November 9, 2005 11:47 AM PST
Ozzie memo: 'Internet services disruption'
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integrating hardware, software and services into a seamless experience with dotMac, iPod and iTunes, but seems less focused on enabling developers to build substantial products and businesses.
Even beyond our large competitors, tremendous software-and-services activity is occurring within startups and at the grassroots level. Only a few years ago I'd have pointed to the Weblog and the Wiki as significant emerging trends; by now they're mainstream and have moved into the enterprise. Flickr and others have done innovative work around community sharing and tagging based on simple data formats and metadata. GoToMyPC and GoToMeeting are very popular low-end solutions to remote PC access and online meetings. A number of startups have built interesting solutions for cross-device file and remote media access. VoIP seems on the verge of exploding ? not just in Skype, but also as indicated by things such as the Asterisk soft-PBX. Innovations abound from small developers ? from RAD frameworks to lightweight project management services and solutions.
Many startups treat the 'raw' internet as their platform. At the grassroots level, such projects actively use standards such as vCards and iCal for sharing contacts and calendars. Most all use RSS in one way or another for data sharing. Remixing and mashing of multiple web applications using XML, REST and WS is common; interesting mash-ups range from combining maps with apartment listings, to others that place RSS feeds on top of systems and data not originally intended for remixing. Developers needing tools and libraries to do their work just search the internet, download, develop & integrate, deploy, refine. Speed, simplicity and loose coupling are paramount.
And the work of these startups could be improved with a 'services platform'. Ironically, the same things that enable and catalyze rapid innovation can also be constraints to their success. Many hard problems are often ignored ? the most significant of which is achieving scale. Some scale issues are technological and result from the fact that they are generally built on application server platforms rather than high-scale service platforms. But new services also need to build user communities from scratch ? generally by word of mouth. Many fund their sites using syndicated ads, but have a difficult time transforming their services into higher levels of commerce. Some seek to incorporate client software into their user experience, but then need to reinvent software deployment, update, communications and synchronization mechanisms. User identity and cross-service interoperability mechanisms are still needlessly fragmented. Intuitively there seems to be a platform opportunity in providing such capabilities to developers in a form that retains the speed, simplicity and loose coupling that is so very important for rapid innovation.
Today there are three key tenets that are driving fundamental shifts in the landscape ? all of which are related in some way to services. It's key to embrace these tenets within the context of our products and services.
1. The power of the advertising-supported economic model.
Online advertising has emerged as a significant new means by which to directly and indirectly fund the creation and delivery of software and services. In some cases, it may be possible for one to obtain more revenue through the advertising model than through a traditional licensing model. Only in its earliest stages, no one yet knows the limits of what categories of hardware, software and services, in what markets, will ultimately be funded through this model. And no one yet knows how much of the world's online advertising revenues should or will flow to large software and service providers, medium sized or tail providers, or even users themselves.
2. The effectiveness of a new delivery and adoption model.
A grassroots technology adoption pattern has emerged on the internet largely in parallel to the classic methods of selling software to the enterprise. Products are now discovered through a combination of blogs, search keyword-based advertising, online product marketing and word-of-mouth. It's now expected that anything discovered can be sampled and experienced through self-service exploration and download. This is true not just for consumer products: even enterprise products now more often than not enter an organization through the internet-based research and trial of a business unit that understands a product's value.
Limited trial use, ad-monetized or free reduced-function use, subscription-based use, on-line activation, digital license management, automatic update, and other such concepts are now entering the vocabulary of any developer building products that wish to successfully utilize the web as a channel. Products must now embrace a "discover, learn, try, buy, recommend" cycle ? sometimes with one of those phases being free, another ad-supported, and yet another being subscription-based. Grassroots adoption requires an end-to-end perspective related to product design. Products must be easily understood by the user upon trial, and useful out-of-the-box with little or no configuration or administrative intervention.
But enabling grassroots adoption is not just a product design issue. Today's web is fundamentally a self-service environment, and it is critical to design websites and product 'landing pages' with sophisticated closed-loop measurement and feedback systems. Even startups use such techniques in conjunction with pay-per-click advertisements. This ensures that the most effective website designs will be selected to attract discovery of products and services, help in research and learning, facilitate download, trial and purchase, and to enable individuals' self-help and making recommendations to others. Such systems can recognize and take advantage of opportunities to up-sell and cross-sell products to individuals, workgroups and businesses, and also act as a lead generation front-end for our sales force and for our partners.
3. The demand for compelling, integrated user experiences that "just work".
The PC has morphed into new form factors and new roles, and we increasingly have more than one in our lives ? at work, at home, laptops, tablets, even in the living room. Cell phones have become ubiquitous. There are a myriad of handheld devices. Set-top boxes, PVRs and game consoles are changing what and how we watch television. Photos, music and voice communications are all rapidly going digital and being
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