a privately-held US company that has not even launched a dedicated UK website.
The growth outstripped that of Flickr, a website owned by Yahoo, the search engine, which provides online storage of photographs. Flickr increased its audience by 131 per cent to just over 1m.
YouTube’s unique audience for July was also larger than the 3.5m recorded by MySpace, the networking website owned by Rupert Murdoch’s News Corporation, which has launched a dedicated UK variant.

Alex Burmaster, European internet analyst at Nielsen/Net Ratings, said: “Last year indicated the potential for sites utilising the internet as a method for users to communicate and share information and the first half of 2006 has confirmed this. The audience to video-sharing phenomenon YouTube is testament to this, having grown by a factor of almost five during the year. More than one in eight Britons online now visit the site.”

The audience figures are important because both YouTube and MySpace aim to remain predominantly free to the public and charge advertisers to reach their users, who are mostly young.
While advertisers have been drawn to the websites by their growth and the lengthy average times that visitors spend on them, they are aware that the sites often contain raucous and copyright-infringing material, which could prove damaging to brands advertising on them.

Other content-sharing websites in the top 10 list included Photobucket, for image and video-sharing, and Bebo, a social networking website and rival to MySpace.
American Express was the fourth fastest-growing web brand.