When looking at the future of the mobile market, we can clearly see two big contenders, Apple and Google. While Apple has a definite head start, Google mobile’s strategy and execution has been impressive. In the last couple of years, Google has managed to create an open platform, engage with a wide variety of device manufacturer partners, and promote its own branded device. Although iPhone fans might disagree, it is fair to say that, with the latest Android 2.x generation of devices (i.e., NexusOne), there are fewer and fewer hardware and software differentiators between the two solutions.

The dilemma: iPhone is still the big gorilla

However, despite Google’s successes with Android, iPhone is still the big gorilla, and it is too early to predict whether Android will ever take the lead.

Looking at the three aspects (i.e., product, distribution channel, and ecosystem) of each business, we can easily see that Apple is still the clear leader in the market it created: the application ecosystem. In this category, iPhone beats Androids on all counts (i.e., users, applications, and revenue)

In the real world, this means that if you intend to build a mobile application, you will probably do it first for iPhone and then for Android with the leftover. Ironically, Google is in the same position that Apple is in the PC market vis-a-vis Microsoft.

So the billion dollars (or downloads) question, is how can Google turn the tables?

The solution: Embrace and extend

The short answer is, Google should embrace and extend the iPhone [ecosystem] by creating an Android.iPhone SDK.

Google should enable its Java/Eclipse mobile development environment to support iPhone. This would allow developers to use a single mobile development environment to target different devices. This move would hit Apple at the source of its core differentiator, the developers.

The trick of such execution is to strike the right balance between the write once, run anywhere model and to use the best aspects of each device. In fact, from my experience, the best way to tackle this problem is to offer both models and let developers and time decide which one deserves a greater investment.

For example, Google should offer the following options:

1. A way to “cross-compile” an Android application for the iPhone. This would have the advantage of the write once, run anywhere model, but would inherit its disadvantage as well (i.e., the lowest common denominator).
2. A specific Android.iPhone SDK that would extend the Android SDK where necessary to fully utilize the iPhone specificities.

The good news for Google is that this path, of third-party iPhone development tools, has already been paved by numerous small companies, as well as by Adobe with the upcoming Adobe CS5. Consequently, it will be difficult for Apple to single out Google even if this move could be more disruptive to the iPhone business than Google Voice application (which has been notoriously rejected by Apple for competitiveness reasons).

If Google were to offer this solution, it would have a big impact on how developers approach mobile development. It would eventually position the Android SDK (and Android.iPhone SDK) as the de facto standard environment in which to develop native mobile applications and make Android an easy and cost-effective device to target.

Additionally, this strategy has the unique advantage of bringing Apple into the foreign territory of openness and inclusion. Apple is very comfortable in competing and innovating in closed markets (i.e., music and mobile), but tends to be a little defenseless in open ones.

The catch: Cost

The only catch of this strategy for Google would be the cost. Doing this the cheap way would backfire, and doing it well would not be easy. However, this embrace-and-extend strategy could be the next single most effective step that Google takes in the mobile space.

If you liked this article, retweet, rebuzz, or +1 on HN appreciated

While many see Microsoft Silverlight as an Adobe Flash killer, I actually think Adobe should rejoice that Microsoft is competing with Adobe on its own turf (i.e., media plug-ins) rather than putting all its energy, as it once did, into Web standards and innovation (IE 5.0 was the most robust and compliant Web browser of its time).

If Microsoft were to take a similar approach to the one it embraced in 1995, when it actually took the lead in Web technologies and provided the best Open Web browser implementation, new media functionalities such as video and 2D/3D would become an intrinsic part of the Web, making media plug-ins irrelevant to its future. In other word, if Microsoft were to go full Open Web (with SVG, Canvas, Smil, HTML 5, Video, and CSS3) Adobe Flash would be history in couple of years. However, Microsoft decided to follow Adobe’s plug-in strategy by forking visually rich capabilities into the plug-in world and throwing itself into a completely new market.

Why? Why follow when you can lead?

I think there are three main reasons:

1) Adobe is an easier target.

Between Adobe and Google, Microsoft might think it has a greater chance of winning against Adobe.

Microsoft has probably concluded that Open Web is a much less predictable entity given the complicated relationships among the various open source, standard, and commercial entities (e.g., Mozilla, Google, and Apple). Additionally, given Google and the open source community’s progress on the Open Web front, Microsoft might have feared being able to lead the way this time.

Thus, opting for the plug-in route had the advantage of slowing down Open Web technologies (and consequently Google) and narrowing down the competition to Adobe rather than Google and the open source community.

2) Expanding from the developer market to the designer market is safer.

The desktop software market is comprised of the three main following buckets: office productivity, developer tools, and designer tools. The only place where Microsoft is still not the leader is the designer tools segment, and that is where Adobe excels. Conversely, Adobe is seeing its next tools growth opportunity in the developer market.

Consequently, Microsoft and Adobe have created a new battleground, “designer-developer workflow” where they are both promoting an ultra rich visual experience for Web applications and positioning their respective tools and plug-ins as the ultimate solution for maximizing designer-developer productivity. Microsoft sees it as a way of leveraging its developer base to move into the designer market, and Adobe sees it as extending its designer market to the developer one.

While Microsoft could have focused on providing the best developer and designer tools for Open Web development, it probably felt more comfortable, as Adobe did, controlling the designer and developer experience by owning the language, runtime, and application model. Additionally, from a market standpoint, it is fair to assume that Open Web developers might not be as marketable as developers open to proprietary Web technologies. So from a business standpoint, Microsoft is opting for the safe route and is betting on what it knows best, controlling the developer, and now the designer, experience end-to-end.

3) Microsoft hopes to slow down commoditization.

Last but not least, Microsoft must fear that going full Open Web would backfire, by accelerating its operating system commoditization, and would give good wind to new operating systems, such as the mysterious and aptly named Google Web OS. Microsoft wants neither to fall too far behind on Open Web technologies nor to give them more momentum that they already have.

While I can understand each of these points, I still think that Microsoft’s lukewarm approach to Open Web technologies is the wrong strategy. The Web has always been open in nature, and making pixels fly faster or smoother will not alter that. Given all the passion and strategic interest surrounding it, the Open Web will happen with or without Microsoft. Microsoft would be better off fully embracing and leading Open Web technologies, as it did back in the late 1990s, and redefining the Web design and development market. If a disruption wave is coming your way, surfing it is better than being smashed by it.

I would even go further by saying that Silverlight is helping to maintain the Adobe Flash mainstream. Adobe Flash is an amazing piece of technology, by all accounts, and future versions are poised to be even better. While Silverlight might have some technical advantages here and there, overall, Adobe Flash is still the best media plug-in available as far as functionalities and reach. And given all its antitrust restrictions, Microsoft is even finding itself in a difficult position to aggressively distribute Silverlight. So at the end of the day, the more Microsoft is selling plug-in development to Web developers, the more Adobe will benefit. In fact, Microsoft Silverlight’s marketing department should be commissioned by Adobe.

If you liked this article a +1 on HN or a re-tweet are greatly appreciated. (see R-Tweets)

1) JavaFX is NOT Java.

Obviously, from a marketing standpoint, JavaFX is branded as Java; however, technically JavaFX is a language by itself, which happens to be compiled into Java bytecode and run on a Java VM. JavaFX is similar to Groovy or JRuby, minus the dynamic part (see #2). For example, introspecting a JavaFX object from Java requires some tricks since JavaFX Object/Class definitions do not map directly to those of Java Object/Class. (Note: Sun has been trying to brand JavaFX beyond the JavaFX Language itself, but so far most developers see JavaFX as the language)

2) JavaFX is NOT a scripting language.

Even though it is called JavaFX Script, JavaFX is NOT a scripting language (in the dynamic sense). JavaFX code gets compiled to Java bytecode at design time. So, JavaFX is similar to Flex (except for the XML-UI part). Note that JavaFX started as a scripting language in Sun Labs, but quickly became a compiled language (probably for performance reasons). Sun keeps using the term “JavaFX Script” to distinguish the language from the JavaFX brand and to avoid using the word “language,” which would make it too obvious that JavaFX is another language all together.

3) Android is NOT a Java-based device.

Here again, some confusion could come from Larry’s keynote address. Some might believe that Android is Java-based and that it runs Java. However, Android is NOT Java based; it is Linux based. Google Android SDK converts Java bytecode to Android more optimized Dalvik VM bytecode. Thus the developer codes with Java, but the device does not run Java (kind of similar development experience to GWT, which cross-compiles Java code to JavaScript/AJAX). While it is possible to have Java VM for an Android phone, an application built with Android SDK does not run on Java when executing on the device. By the way, I still have not found JavaVM for my G2/HTC-Magic.

4) JavaFX cannot run on Android without a Java VM.

I would LOVE to be proven wrong (with an example) on this one. This is a discussion I had with my friend @cromwellian about getting JavaFX on Android. In short, the only practical way to get Java FX on Android would be to have a JavaVM on Android. The Android cross-compiling trick would be pretty complex to extend to JavaFX. As stated above, JavaFX is not only a library, but a whole different language, which gets compiled to Java bytecode. So the Android compiler will have to do quite a bit of work to move a Java/JavaFX application to a non-Java VM. It’s not impossible, but hard. GWT² hard, I think. So, to recap, you can run JavaFX on Android, but you need a JavaVM (apparently JavaFX on Android has been demo in JavaOne -see 2:30-)

5) Java is NOT on most devices [that matter].

Sun likes to say that Java is on billions of devices (see 0:54). While mathematically probably true, practically, developers do not really care about Java for mobile. These days it’s all about iPhone, Android, Plam Pre, and mobile Web (not even Windows mobile). Most of these high-profile phones do not have Java out of the box, and getting a Java runtime can even be challenging. For example, there is no JavaVM out of the box on iPhone, Android G2/HTC-Magic, and Treo 750 WinMobile (I could not find one on my old Treo 750 WinMobile). And for the rest—well, the J2ME market is very fragmented. It is really hard to measure your reach when you develop a Java application for mobile devices. And the ironic part is that since JavaFX needs the latest and greatest JavaVM to run, it does not even run on the billions of billions of J2ME devices anyway. So, in a way, Sun has been resetting the clock with JavaFX for their mobile market. They still have the device manufacturer’s relationships but they do not have the devices anymore.  Some disagree with these statements noting that Java is on all Nokia and most Sony-Ericsson devices (see Jehtro’s comment)

As a software Architect/Entrepreneur, I truly like and use Java a lot, but I hate Kool-Aid. I really wish that Java and JavaFX will be successful on the mobile and PC market, but as a community, we need to assess the current state realistically if we want to accomplish our vision. That aside, I would agree with Scott: if Larry managed to convince Steve to put Java on iPhone (at 0:26), it would definitely be a game changer (however, this would be against Apple’s Wall policy).

As a side note, I am sure that the Open Office team got very excited when Larry told them they should port their application to JavaFX. Flying pixels should rule the world!

Anyway, now that this merger is almost done, the big question everybody has is what will happen with Sun software and open-source assets such as Java, MySql, and OpenOffice. There is also the burning question about Oracle’s commitment regarding Linux. Before going one-by-one, it is important to understand few things about Oracle:

1. Oracle does not like GPL. They have been forced to coexist for their Linux strategy against Microsoft, but, they are isolating it as much as possible.
2. Oracle does not care about desktop computing. While Oracle has some desktop applications (e.g., JDeveloper and Beehive Clients), it tends to mostly focus application model research and development on Web frameworks such as JSF and Fusion Middleware. In other word, no AIR will be coming out of Oracle anytime soon.
3. Oracle has a very talented Linux group, headed by Wim Coekaerts, which has made significant Linux (GPL) contributions. However, overall, Oracle is still far behind IBM in terms of Open Source investment. IBM is the organization that gets and does open source better than anyone else.
4. Oracle masters, better than anybody else, the art of selling software to enterprises. It has the most aggressive enterprise sales force on the market, and they know all the tips and tricks to maximize any single software sell.

So, now the burning questions are what Oracle will do with Java, MySql, and OpenOffice, and will it stay committed to Linux?

1) Oracle on Java

Java is probably the biggest topic, at least for developers.

On the language side, I think it will be business as usual. Sun Java linguists will probably stay at Oracle, and Oracle will probably keep them, as they are the core of one of the biggest part of their acquisition. Many developers are already considering the Java language to be in maintenance mode after JCP‘s repeated failures to adopt Java popular requirements such as closures. Therefore, the change in ownership will probably have little effect on the already-not-popular Java language evolutions.

Oracle might have a bigger effect on the server side of Java. EJB3.0/ORM and Portal specs and implementations should get a boost and, hopefully, JSF will get a re-lifting. However, changes in velocity will be hampered by the fact that everything will still have to go through the same JCP process.

Now, the client side is going to be the entertaining one. I think that first, Oracle will get confused and overwhelmed by JavaFX (who has not?). Then, it will be interesting to see what the Oracle people will do about it. My guess is they will let it be for a while (out of confusion), and then quietly deprecate JavaFX as they realize it is the failed compiled client/server model all over again with some flying pixels, a cute, but weird, Java-like-but-not-Java language, with very low client penetration.

On the tool side, the NetBeans vs. JDeveloper fight is going also to be fun to watch. Oracle has been very emotionally tight with its JDeveloper to the point of prioritizing it over BEA Eclipse-based IDE (even after standardizing on WebLogic middleware). The good news is that both NetBeans and JDeveloper are Swing-based, so a happy marriage is not out of the question (except if JavaFx wants to cause trouble).

Personally, I am a little concerned about Tomcat. Tomcat has become a very robust and reliable Servlet container and, with frameworks like Spring and Hibernate, can become the backbone for highly scalable SaaS enterprise applications. The good part is that Tomcat is governed by Apache, which hopefully will maintain a good continuation of the project. But again, if Oracle decides to stop continuing Sun’s investment in Tomcat, the product will untimely surfer.

2) Oracle on MySQL

Let’s get to business. MySQL acquisition is very interesting. It is important to note that Oracle has always tried to understand what it could do with MySQL, without giving it too much attention. This initiative became concrete in 2005, when they bought the innoDB. MySQL’s CEO, Marten Mikos, has also been relatively friendly with Oracle over the years. I actually think he would have rather been bought by Oracle than by Sun. But although this was a topic of discussions, it has never happened, because, as Larry likes to put it:

“I prefer to spend $1 billion and be right than $100 million and be wrong.”

Well, this is Larry’s business genius. He just spent $6 billion and he is probably right.

So, what Oracle will do with MySQL? The new MySql 5.4 has some features that could be considered quite competitive with the Oracle database. And now that MySql has the Oracle brand on it, Oracle will have to be even more careful about it.

My bet is that Oracle will keep the MySQL 5.4 Community going and slow down the development of 6.0 (in very subtle ways). Where Oracle might become aggressive is in regard to the MySQL Enterprise and Cluster editions. While an internal competition is always better than an external one, Oracle is going to want to control it. It has two options for doing this. The first is by price, basically aligning the MySQL Enterprise and Clusters editions to Oracle DB pricing (at least as a lower cost alternative for small to medium enterprises -see comment from Chris Arthur- ). The second is by product, by slowing down MySQL Enterprise product innovation and investment. My guess is that it will be the first one, which might result in a reduction of resources on MySQL community editions as well.

One thing I think won’t happen (at least for the next 5 to 10 years) is a merger between MySQL and Oracle DB. First, it would be a mistake from a business standpoint, as MySQL gives a great new channel to Oracle and, second, Oracle does not want to risk contaminating its crown-jewels database source code with the viral MySQL GPL one.

3) Oracle on OpenOffice

This is probably the sad one. I am a big fan of OpenOffice, and I am not sure of its viability inside Oracle. As mentioned above, Oracle does not really care about desktop computing. While there might be some interesting fit with some Oracle products (e.g., Oracle Beehive), an investment in OpenOffice would require an equal (if not greater) investment in Microsoft Office integration, which Oracle has never done. I am not sure the OpenOffice asset acquisition will trigger a change of heart. I think that in a year or two a spinoff will be inevitable.

4) Linux (vs. OpenSolaris)

Last, but not least, Oracle and Linux. Will this acquisition tamper with Oracle’s commitment to Linux? As far as technical contributions, I do not think it will change much. I think the Oracle Linux group will stay committed and funded to continue the Linux initiatives.

However, on a macro level, we might see some change. I think the real question is, “Will Oracle continue [some of] Sun’s hardware business?” If, yes, then, Oracle will have to push OpenSolaris to the market and that might take some juice out of their Linux marketing initiative. Otherwise, if Larry’s last commitment to Solaris and Sun’s hardware was just a gimmick for Wall Street (or a last favor to Scott McNealy), then, in couple of years, Oracle might be back, full speed, on Linux by acquiring a Novell or Redhat, for example.

Update 2009-05-20: My latest conversations on the subject lead me to believe that Oracle will probably end (i.e. silently put in maintenance mode) the Sun x64 solution (which compete directly with their current HP/x64/Linux/Storage solution), and will keep Sun’s Middleware for higher-end customers. This new hardware and OS division will allow them to effectively push their “DB Appliance” solution to large enterprises (with total control on the Operating System), and push Linux/x64 to the SMB market. So, Oracle might and probably should do both, Solaris and Linux.

So, here is it, my quick take on Oracle acquisitions and some predictions for the future. I really have the greatest respect for the Oracle executive team, Larry, Safra, and many others. I think they are great market strategists, and they are continuously shaping the enterprise software market. Very fun to watch!

Now, the next question is: What will IBM do about it? Buy SAP?

In the software industry, and probably in other industries as well, there are two types of startups: the scale-first type and the monetize-first type (sometimes called lifestyle business). Any organization needs to eventually do both, but in the beginning, a startup needs to decide to focus on scale or monetization. Seesmic and Balsamiq are great 2008 examples of each type of startup. (Good comment from Vasudev Ram, Not everyone needs to or wishes to becomes a Google or a Yahoo! or a Microsoft)

For those who do not know yet, Seesmic is a typical Web 2.0 Silicon Valley startup, with a famous founder, a vision to revolutionize something on the Internet (in this case video conversation), a $12 million dollar investment, and a primary (or exclusive) focus on growing the community (i.e. no revenue plan yet). The service successfully established itself as a leader in its own space (video conversation) and seems to drive some interest from traditional media companies (e.g., BBC).

While Balsamiq addresses a different but equally promising space (i.e. the designer-developer workflow), the company has taken a completely different approach. Balsamiq is a self-funded entity, mostly a one-man show (coder and marketer) with a clear and simple revenue plan from the start (already generated $160K in 2008), and it even managed to get some great marketing buzz thanks to the founder’s marketing ingenuity in sharing what other entrepreneurs do not want to share (e.g., revenue, customers, and detailed strategy).

Which one is better? Which one is most likely to succeed? Well, both have pros and cons, and mostly depending on the entrepreneur.

Some entrepreneurs care more about creating the next Internet phenomenon while others care more about creating a self-sustainable organization. The good news is that the software industry has (or at least had) room for both types.

Scale-first pros & cons

“Scale-first” startups such as Seesmic definitely have the potential for a higher return on investment, which often explains their significant cash infusions. They often focus on creating a phenomenon, which can be very invigorating for the founders, investors, employees, and even the community. This energy can fuel some great innovation and even dedication from the community. The other significant advantage is that “scale-first” startups are often seen as the visionary ones, and their founders can use their celebrity status cleverly to maximize their marketing activities. Loic Lemeur is definitely a master of this art.

The catch, and there always is one, is that “scale-first” startups are inherently riskier and can sometime solve a need that does not have a market (I am calling this a “market false positive”). The biggest risk probably comes from the exhilarating nature of the business, which can drive entrepreneurs and even investors to lose sight of the real business opportunity, resulting in a great waste of time, money, and personal life for all parties involved. Last but not least, there is also a lot of narcissism (often an unavoidable side effect of frame) in this community, which can bring lot of confusion regarding what the real market opportunities are (BTW, I am not saying it is the case of Loic).

Monetize-first pros & cons

On the other hand, “monetize-first” startups tend to be more down to earth and usually only bite off what they can chew (as Peldi so sophisticatedly put it on his Balsamiq company Web page). While still risky, the risks are much lower, as the whole strategy is to invest in proportion with the market demand. I also think that lifestyle startups provide a higher personal satisfaction, as the entrepreneurs feel more in control of the execution (100% vs. 30% or so). Also, the low-key nature of the business usually attracts more practical and humble parties to the table, which can optimize the company operations quite a bit.

However, even the humble route has some catches. First, investors are harder to find. While the current market conditions might help a little, software venture capitalists are shooting for bigger investments ($4+M) with high multipliers on exit (x10 to x15), and given that buyout has become the only realistic exit strategy for most investments, making revenue the first priority will implicitly base the value on it and consequently limit the possible outcome (x3 to x6 of revenue depending on the business). Comparatively, in the dot-com and even in the Web 2.0 era, exit strategy has usually involved around $7 to $30 per user, which is obviously a much bigger and faster return opportunity. However, as John Prendergast noted, monetize-first enterpreneurs might not need or want an exit. Recruitment can also be an issue, as second-level talents tend to gravitate more to bigger ideas than to small or local ones.

While it might be easy to be sarcastic about one type or the other, each has its share of pros and cons. At the end of the day, it is about the entrepreneur’s style more than anything else. The worst move for an entrepreneur is to try to avoid following his or her own style. I learned this the hard way when I started Sportner (a social network for people who play sports). I started a “scale-first” business though I am fundamentally a “monetize-first” entrepreneur.

So the only advice of this article is that the right style is your own style!

Personally, while not a customer, I am a big Balsamiq fan. Peldi is really one of the great examples of a successful “monetize-first” entrepreneur. Just check out the Balsamiq Company Blog (especially the 2008 flash back).

I also like to describe Seesmic as a great example of the first category. I think Seesmic investors eventually will make a relatively successful exit for around $25M to $50M to a media company that wants to get its feet into Web 2.0 or to a Facebook or Google based on the new Seesmic social-desktop strategy (which could become Seesmic new main strategy).

I think that the main reason why mobile email has taken so long to be widely deployed was the reluctance from the Telcos to enable a competing technology that infringes on their highly profitable text messaging (SMS) and promising rich messaging (MMS) services.

As they successfully accomplished for text messaging and ringtones, the Telcos wanted to charge users for sending a rich message, watching a movie, streaming a video, downloading an application, and any other service beyond voice calls.

In short, the Telcos DID NOT want to be restricted to just being “the pipe,” as they have been confined in the wired world.

Well, as software giants such as Apple, Google, and Microsoft are aggressively entering the mobile space, the Telcos have slowly but surely become just that… a pipe…once again.

Speed, coverage, and price have become their core differentiators, and as in the wired world, users are now making decisions that are based on software (e.g., iPhone vs. Android vs. WinMobile) and application ecosytems.

For example, without a fee, mobile users can now do the following (outside of “the pipe’s” fees):

• Send rich messages: email
• Sync email, calendars, address books: Exchange, Google Email/Calendar.
• Get full geolocation services (mapping, directions, traffic): Google Map
• Stream Live Video: Qik

While Microsoft and Google are taking a traditional software approach to the mobile market, Apple has been cleverly playing a dual game (as they also are doing in the music industry). On one hand, they are playing the “exclusive and lock”  Telcos game by the book, to the point of being overzealous about preventing users from unlocking devices. On the other hand, they are virtually writing off the Telcos from the application market by providing their own application store.

Nevertheless, I still think the Telcos have some interesting market opportunities. First of all, as more users require additional bandwidth, Telcos will see their premium bandwidth demand going up, especially for Video (I pay an additional $40 per month for unlimited 3G). In addition, given that the mobile application market is about to explode, Telcos should be able to capitalize by creating their own application market place that can compete against the iPhone store.

1. Social Networking is the method of connecting and communicating with the purpose of increasing knowledge (of people and of domain).
2. Collaboration is the method of organizing knowledge and expertise to efficiently accomplish a particular task.

So, Social Networking is about sharing and discovering, and collaboration is about organizing and creating. Although informal, the point of these definitions is to demonstrate the similar but inherently distinctive meanings of collaboration and social networking.

The latest challenge for an enterprise is that social networking has undergone significant innovation cycles, mostly on the consumer side, and collaboration has not kept pace. As a consequence, an enterprise is often tempted to substitute collaboration by social networking, which could lead to an oversized enterprise social network with very little productivity gain, or even a loss, due to the over-communication side effect.

In my opinion, enterprise collaboration is still too unstructured, fragmented, and, I would even say, immature. Most users became accustomed to unnatural and inefficient ways to partner for the most basic task, such as document collaboration. Some collaborative solution providers tend to offers partial results for fear of empowering or promoting their competition. For example, Google has an interest in luring users away from the Microsoft Office application suite, so the company consequently orients its technology and innovation toward this business goal to the detriment of the overall user’s value. Interesting solutions such as SocialText, Confluence, Jive, Yammer, and 37Signals are trying to tackle this opportunity, and while they are indisputably useful and innovative, significant untapped opportunities remain.

The key to designing the next generation of collaboration solutions is to reconsider the ways that software and services can help people who are collaborating from the bottom up. Often times, collaboration software attempts to accomplish too much, and often finds itself obstructing user workflow. I developed the following seven design principles, based on my experience with building collaboration software:

1) With, Not Against, Email.

Although we might first think “email is broken” when we want to build a new collaboration system, this is a bad thought to consider. Instead, remember that email is a popular, easy-to-use type of program. In fact, email is often the first and last application people use every day. In short, do not build a system to bypass email, but rather a system that enhances email.

2) With, Not Against, Office.

For a long time, there has been an emotional (or business) trend among professionals to terminate the office desktop software era. Although some of the rationale behind these wishful thoughts is understandable, the collaborative solution would fare better if it would learn to work seamlessly with desktop office files and software instead of trying to circumvent them.

Users do not want to import or export files, but rather, they want to create, save, share, and comment on documents from any location, such as desktop, Web, or mobile, whether they are on or offline.

In other words, office desktop software, including word-processing, spreadsheet, and presentation programs, are just as pervasive to be considered a part of the operating system, as is the Web browser, but in a much less controversial way.

3) Individual Productivity as the End, Group Collaboration as the Means.

Ultimately, we live in an individualistic and competitive society, and the best way to build an effective organization is to align individual and organizational interests. To this end, from the beginning of time, organizations have hierarchically organized themselves with clear accountabilities and a clear chain of command.

Thus, organizations require the tools and processes to optimize their entire structures by empowering each element of their organization, from the individual worker up to the top manager. With different roles come different needs, but if the tools exist to make each role more efficient, the entire organization will maximize its execution potential. Maximizing group productivity might be the right path to make a specific role more efficient, but it is just the means and not the end.

4) Extensibility Over Completeness.

When developing a collaboration system, it is a natural inclination to try to build a full set of shared applications. Some might try to build email, content management, calendar, web conferencing, and instant messaging, while others might focus on a more sophisticated set of applications, such as project management, people-friendly wikis, issue-tracking, and collaborative workspaces.

While some of these modules are necessary, system extensibility is as important, if not more. Effective collaboration systems must be customized and enhanced by the people who are collaborating, and consequently, the applications must be extensible. The trick is to strike the right balance of pre-built application and extensibility capabilities. Because this is where most collaboration systems have failed, it is where the biggest opportunity resides. Hopefully the PaaS movement will result in useful concepts that can be applied to collaboration systems.

5) Software as a Service (Saas) AND Software.

Another current market tendency is to try to oppose enterprise software (i.e., “on-premise software”) versus SaaS solutions (or “applications in the clouds”). I was recently a Red Herring panelist in San Jose, where some CEOs predicted the slow death of enterprise software and the pending victory of the SaaS way.

While I am big believer in the SaaS business opportunities and the first one to advocate beginning enterprise solutions from a SaaS angle, I believe that a complete collaboration offering ultimately needs to support all the deployment modes possible, including the hybrid ones.

I agree that today’s “enterprise software” is broken and has become increasingly (even ridiculously!) expensive to extend and to maintain. However, the solution is not to remove choice from the users, but rather to fix the problem at its source: the enterprise software architecture. (see good post from Neil Robertson on Why enterprise software is Not dead)

6) Asynchronous Over Real-Time.

Software vendors occasionally think that they have an embryo of a collaboration system because they have some real-time technologies (e.g., web push technologies for co-browsing). However, I disagree. Real-time technologies are good tools to build a collaboration system, but they are no more collaborative than any other low-level technology. In fact, Facebook, and before that, email, has shown that most collaboration happens in an asynchronous fashion rather than in real-time. Facebook CEO Mark Zuckerberg articulated this fact in one of his keynote addresses, where he discussed the increasing number of opportunities for two people to communicate if they do not have to be at the same place at the same time. Although obvious, we technologists often get overexcited by our own technology.

7) Social Networking Inside.

Last on my list is social networking, because at this time, it is overhyped. It is also last, because a system that follows the first six points would already be relatively unique. Last, because in the end, it will be put first anyway. Nevertheless, a better-connected organization is a more effective one, so social networking practices and technologies are great ways to improve an organization’s internal connectivity.

So, here it is, a first take at seven design principles for the next generation of collaboration solution. In collaboration, we have assumed for too long that users will learn new ways of doing things that enable them to accomplish the task at hand more quickly. This, unfortunately, is not true. Rather than assuming that users will adapt to the software, it is the software that should adapt to the users. In short, do not ask a user to spend time in order to save time.

Well, while the licensing questions are pertinent and will need to be answered at some point, the real questions are “What? Why? And How much [open]?”

The “What” and “Why” are very dependent on the entity’s business model and should be carefully thought out. Open Source is a useful tool to lower the entry barrier, change product perception, increase adoption, and create awareness. However, it does not come for free, definitely does not reduce engineering cost, and often requires a specific DNA. The key to determining the “What?” is to not only think about what the entity is ready to give to the community, but also, what the community would be interested in taking from the entity. In other words, don’t ask yourself what you can give to the community, but what the community wants to take from you.

The “How much [to open]?” is the main question which will help determine the appropriate license, the challenge being that among your users you will have competitors that you cannot really individualize. To facilitate this thinking process, I made the following matrix which lists the main usage capabilities for the different types of open source licenses.

“Download” and “Evaluate” are often the easiest ones since most technology companies want their “open” or even proprietary technologies to be freely accessible for evaluation. Obviously, all open source licenses allow these two usages.

The “Deploy” is where most misunderstandings come from and where open source differ the most from proprietary software licensing. For server technologies, all open source licenses (1) allow users to freely build and deploy applications on top of the open source [server] asset without any restrictions on their application licensing. Restriction applies only when redistribution of the asset occurs, and typical end-user usage (over the Internet) does not qualify as asset redistribution. For example, Google is using a highly modified version of Linux (GPL) and has not had to give anything back to the community (Note: Google gave some of its customization back, though). Note that for client side open source components, GPL can be a little bit more complicated (not covered in this post).

Redistribution of an application is where GPL differs the most from other open source license types. GPL is very viral by design, and can be a great tool for an entity wishing to control the redistribution of its open source asset by assuming that many potential customers or distributors will not want to play by the GPL rules. Dual-licensing (GPL + Commercial License) is often used for this purpose by allowing users to opt-out of the GPL licensing restriction if they agree to the commercial terms. There are a lot of caveats to this dual-licensing approach (e.g., open contribution, community uptake, and corporate development opportunities), but it has proven to be working (e.g., MySql). MPL and BSD-like licenses (and in some ways LGPL) are designed to allow free redistribution of the open source asset.

Modification of the open source asset is where BSD-like licenses (Apache, BSD, MIT) differ the most from other ones. All other open source licensing forces modifications to their asset to be submitted back with the same original license, whereas BSD/Apache-like licenses do not have such requirements. I personally think that this is one of the principal reasons why Apache products and assets have been broadly adopted by commercial entities such as Oracle in their commercial offerings.

So, in short, for server-side assets, open source licenses cannot really be used to control deployment, but more redistribution and modification. If there is a good OEM business opportunity, then dual-licensing (i.e. GPL + Commercial) might be an option, but if community and adoption are the principal objectives, the Apache/BSD license types are probably the most effective ones. While GPL might give the most control (in some ironic ways), it might also limit market adoption and business opportunities.

My philosophy is that leadership comes from contribution and not control (i.e. licensing).

(1) GPL V3 has an optional clause forcing the deployed applications to be under GPL as well (this clause is not commonly used).

Related Links:

• Some good info about Mozilla Licensing: MPL FAQ, Relicensing FAQ
• GPL vs BSD, a matter of sustainability
• What is CopyLeft (from Gnu.org)

Having worked for many technology provider companies (e.g., Netscape, Oracle, and Adobe) and being a developer myself (mostly on weekends), I have always been fascinated by the dynamics and trends in the developer industry. I think that, coupled with the open source and software as a service dynamics, this industry is experiencing an auspicious time for interesting technological and business opportunities.

If you happen to build a [Web] developer strategy for a company or a project, you will often need to have some sort of representation of this market. To this end, I have been developing a simple—but useful—representation of the Web developer community in the form of a spectrum which I have called the “Web Developer Spectrum.”

The Web Developer Spectrum consists of four main contiguous sections, from Enterprise Technology Developers up to Hackers/Hobbyists. It is important to note that an individual developer may belong to multiple sections, depending on the nature of his or her projects at a given time.

Here is the representation and description of this spectrum.

Enterprise Technology Developers

The Enterprise Technology Developers category consists of developers who work for big technology companies, such as Oracle, IBM, and Sun, and create technologies and standards that will be packaged in complete product offers targeting large enterprise IT departments.

These developers tend to be focused on architecture, completeness, and standardization, sometimes at the cost of simplicity and accessibility. Compared to other developer segments, these developers usually have an adequate amount of time and resources to get their job done.

Some good examples of technologies coming out of this segment are: J2EE, JSF, EJB2.x, and SOAP. As previously mentioned, some of these technologies, especially EJB 2.x, could be considered by some enterprise developers a little bit over-designed. EJB 3.x has addressed some of these issues by adopting the persistence model from alternative open source frameworks, such as Hibernate.

Business Application Developers

This segment includes developers from system integrators, such as Cab Gemini, Infosys, IBM-Services, and developers from various enterprise IT departments. The main priority of this segment of developers is to build and deploy enterprise applications in order to maximize the overall business productivity.

These developers are usually application-centric, meaning that they focus mostly on bringing the right functionalities to the right users in a timely manner. They tend to favor technologies with high returns on investment (i.e. with the highest “application-out/time-in” ratio), and they usually like to mitigate risk by contractual relationships with technology “vendors” (i.e. product licensing and support agreements).

JSP, ColdFusion, asp.net, Spring, Hibernate, and XML-RPC are the types of Web technologies used by the business application developers. Many of these developers are coming from the 3GL/4GL client/server development world, and often require quite extensive training to learn these new Web development paradigms and tools.

Web 2.0 Developers

By Web 2.0 developers I mean developers who build Web application for consumers, such as Digg, Delicious, Facebook, Bebo, Twitter, Craigslist, and many other Web companies. The successful one tends to start small and scale fast, while the others tend to move from project to project until they find the one that can attract a good user community.

Web 2.0 developers tend to be user-centric, prioritizing application simplicity and design over completeness. Web 2.0 developers tend to like dynamic, simple, and scalable technologies, such as Ruby/Rails, REST, and MemCache, Java (minus J2EE), to name a few. This is a relatively difficult business for technology and tool vendors since this community is very self-serving and usually pushes technologies in the opposite direction from what a typical enterprise would require (scalability vs. transactional).

Hacker & Hobbyist Developers

Last, but not least, there are the hacker (in the open source sense) and hobbyist developers. While many of these developers are actually paid to work on their projects, some of them (the hobbyists) code mostly for fun and self-satisfaction. This segment could be another spectrum in itself, but I combined it for simplicity.

Great quality products, such as PHP Gallery 2.x, Wordpress, and PHP BB are coming from this community, as well as some smaller projects, such as greasemonkey, and other application plugins. This community tends to be self-serving as well and extremely proficient at fulfilling its own needs.

Hobbyists tend to use more scripting language, such as Python, PHP, Javascript, and other accessible technologies, while hackers tend to go relatively deep in the software development stack to accomplish the required tasks.

A few weeks back, I showed this spectrum to Rich Levandov from Master Head Venture Partners, and he raised a very interesting point. Prior to the open source development, technology vendors, such as Oracle, Sun, and IBM, represented the largest developer community on the market, and, consequently, were the main technology sources for the industry. With the popularization and maturation of the open source development and distribution model, community-created technologies have become more and more relevant, to the point where they even eclipse vendors’ technologies. AJAX and Hibernate are probably the most recent examples of such a trend. I still see major technology vendors making most of the technology distributions (given the enterprises’ need to mitigate risk); however, I think they will have to adopt more and more community technologies and standards if they want to stay relevant in the marketplace.

Obviously, this representation in not perfect, but, many times, it has helped me to visualize “developer” business opportunities. I hope this will be useful to others, and I definitely welcome any and all feedback.

1) Facebook to make big push to Mobile

This is more of an opinion than a prediction, but I think that Facebook should make a big push in the mobile space. Apple reinvigorated this space from a consumer point of view; however, mobile applications are still hard to develop, integrate, or promote. Facebook has the reach, the technology, and the platform experience to create an online mobile platform allowing application providers to build, integrate (i.e., mashup), and deploy (i.e. provisioning) mobile applications.

The challenge to build a true online mobile platform would be to take some distance from the “PC world” and focus the mobile specific issues, constraints, and value chains.

Google might be another challenger in this space; however, their strategy seems to be very device-centric (with Android), which will take longer to unfold.

2) Ning to be acquired by Yahoo! (or Microsoft)

On the consumer portal front, I predict that Ning will get acquired by Yahoo! (or Microsoft). TechCrunch predicted that it would be Google, but I think that Google has its hands too full with Open Social to buy yet another “framework.”

Yahoo! might want to make an aggressive move in the social network space in a novel way. A Ning acquisition might allow them to differentiate themselves, at least from a developer standpoint. In a way, Yahoo! could become the social network platform for the rest of us.

Note: Google might very well buy Bebo.com to deepen its US/EU social network presence.

3) Apple to revolutionize the media distribution market (iTunes 2.0)

Well, this one is not hard to predict, but I think that Apple’s move to online video will become big. The WGA strike definitely works to Apple’s advantage. While Apple’s video rental numbers might look relatively low by the end of 2008, when compared to Blockbuster, I think Apple is going to be in a position to dominate this market (or at least, create its own).

The big question is, how will Apple be able to get into the living room? Apple TV?

4) Apple to acquire Adobe

This is an easy and now popular prediction. Despite the fact that Apple has a lot on its 2008 plate, I think, as many others do, that it would be a good strategic move for Apple to “merge with” (i.e. buy) Adobe. Apple is now, more than ever, the king of user experience from a consumer point of view. It would make perfect sense for Apple to also become the tools leader for creating these user experiences.

The irony of such an acquisition would be that, with the newly-acquired tools and runtime (Adobe Flex/AIR), Apple developers would be able to build and deploy applications for Microsoft Windows (as Microsoft developers used to do with Microsoft tools for Apple computers).

5) Microsoft to open SilverLight and/or XAML

2007 was the SilverLight year, in which Microsoft first attempted to take over the Flash market. SilverLight is mostly based on an XML language called XAML which is also used to build desktop applications with the WPF runtime. However, while some XAML clones already exist (e.g., Wayne’s post and eFace) none of these technologies are officially open.

I predict that Microsoft will either standardize the XAML language or even open-source the SilverLight code. It won’t do any harm to Microsoft, and will definitely counter some common attacks against these technologies.

6) Oracle to buy RedHat or SalesForce.com

I was going to say BEA, but this would be cheating now. I think the next one could be either SalesForce.com or RedHat. Oracle has been pretty aggressive in its Linux strategy in the last couple of years. A RedHat acquisition would be definitely in-line with Oracle’s disturb-before-striking acquisition strategy. RedHat new CEO would probably facilitate such acquisition.

I also think that online platforms for enterprise software/service companies are going to become strategic in 2008. SalesForce.com, with its force.com platform, is being aggressive about this, and can become the Facebook for enterprise applications. I am not sure that Oracle is ready to bet big on SaaS or PaaS (Platform as a Service) yet. But P/SaaS is definitely going to continue to grow, and might even become more relevant in economic downturn.

Anyway, both of these acquisitions are probably just a matter of time, and 2008 will tell us more.

7) Enterprise Web 2.0

As mentioned in the introduction to this post, I think that 2008 will be a real start for Enterprise Web 2.0, the buzz-word for leveraging the best of the Web 2.0 technologies and paradigms to make enterprise internet applications more usable (i.e. RIA/AJAX), simpler, and collaborative (i.e. social). In this context, SaaS and PaaS (i.e., Platform as a Service) are going to be critical. (see Dion Hinchcliffe’s 12 predictions for Enterprise Web 2.0 in 2008)

To this end, I am now consulting with enteprise software and service companies to help them leverage Web 2.0 technologies and paradigms for their products and services. See www.jeremychone.com for more information.

So, here you have my seven predictions for 2008, hoping the “recession” won’t be too hard on the industry.

And a belated happy new year to you all!

Facebook: A New King is Born

Facebook was undeniably one of the major internet phenomena of 2007. While its online Internet platform was not a new concept in 2007 (e.g., Oracle Mobile Studio), it is definitely fair to say that Facebook matured the concept and pushed it to the masses. I have been impressed by Facebook’s execution on the technical, business, and developer/end-user experience fronts. Facebook has successfully created a new market for itself, and is ruling it.

I personally think that Facebook has the potential to endure like Microsoft, Google, Apple, and Oracle. I also think that Microsoft prefers it that way, and it is one of the main reasons why they boosted Facebook’s valuation to $15B (TechCrunch: “Facebook Takes the Microsoft Money And Runs”).

iPhone: Great marketing starts when entertainment supercedes education

Another big phenomenon of 2007 was the iPhone. I am almost more fascinated by the buzz around it than by the product itself. I do not think that everything was planned, but the combination of Steve Jobs’ excellent keynotes, a great product, the desire of users for slick designs, and some entertaining PR glitches, turned this new device into a blockbuster phenomenon. iPhone even had gross weekend sales reports, as do Hollywood movies. Needless to say, with Steve Jobs, Apple has everything it needs to succeed in this new marketing age.

From a practical standpoint, Apple reinvigorated the mobile market, and this benefits everybody. So, as a non-iPhone user, I thank Apple for entering this market and pushing the standard up.

Oracle: Self-Predicted Prophecy

Larry demanded it, Oracle did it. What might have seemed unthinkable a decade ago has now happened. Oracle and SAP have entered a channel expansion spree which consisted of buying most of the major enterprise companies, such as Siebel, PeopleSoft, Business Object, and Hyperion. Larry predicted it in early 2000, and made it happen in less than a decade.

As Larry used to say, “I prefer to pay $1B and be right, than $100 Million and be wrong”. Well, Oracle did apply his philosophy pretty well.

I actually think this is a very good strategy for companies the size of Oracle or SAP. The consolidation in this market was probably inevitable, given the fact that what big enterprise customers are really looking for when signing an software license/support contract is the insurance on the product as much as the product itself.

This does not change the fact that enterprise innovation can still happen outside of these big companies, it just changes the opportunities (i.e. exit strategies) associated with these innovations.

Beyond AJAX: Return of the Client

If AJAX and Web 2.0 were big news in 2006, technologies to go beyond Web browsers could be seen as an early theme marking 2007. As mentioned in the “Return of the Client” post, the main Internet technology providers are aggressively putting strategic technologies on the market to try to seize this new opportunity.

Although all of these technologies are somewhat based on standards such as XML, Javascript, HTML, and CSS, they are diverging quite a bit. Standardization might happen at some point (e.g., W3C Web Application Formats Working Group), but this does not seem to be a priority for anybody at this point.

The two noticeable new efforts are Adobe AIR/Flex and Microsoft SilverLight. Early applications seem promising. However, CAUTION, while we might get excited about these new possibilities, making a pixel fly does not necessarily give it a purpose.

Media industry: Mutation Started

Something a little bit more subtle is the awakening of the media industry to “legitimate” Internet business opportunities. I think that before 2007, the media industry saw the Internet mostly as a threat to their business, and like Bill Gates in the early 90’s, did not really see how to make money out of it. However, after witnessing some almost-no-budget shows such as Ask a Ninja and LonelyGirl15 reaching spectacular audiences, the media industry finally recognized the power and opportunities of the web. I think the WGA Strike is definitely a symptom of this awakening.

The industry has entered a first phase which is to monetize traditional productions (i.e., TV shows and movies) with this new media distribution channel. This is mostly a big-fish game, where the latest entry was Apple.

I think the next phase will be for the industry to create a new market for these next generation productions. It will be interesting to watch the incumbents play this new game; YouTube or Apple might be able to become the backbone of a new market.

We can now definitely close 2007. Next post will be the 2008 predictions.

Not surprisingly, Microsoft has decided to change the way its Web browser works rather than paying royalties. Luckily for Microsoft and probably for users too, the change does not seem to be as disruptive as originally thought. User won’t see much of a difference, and the modifications on the application side seem to be modest, as specified by Microsoft instructuctions.

Consequently, Web masters and IT organizations will probably the ones most impacted by this change, since they will have to update their Web applications. Also, it is not clear to me how this case will affect other browsers, such as Firefox, Opera, and Safari. If it does not, it could be a good opportunity for those communities to lure users away from Microsoft IE.

This new excitement is probably generated by the presumption of achieving the ultimate Internet goal of enabling true “Everybody to Everybody” participation. However, while this “new wave” brings tremendous user and social values, it still does not seem to address some of the critical Internet roadblocks to pervasive Internet collaboration.

To better understand these limitations, we need to take a quick look at the evolution of the Internet. I see three main phases in the Internet evolution. (Note: The “Web x.x” numbering scheme is completely artificial, and is just used to support a “relative numbering” scheme leading to today’s “Web 2.0″ term).

• The Creation (”Web 0.x”): In the late mid `90s, the Mosaic project, created by Marc Andreessen, had the ambitious goal of making network collaboration accessible to the broadest audience possible. With the creation of Netscape Corporation, the idea attained tremendous visibility and support from the market, leading to the proliferation of a new client application allowing unfettered access to network information: The Internet browser.
• The Development (”Web 1.x”): The exponential growth in popularity of this new medium led established and new software companies to realize the great potential of this new market. On May 26, 1995, Microsoft, in a famous Bill Gates memo (”The Internet Tidal Wave“), reoriented itself towards this new model. Although the over-excitement created an inflated market that eventually burst, many content and service companies such as Yahoo!, Amazon, and eBay have remained strong and growing. The popularity of this new paradigm, coupled with the commoditization of the Browser on many devices, have put Internet in almost everybody’s hands. This phase could be seen as the popularization of Internet access.
• The Reinvigoration (”Web 2.0″): Lately, infrastructure commoditization and the flamboyant success of new Internet companies, such as Google, have reinvigorated the drive for Internet innovation. I see two new fundamentals from the previous eras:
  • First, the industry is now focusing on popularizing content publishing. New services like Blog (e.g. Six Apart), Wiki (e.g. Wikipedia), Photo Album (e.g. Flickr), Social Network (e.g. Linked In), and many others are based on the principle of enabling every users to become content producers as well as content consumers.
    This “2 Way” web is already having important social ramifications, where knowledge and information are becoming more and more open and accessible.
  • Second, most of the Internet organizations are placing more emphasis on usage (direct or indirect via APIs) than subscribers (eyeballs). This is a great step towards building a stronger Internet in which closed Internet services, such as today’s Instant Messaging networks, will hopefully be pushed out of this ecosystem. It is always a great milestone when an industry understands that backing a larger cake might be more beneficial than trying to take a bigger piece of a smaller cake (see the Inherent Truths and Value of Community).

The following simple graph represents this evolution, where the “Web 1.x” phase is characterized by “content consumer” growth and the “Web 2.0″ phase by “content producer” growth.

Web 0.x to Web 2.0 Simplified

However, while content publishing has been made much simpler, it still is not as pervasive as content access. For example, while my grand mother can access online pictures of her grandchildren, she still has a hard time contributing to the content.

Here are the main hurdles to realizing the true “everybody to everybody” Internet participation paradigm.

• User identity silos: While today’s economics valorize usage values, there are still strong incentives for companies to own their user communities on a exclusive basis . These economic incentives, coupled with the technical challenges to providing secure and distributed Identity Management mechanisms, are considerably slowing down the rate of Internet participation growth. The good news is that the Internet community is tackling this issue (referred to as “Identity 2.0“) very seriously, and while there are no clear winners yet, there are good contenders (Infocard and SXIP).
• Interoperability mechanisms fragmentation: As Ray Ozzie mentioned in his memo, cross-service interoperability mechanisms fragmentation is also a key obstacle to Internet growth. However, the defacto standard, where “clone services” just copy the APIs of their established competitors, has been a pretty good short term workaround. For example, 23 photo sharing service, profiled by TechCrunch, cloned Flickr from the user interface down to the APIs. There are also very promising new simple protocols, like SSE, that will probably continue to emerge as needed.
• Limited Internet architecture utilization: Outside of a few Internet applications, such as IM, Voice Chat, and “Illegal” file sharing, most of the Internet services just use a Client/Server Internet application model. However, there are many examples where a more distributed approach would greatly enhance the user experience. Opera integration with Bit Torrent is probably a first step towards this direction. However, there does not seem to be much more than that happening in this area.

The good news is that the Internet community is actively working on resolving these issues to enable users to take better advantage of the Internet.  So, we can expect to see more innovation in the years to come around these areas.

UPDATE Dec 02, 2005: Michael Arrington reports a great post (Web 2.0 DNA), from Brandon Schauer, about Web 2.0 historical timeline. A must read!

UPDATE Dec 04, 2005: Good discussion about “Web as a platform” from A VC.

Although this model has created some great Internet companies (Amazon, Ebay), it also created the dot-com saga that we know all too much about. Even for companies with good ideas, putting the “Buzz before the Bits” could be very costly.

In today’s internet (often referred to as "Web 2.0"), the environment has changed dramatically, and has become much more favorable to innovators. Three main factors have contributed to this change:

• Extremely low cost of infrastructure: In contrast to the early days of high start-up cost, today’s “commoditization” of infrastructure hardware and software allows entrepreneur to start with just an idea, skills, and time. It is probably clear that this new era will not have the same effect on Sun that the dot-com era had.
• Abundance of technical information and tools: Thanks to open source and advanced search capabilities, the abundance of available technical information and tools is unprecedented. This significantly reduces the cost of development and deployment, and allows start-ups to just focus on their core ideas.
• Past experience: The dot-com experience has brought a lot of wisdom and some humility to the technology industry. Entrepreneurs view their ideas with much more objectivity now, and often know from the start if an idea would be better as a stand-alone business or as complement to another service. VCs have become more prudent about investing as a result as their painful dot-com experiences. Angels avail of some very mature processes and forums in which to evaluate early ideas.

Consequently, innovation has become cheaper and investors have become wiser. With innovators doing more to drive process. This, ultimately is a good thing for everybody, including investors.

This reduction in the cost of innovation, coupled with new challenges of creating a long-lasting businesses (see VC Squeeze from Paul Graham), is pushing entrepreneurs to evaluate the “flip” strategy (selling to a Google, Yahoo or others) before even talking to venture capital firms. The Riya-Google Rumor from Techcrunch might be the latest example to date.

All of this is not to say that venture capitalists are not adding any value. Actually, they add a great deal of wisdom due to their memory of the dot-com bust. In a great panel about Internet 2.0, Josh Stein of DFJ pointed out that many of the ideas of 1999 could be good inspirations for today’s market. Indeed, we are seeing many of them resurface. It is probably fair to say that many of the dot-com ideas were too early for their time, and that Web 2.0 might be the right distribution for many of them. Only time will tell, I guess.

In short, Internet Innovation is back on, more innovative and more "free" than ever. This is a very exciting time, and great things will come out of it. So, we should enjoy the wave and give the best of ourselves.

It is very interesting to watch Microsoft waking up, loud and determined as in 1995. The fact they chose Windows and Office brand for their "Live" offerings is significant.

A few interesting points from the Ozzie memo:

• Microsoft did openly recognize having missed some opportunities (e.g., Google, Skype, AJAX).
• They are puzzled about Google’s strategy:
  "[Google's] myriad initiatives … drive scale for their advertising business … or … grow to substantively challenge our offerings"
  (BTW, good job from Google. In less than a decade, they puzzled Microsoft)
• Ozzie did a good assessment regarding today’s Web hurdles:
  "User identity and cross-service interoperability mechanisms are still needlessly fragmented".
  (I hope this means Microsoft will work on standards and interoperability, instead of creating another proprietary Identity Management "a la MS-Passport"!)
• Regarding my previous point about this new advertisement revenue potential, Ozzie did confirm that "… no one yet knows how much of the world’s online advertising revenues should or will flow."
• Ozzie does point out the value of the Internet adoption model and seamless application integration.

Microsoft is certainly doing the right thing by embracing these changes. During the last couple of years, a lot of "underground" work has been done to come to this point. It will be interesting to see Microsoft catching up. Undoubtedly, they can catch-up on the technology side. Their real challenge will be adapting to these new business models.

Some missing points from Ozzie’s memo (just for speculation sake):

• No mention of Open Source. Ozzie could have said that Open Source is part of this new ecosystem. He probably wants to tackle this topic offline.
• Ozzie did explicitly mention the term AJAX couple of times, but not Web 2.0. Arguably, Web 2.0 encompasses AJAX. Free speculation: Microsoft might be starting branding MS Live "against" Web 2.0.

Related links:

• Dave Winer publishes Gates and Ozzie memos.
• On Slashdot -
  Why Microsoft and Google are Cleaning Up With AJAX
• Marc Benioff’s retort