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.

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Apple’s iPhone product and marketplace have been the latest example of Apple’s excessive control. Apple ingeniously controls its iPhone platform at both the production and distribution levels. In practical terms, this means that iPhone developers must have the Apple SDK (which only runs on a Mac computer) to be able to produce an iPhone application (even if developers use other application SDKs, such as PhoneGap). Developers also must get the application approved by Apple in order to distribute it. Microsoft would not have even dared to dream of such a market scheme.

Nevertheless, at its annual event last week, Adobe demonstrated how developers can circumvent iPhone application’s production restrictions by using the upcoming Adobe Flash CS5 to produce native iPhone applications. And while this has little to nothing to do with putting Flash or AIR on the iPhone, it is big news for mobile developers. It will allow any developer on any platform (such as Mac or Windows) to develop iPhone applications.

As of now, Adobe’s solution lacks many of the most interesting iPhone APIs, but it is safe to assume that if Adobe is serious about promoting AS3, its language for native iPhone development, Adobe will provide full iPhone API access in the final release.

Now the big question is, will Apple allow Adobe to fork its iPhone developer community?

It is fair to assume that Adobe did not ask Apple’s permission, and that Apple probably sees this initiative as a competitive threat rather than an opportunity.

Apple cannot afford to ignore Adobe anymore, and must respond to this initiative by carefully weighing the risks of each course of action. Apple has the following three options:

1) Let it go

The first and most unlikely option for Apple will be to let the matter go and allow the Adobe developer community to develop native iPhone applications with Adobe’s technology without needing Apple’s SDK.

By doing so, Apple will definitely change its reputation for maintaining strict control of its technology. However, ignoring this event will set a dangerous precedent that Google may use to enable Android developers to do the same. While Apple might not consider Adobe a direct competitor in the mobile market, Apple definitely does not want to get “Windows’d” by Google.

While this would be the best option for developers, it will be astonishing if Apple goes this route. Apple will probably offer excuses to justify why this option would be a detriment to the iPhone developer and user communities.

2) Block it

The obvious approach for Apple would be to stop Adobe from releasing this product, either by making it technically unreliable, by denying any applications built with it, or by legally harassing Adobe.

The problem with this approach is that it could create a similar insurgence from the developer community as Google Voice did from the user community. This outcome would generate good PR for Adobe and raise awareness among developers about the need for more openness in the iPhone development environment (note how Apple is making anybody look open).

3) Control it

The most likely outcome is that Apple will attempt to control Adobe’s new product by entering into some sort of partnership with Adobe, and, most importantly, keeping Google out of such relationship.

This result could actually benefit Adobe, since Adobe’s true agenda is not to cross compile its Action Script programming language to iPhone byte-code, but rather to distribute its Flash and AIR runtime to the iPhone.

Perhaps Adobe’s Flash CS5 iPhone application support might be part of its master plan to get Apple’s attention in order to bring Flash runtime(s) to the iPhone. If so, this “show, don’t tell” strategy is a smart and modern way to influence bully market players such as Apple.

Anyway, what’s your take, what do you think Apple will do?

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Related Article

• 2009-10-15 – InsideRIA – Scott Barnes: Could Adobe potentially harm the iPhone AppStore
• 2010-04-07 – We got our answer, Apple is blocking it: New iPhone Developer Agreement Bans the Use of Adobe’s Flash-to-iPhone Compiler

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.

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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.

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.

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