Google's foray into Image Search

Google has recently started Google Goggles which can translate text captured in photos. Google uses image recognition technology and helps in searching images. So it'll be very beneficial to mobile users as they can click pictures and get relevant information about the objects.

Two important observations:
1. This image search does not use tagging. So it's a completely new technology where images are being matched from a different database of images.

2. This is an example where different technologies are converging. It's a beautiful combination of Digital Signal Processing and Databases.

The Facebook Imperative

The founder or Salesforce.com asks the question - “Why isn’t all enterprise software like Facebook?” Facebook brings what is most important to the user - updates, statuses, news feeds, etc. - into one place. Marc Benioff sees the direction of cloud computing and software solutions moving in this direction, changing the way work and collaboration is done.

http://techcrunch.com/2010/02/24/the-facebook-imperative/

Facebook "friends"

This is somewhat related to the issue of privacy on Facebook... and it's hilarious.

Facebook privacy glitch

I always wondered why people were so terrified about privacy settings on Facebook. They're rather easy to change, and how can anyone reasonably expect something he or she posts online to be truly private. It's called the WORLD WIDE WEB. Facebook's privacy issue in this case is a bit different from what users had previously complained about because this time it's not about policy. It's about the underlying structure.

Telepresence on Fox 24 (March 1)

For those that watch 24 on Fox, here is a link to our discussions pertaining to Cisco telepresence.

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Enjoy..

Microsoft Fights Spam

Microsoft won US court approval to shut down a spam network spanning 277 domains. The domains are part of the Waledec Botnet. This botnet was one of the 10 largest botnets in the US. The termination of the network will prevent 90,000 computers from receiving messages to send out spam. However, shutting down the network does nothing for computers already infected with malware. Below is a diagram of how a botnet works, Courtesy of the BBC.




This was particularly interesting after viewing the video in class that stated over 90% of emails sent are spam. It is interesting to see Microsoft taking action against these networks proactively. Maybe this is a form of IT CSR.

http://news.bbc.co.uk/2/hi/technology/8537741.stm

Google's Ad Revenue Mix

This chart says a lot about where Google gets its revenue and why it needs multiple hooks to get people to come to Google sites. Note that this chart is different from the numbers reported by Google because it allocates the traffic acquisition costs directly against the revenue from ads on other sites (AdSense). It also reminds us why we need to delve deeper than high-level statements and figures often bandied about in various places. 
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So, if Google is largely a destination site that depends on people visiting and spending time on its properties, then it needs to recognize the importance of social networking and threat from Facebook (and Twitter).  There are strong rumors that Twitter will launch an advertising platform soon.  Facebook already has its advertising platform. 
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And there is the mobile advertising battleground....

Fuel Cell Technology to Change Energy Landscape?

Bloom Energy recently unveiled its "Bloom Box", a fuel cell that can be used to power homes, buildings, and other stationary areas of energy consumption. The fuel cells can use hydrogen, methane, or other natural gases which are abundant in the United States. This has the potential to be a disruptive technology within the energy industry (and could disrupt the geopolitical landscape as well).

Google, Fed Ex, and Walmart are all beta-testing the technology and EBay is already using it. However, Bloom Energy is not the only player in this area - interestingly, large telecoms such as Sprint and Vodaphone have invested heavily in fuel-cell technology, acquiring several patents in an attempt to develop clean power for cellular base stations.

As much of the energy industry is shifting toward the service layer, this story reminds us that there is still a great deal of potential in R&D and manufacturing at the bottom of the stack. This is one industry where the hardware is not yet a commodity.

EU Opens Antitrust Inquiry Into Google

The EU is going to lead the way in looking at Google's allegedly anti-competitive activities in regards to search and the listing of its competitor's websites. Here is a Wall St Journal article and one from All Things Digital.

Unsurprisingly, the companies launching the complaint have ties to Microsoft.

The question that occurs to me is: If Google is ranking websites fairly, how can they prove it without revealing the proprietary information behind their page rank algorithm? The Microsoft case showed how the information that comes out in these antitrust cases can cause significant damage all by itself.

Flash Wars

But the Evil empire may very well be Apple(yes, not Microsoft!). The not so recent Steve Jobs outburst on Adobe "being lazy" and consequently Flash being not supported on iPad may turn out to be a key battle ground for web content delivery standards.

Flash according to Jobs is buggy(consequently crashes apple OS); CPU hog; and proprietary; hence Apple roots for HTML5 instead. But Java(remember!) inspite of being stable and open source finds no place on the Apple platform either. So why would Apple not support Flash in-spite of being used for 75% of all videos on web & 90% of interactive ads ?

Apple today is not only a Hardware / Software maker but also a Content deliverer, which wants to control the sources from which customers get their entertainment. Flash and Java can both act as content delivery systems via the web, completely bypassing the App Store thereby threatening a lucrative revenue source. So Apple is hiding behind the garb of Flash being buggy (if microsoft can make Flash work Apple definately can... also if Flash was that bad it wouldn't available on 98% of world's internet enabled computers) and therby controlling the way customers access content. Had this been done by Microsoft everyone would be up in arms...maybe it's time to ask Apple some tough questions!

Sony : Cultural Implications of CES Seven

I was struck by Sir Howard Stringers' presentation of the CES Seven and how these 7 initiatives will help to create the best hardware, software and entertainment within consumer electronics.


In particular I was interested in the following pieces as they have the potential to have the greatest impact on Sony's business model and corporate culture.

- Embrace fusion of Industry
- Service Enhanced Industry
- Support of open technologies
- Enhanced shared network

As a hardware manufacturer Sony is now forced to consider collaboration as made evident through its Sony Reader partnership with Google Books . I wonder what institutional changes will be made within Sony to continue to encourage partnerships, open standards and service based consumer electronics. As a hardware manufacturer as well as a Japanese company there is likely to be considerable emphasis on hierarchical relationships, which inhibit innovation.

Shades of the Audrey?

The Sony Dash, New product?

Look familiar?
http://en.wikipedia.org/wiki/3Com_Audrey

Sure, the technology has advanced a bit since 1999, but hopefully Sony has taken some lessons from 3Com's failed Audrey system with regards to what consumers want for their internet needs. The Dash has a lot of similar problems regarding portability and limited use, and will be competing with more versitile products such as the unfortunately named iPad.

Fun fact: The Audrey is consistently ranked as one of the worst personal computing gadgets to ever reach the market.
http://www.pcworld.com/article/125772-7/the_25_worst_tech_products_of_all_time.html

Is Wal-Mart Buying Vudu to belatedly catch up with Amazon?

Just after our discussions on Amazon and Sony, there comes an announcement that Wal-Mart is buying Vudu.  NY Times is reporting that the deal may be announced soon. This observation in the NY Times article is particularly interesting to think about.

Wal-Mart’s move is likely to give a lift to sales of Internet-ready televisions and disc players, which generally cost a few hundred dollars more than devices without such connections. These products allow people to watch movies and shows over the Internet, bypassing their traditional cable or satellite service.

The deal could also allow Wal-Mart to one day sell a variety of other merchandise through people’s televisions via the Vudu service. 

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Given Wal-Mart's scale and reach, this is potentially an important strategic move under convergence of industries. What's your assessment of this move--is Wal-Mart emulating Amazon?  Does Wal-Mart have the competencies required to be a key player in the digital space?

More broadly--what does it mean for Apple (iTunes), Amazon (video on demand), Google (YouTube) and Sony? 

The Next Chip Battleground - Smartphones

As the battle between smart phones is heating up for consumers and service providers, another war is under the case. This article from today's NYTimes talks about how chip makers, including Intel, AMD, and others are seeing smartphones as the next big thing, and battling to make headroads into the market. This is very interesting, especially since Apple decided to start manufacturing its own chip for the iPad.

This new widening market will see increased competition, and the results of the new generation of chips will greatly influence the seamless integration between mobile and computing devices. As more entrants battle with the existing manufacturers, the consumers will win, and the division between laptop and phone will shrink, disappearing in the next 5-7 years, if that long.

The next age of government

http://www.ted.com/talks/david_cameron.html

The leader of Britain's Conservative Party says we're entering a new era -- where governments themselves have less power (and less money) and people empowered by technology have more. Tapping into new ideas on behavioral economics, he explores how these trends could be turned into smarter policy.

I know that we, in the class, have not focused on the effect of technology of government, however, this TED talk seemed to be a fairly good presentation on how information technology advances can aid the interaction of the people and their government.
David Cameron's main point is on making government actions transparent, allowing the people to be more empowered in this "post-bureaucratic" age.

While this is what should happen, it will take another generation or three before such practices reach their full useful potential.

Google getting trying to get into the ecommerce market in a way that will directly be competing against amazon and Ebay?

Going by the new hiring of Stephanie Tilenius as a "vice president of commerce" it looks like that way.

http://bits.blogs.nytimes.com/2010/02/16/google-hires-ebay-veteran-for-new-commerce-position/

A lot of sale for Amazon anyways happen by going through Google.

http://googlewatch.eweek.com/content/googleopoly/is_google_gunning_for_e-commerce_giants_amazon_ebay.html

So with kind of varied things Google has been able to produce over the years I am not sure if "surprise" as a word is relevant for them in the web world. As Eric Schmidt said ..wants a small google in everything thats on the web.

Google Shopper for Android: Seeking to Control the Architecture of Mobile Commerce?

A few days back, we were discussing the strategic rationale for Google to experiment with a variety of software initiatives including Android.  I like you to take a look at Google's latest initiative--Google Shopper for Android. Pay particular attention to the features shown and think about them in the context of the ways Google is striving to control and influence the emerging architecture for mobile commerce.

I am sure this has implications for many of the companies and the sectors that we are examining in the course.




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Comcast Offering Backup Option to Customers

From the Boston Globe today, Comcast has partnered with Mozy, a subsidiary of EMC, to offer online back and sharing of files between users. While Mozy offers a computer backup product now, the Comcast version will allow users to share files, something they cannot do currently, but will also have a storage maxinum set.

Because Comcast has more pressure from other broadband providers - Verizon Fios, broadband mobile cards, and smartphones - for network access, any added features to keep customers will be a means of differentiation.

Is this service easily copied by competition? Of course. Does it already exist on the net for free? Yes. Will Comcast make money on this offering? Probably not, but it could entice average users who don't know about Mozy, Dropbox, or the many other online file saving/sharing options to take advantage of this Comcast product.

Comcast's move shows what we have discussed in class - the interrelated partnerships that arise at technology converges. This new offering would have been unheard of three years ago, but is logical, even expected, now.

The pace of innovation and product differentiation

In an article today in the NY Times titled “Tech Industry Catches Its Breath” the author reported on the Mobile World Congress, typically a show featuring the announcement of new technological breakthroughs, however this year it is much more subdued with only tweaks on the hot new tablets recently announced. As I read through the article I started to think both about the pace of innovation and the rate of product differentiation.

The article reflects on the technology and product breakthroughs of recent years with the netbooks, the iPhone, the Kindle and most recently the iPad. But the reporting on the many variations of devices that are based on the innovation listed above are what made me think about product differentiation. How much does it matter that you are the company that comes up with the breakthrough technology? These days it seems that companies such as Apple and Google come up with a major innovation, the product is then manufactured in Asia, and often times those Asian companies then create variations that are sometime an improvement upon the original design and sold at a lower cost. Is the product differentiation game as opposed to the product innovation game more profitable? More successful? Perhaps also these lower cost improved variations catch on at a larger scale in other countries but at a smaller scale in the US. Clearly for the consumer, we need the innovative companies such as Google and Apple to make game changing technologies, but how sustainable are these product investments? And are these companies getting enough of a return with the rapid imitators and innovators making variations on their products so quickly?

Microsoft-Google-Apple: Observations on their future potential

Here's a video that provides additional information on the growth potential and challenges facing the three companies that we have discussed during the course. Take a look at it and offer your own comments and observations.

Will e-books and readers become commodities?

I noticed that Amazon developed a free app last year that makes it easy for people to read e-publications purchased from the Kindle store on their iPhones. However, they still require you to own a Kindle before buying Kindle books.

Amazon would clearly like to control the platform for e-publications, especially since they make a nice profit margin on each Kindle they sell. The free app attempts to create "coopetition" with Apple, giving Kindle users added value by allowing them to access their content through the iPhone, but still requiring they have a Kindle as their primary reader. The iPhone is probably fine for reading for ten minutes on the subway, the Kindle better for curling up with a novel on a Sunday afternoon. So the devices seem complementary, helping Amazon establish the Kindle format as a standard.

But I wonder what will happen as people devise ways to port content to the iPad and other devices. Is it possible to maintain closed standards for very long? As a consumer, I'd love to be able to access my purchased content on a Kindle, an iPad, a PC, a cheap Kindle knock-off, or any device I choose. And I'd be thrilled if there were dozens of discount e-publication sites all achieving parity in terms of selection and ease-of-use, and competing mostly on price.

Know who else would be happy with this situation? Google. If I'm buying from multiple sites, I'd want a centralized place to access my content. I'm sure Google would be happy to host it in the cloud. They would see all my reading preferences and could send me targeted advertising from the various e-book sites clamoring to attract my business.

I guess that's why Google tends to promote open standards and to be so popular with consumers and so disruptive to companies trying to dominate particular markets.

Thoughts on IBM

During class today, I was thinking about the IBM's shift to services, and wondered if part of their strategy in doing this is to fuel mainframe sales and follow-on services. A recent Economist article led to this thinking:

"High 'switching costs' explain in large part why mainframes are still a good business for IBM. It is the only big firm left selling them, at prices that start at $100,000 but often reach the millions."

I dug around IBM's most recent 10K, and although their hardware sales are a small fraction of their overall revenues, the point I'm trying to make is that sales of software and maintenance contracts don't seem to be the high-value services advertised by the Smarter Planet initiative. Again, from the Economist article:

"Sales of mainframes are said to have brought in about $3.5 billion a year, on average, in the past decade. Although this is only about 3.5% of the firm’s overall revenue, each dollar spent on hardware pulls in at least as much from sales of software and maintenance contracts. Toni Sacconaghi of Bernstein Research estimates that 40% of IBM’s profits are mainframe-related."

(Full article here)

Numbers from their 10K:

Wired Magazine on Digital Tablet (iPad)?

Please take a look at this in the context of our discussions about Amazon's digital strategy.

Liabilities surrounding Google Books

This post comes a bit late relative to our discussions regarding Google, in particular Google books, but I've been having trouble accessing the blog until now.

I have an interesting perspective surrounding the copyright issues surrounding Google Books. I am a volunteer librarian for a library which holds a very valuable collection of magazines, many of which are irreplacable, and in some cases we may have the only existing copy in public hands. (Or the only copy remaining at all...) Many of these magazines are also not in the best condition.

We've had interests in getting them scanned by Google so that they will be preserved. However, some of these magazines are not out of copyright, and a great concern of our library, among many others, is that in entrusting our books to Google, we might also be hit with a legal challenge should a copyright holder decide to come after Google. Our library runs on a tiny budget and most of that goest to aquiring new books and library supplies. We wouldn't be able to fight a lawsuit.

As of writing this the project is at a stalemate, and the magazines we are trying to protect are slowly crumbling. Unless we can get some proof that we would not have lawyers come after us in the event of a lawsuit against Google, we can't proceed.

It presents an interesting problem for libraries everywhere, and is representative of the conflict of traditional copyright law with new forms of information distribution. On the one hand, it would surely be better to preserve the magazines for others to enjoy than to let them be destroyed. But on the other, many copyright holders do have legitimate claims against Google Books. Who will buy a book if they can just get it for free online?

Personally, I think that preservation of information should be held above our somewhat flawed copyright system (Thank you, Disney.), but then I'm just the librarian...

Microsoft unveils Windows Phone 7

In line with their new strategy of focusing on the "Three screens and a cloud". Microsoft has unveiled the Windows Phone 7, which is essentially the Microsoft version of Google's Android. An operating system designed primarily for touch smart phones, this new mobile OS is Microsoft's first major attempt at re-capturing this segment of the market which is has lost to Google and Apple.

The new system has been described as one that has been made from scratch with no remnants of previous versions. What Microsoft has to its advantage at this point is pre-existing relationships with device manufacturers, making it easier for them to launch the new OS on multiple devices and operators. It will be interesting to see how well Windows 7's reputation as an operating system will serve in propelling Windows Mobile 7 into the market. It will also be interesting to see how strongly tied-in users were with Apple, Google and RIM systems if Microsoft does take off again in this space.

Challenging the Apple App Store

Twenty four telecom providers have agreed to collaborate in forming the Wholesale Applications Community in order to take on the Apple App Store.

In theory, this seems like a logical move for the telecom providers, which have been losing leverage in the industry to the likes of Apple and Google. By teaming up to create a common development standard that is independent of phone-make, service provider, or operating system, the industry aims to attract app developers and build a competitive network of applications.

I believe that this collaboration will face extraordinary challenges for the following reasons:

• The companies that are working together have been long-time competitors and will find it difficult to work together. Getting 24 entities to work cooperatively and productively is difficult enough, even when they are not directly competing
• Apple benefits from a strong brand and a great deal of marketing power. It will be difficult for the Wholesale Applications Community to create a brand and a single face to customers that can rival that of Apple, especially since its identity is split between two-dozen separate companies.
  
• One can envision how app developers will be drawn to this platform. The potential market is huge. Sony, Samsung, and LG and the GSM Association all support the project. However, Apple's existing library of applications is fairly robust, and gives them a distinct advantage in defending this territory.
  

Google acquires another...Aardvark!

This announcement should come as no surprise as Google is becoming increasingly social (buzz,wave et al) these days. Aardvark is basically a Q&A service, crowd-sourcing your social network to find the most relevant people who can answer your query.

It is potentially valuable to Google for the following:

• Every time people use these services to answer queries, Google looses potential searches and consequently ad revenue
• Google gets more valuable, relevant data stream to mine and match for future searches
• Helps differentiate from Facebook and Twitter
• Potentially can be used in the corporates as an in-house(or external) resource to effectively leverage the knowledge pool present within the company

If done right, Aardvark thus appeals to both business and social users bringing more people under the Google umbrella.

Google in the Wedding Planning Business??

Is Google getting into the wedding planning business?? Take a look at this blog and decide what this means? See also here.
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IT Strategy--Crowdsourcing Style

By now, you have seen many different organizations and institutions embracing crowd-sourcing. Here's one initiative to develop IT Strategy using crowd-sourcing proposed by the CTO of the State of California.  What do you think of the idea?  Could it work in the Commonwealth of Massachusetts or in other states that you may be familiar with in the USA or elsewhere in other countries?
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Something to think about.

Towards 10 Billion--Apple iTunes

Apple seems to be closing in on another milestone--10 billion songs.

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Are you trying to be the lucky one?  Take a chance, try timing it!  Here's the link.

To Know Your Enemy, You Must Become Your Enemy: A Detailed Look at MSFT Operating Profits

We had a lot of discussion around how Google has launched many new projects aimed at major competitors, most notably Microsoft. This article takes a look at Microsoft's operating profit by division, and raises an interesting counter-argument to a lot of the speculation around Google's actions. At the end of the day, 97% of Google's revenue comes from ad-based revenue and nets out at $13.2 billion in profit, whereas Microsoft's profitability is up at $46.3 billion on a diffuse number of monetized business lines.



In addition, a healthy portion of Microsoft's operating profit comes from the Server and Tools business unit (eyeball comparison indicates it's about 50% of Google's TOTAL profitability). This business unit helps to create and maintain a significant Microsoft environment on the web and, again, is something that they are actually making money directly off of.



At the end of the day, Google is certainly a force to be reckoned with in the future, but in order to truly recognize that potential they will need to find a way to diversify away from a strictly ad-based revenue stream to truly take on Microsoft and other competitors on all the fronts it is exploring. This means having to actually charge some users for some of the Google tools they are using - at least that's my $0.02. If so, what tool(s) will that be?

Distribution of Nexus One - Another disruptive approach from Google

Google has always been a successful (I believe so!! ) innovator in terms of its product offerings. However, will Google's approach to the distribution of it's Nexus One turn out promising?

When consumers are paying $500 for a handset, the least that they can ask for is a chance to hold it in their hands and to play around with the features before making a decision. But Google is trying to redefine the distribution by putting Nexus up for online-only sales. Google hasn't stopped there, but has also allowed the user to buy the handset and then choose the carrier/plan they want (excluding AT&T of course).

It is clear that Google has taken the second big step toward shifting power from the carriers to device manufacturers, after Apple. Nexus sales* so far doesn't look promising (when compared to Droid and MyTouch 3G) and raises questions whether Google has taken the correct decision. But I feel that Google was quite aware of the implications of its new approach and that this decision is part of their long term strategy and vision. Google is all about reaching out directly to its customers and eliminating any opportunity for a third party to have a control on the way customers use its products and services.

In the down side, Google is inviting anti-trust law suits (imagine a Google world where you have a Nexus One powered by Android in your hand and you manage your data, appointments, contacts, social networks with Google Docs, Calendar, gmail, Buzz etc. - sounds like another Microsoft in mobile version). I'm wondering what Google's next big plan might be - a netbook? may be/may be not - I welcome your thoughts on this.

* This article is an interview with the President of Marketing at Flurry, a mobile analytics company that uses software embedded in applications to track handset sales.

Google's Fiber Network Infrastructure--Just an experiment?

I thought we had a lively discussion about Google today as we tried to sort through the impact and implications of Chrome, Android, Apps, Nexus One and Buzz.  Here's a video worth taking a look at as we think about Google's trajectory of evolution over the next decade.  More details are in the blog.

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Again, the same set of three questions: (1) Why is Google pursuing this? (2) Who besides Google and consumers benefit? and (3) Who loses? 

Thoughts.. Reactions..??

An additional video from MarketWatch

if Opera offers a faster browser on iPhone, Should (will) Apple Allow it?

Image via CrunchBase

Here's an intriguing move in the complex and dynamic world of jockeying for network advantage.  

Reuters is reporting that:

Norwegian browser company Opera Software said it would launch a version of its Mini browser for Apple's iPhone next week, offering faster download speeds.

Opera said the browser would offer consumers up to six times faster download speeds than Apple's own, and cut data traffic by up to 90 percent. Massive data traffic from iPhone mobile phones has caused problems for many operators networks.

Some analysts said Apple could try to stop rivals from access to iPhone as smooth Internet browsing has been a key feature behind the success of the iPhone.

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What should Apple do?  More importantly, what will Apple do?
 

Cisco's Big Bet on New Songdo: Creating Cities from Scratch

The article here highlights Cisco's move to the forefront of the wired cities. After contracts in Dubai and nations with emerging planned cities, this project marries LEED (green) and information to hopefully produce a more sustainable city model, which in turn can be replicated in China.

Cisco's strategy as first mover into this project (rejected by LG, and replacing Microsoft) shows that Cisco is thinking about the future of information and how it will be used to better manage across the globe (think smart grids and IBM). The idea that the more information that is available should mean that the city can make better use of its resources, from energy to captured rainwater, bandwidth to people.

The developer of the city, Stan Gale, quotes Moore's law, saying that subsequent cities will be made better, faster, and cheaper.

For Cisco, this foray into urban development is a huge gamble. While it is true that information is power, is capturing every piece of data worthwhile, and will that data be able to be used effectively to really improve the city? When New Songdo goes online in 2015 (at the earliest), we may just find out.

Digitization of the Automobile and What the Toyota Recall Tells Us

This article in WSJ is timely for our course.  I am reproducing some paragraphs that are relevant to our discussions about the shape of impact and influence of IT strategy on business strategies. 

With each model year, vehicles are morphing into powerful, computerized machines that substitute electronic brains for the brawn of heavy bodies or gas-guzzling large displacement engines. The downside of this 30-year evolution is that for many people, cars are becoming scary again. The new, electro-digital automobiles are difficult for laymen to comprehend or repair. Their failures can be impossible for even experts to diagnose.

--Today, gas pedals are no longer levers connected to cables, but switches in a chain of electronic relays that dispense fuel to the engine in precise ratios to maximize fuel efficiency and minimize noxious exhaust. This is what allows a modern six-cylinder engine to produce more power than many a 1970s V-8.

Brake pedals send signals to computer-controlled systems that apply stopping power faster and more accurately than almost any driver could. In the most advanced cars, such as a Mercedes-Benz E Class sedan, radar-enabled cruise control, electronic brakes and electronic steering can combine to stop a car safely to avoid a collision even when the driver is distracted or dozing. The new E-Class can have as many as 11 airbags, all controlled by electronic sensors. An optional seven-speed transmission uses a computer to match the engine revolutions to every gear shift. The seats can even adjust to compensate for a hard right or left turn.

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A high-tech "green" vehicle such as the Toyota Prius or the Ford Fusion hybrid can't function without computer controlled systems that tell the brake system when to capture energy to regenerate the batteries, or when to just stop the car.

But where there's software there are often bugs. That's why Ford Motor Co. is telling customers it plans to reprogram certain Fusion hybrids to fix a glitch that can cause consumers to feel they have lost stopping power. Toyota says it is moving toward a similar software fix for braking complaints lodged against the 2010 Toyota Prius.

Some Prius and Fusion owners may be encouraged to know that a problem with their car can be fixed by a software download. Others will wonder whether they can trust a car that could malfunction because of some random software misfire, the way their company-issued laptops are wont to do.

"We are in the learning curve on these systems," says David Champion, the head of vehicle testing at Consumer Reports, which first reported on the problems with the Fusion Hybrid last week.

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Auto industry will not be alone in trying to grapple with the shift and learning in the face of adversity.  Many other sectors will face similar challenges. The winners will be those that see the increasing nexus between IT and business strategies. 

E-book Pricing

This afternoon, Marquess Lewis from Pearson spoke to the MS-MBA students at BU. Among many other topics, he talked briefly about who should set prices for e-books (publishers or retailers). This debate has taken a lot of turns over the past two weeks with the introduction of the iPad and the very public disagreement between Amazon and Macmillan.

This morning, Warner Music Group CEO Edgar Bronfman Jr. offered up a new piece of information. According to Bronfman, digital music downloads (measured in legal units) have slowed considerably since Apple gave music labels the freedom to set prices (within an Apple-defined range). However, despite this decrease in unit growth, Bronfman estimates that the variable pricing model has still been a net benefit to the company.

Given this, publishers must assess the impact that this newfound pricing freedom will have on its own market. While there are many differences between digital music and e-books, one key difference may be the maturity of each market. Many publishers may argue that this freedom will give them the opportunity to set pricing expectations early, before the mass market transitions from print to digital. However, other outcomes are possible. During the growth phase of nascent markets, the relative advantage (measured by the ratio of expected benefits to the cost of adoption) tends to be a key predictor of consumer adoption. A 50% increase in e-book prices (from $9.99 to $14.99) may therefore have dramatic impact on the adoption rate (in addition to decreasing consumption by current e-book consumers).

Apple vs. Google vs. Microsoft: War in different fronts

Interesting article from techradar.com, where they discuss how these three companies are fighting against each other and who is leading (for now) on different fronts: home space (OS, hardware, internet browsers), cloud computing, mobile technology, and entertainment (music, TV, game platforms)

Another article talks about former collaboration efforts between Google and Apple, and how now the real war is between these two giants while Microsoft has become just a "plaything" trying to keep up.

Apple Versus Google: Beyond High-level Comparisons

We will examine the areas of competition and cooperation between Apple and Google on Wednesday. Here's a magazine article from Business Week that provides some relevant color commentary on this rivalry. Again, as we discussed in the class, the table 'Same but Different" is interesting at a general level but is not as insightful from a strategy point of view. There have been recent attempts to arrive at comparative analysis between Google and Apple (and in some cases involving other companies such as Microsoft, Amazon, Yahoo and others). Here's a NY Times blog post focused on a 'big-picture' look. Again, I believe that the Table (reproduced below) is interesting at a general (popular) level but can be more insightful.

See how you can develop a comparative analysis that can bring out the subtle but significant areas of similarities and differences between Apple and Google from a strategy point of view.

Facebook and Google Posture and Threaten via Press Releases

A few days ago, Facebook announced plans to launch its own webmail service that integrates with its existing social network.

http://latimesblogs.latimes.com/technology/2010/02/facebook-google-gmail-killer.html


Now Google is about to announce its plans to add social networking features to Gmail.

http://online.wsj.com/article/SB10001424052748703630404575053480962942848.html?mod=WSJ_hps_LEFTWhatsNews


The message from Google seems clear: Move into my core functionality and I’ll move into yours.

Evolution of Apple's Architecture

Here is an interesting picture that shows how Apple is moving away from proprietary ports and connections on its products. I am posting it because it elaborates on our discussion in class today regarding Apple Firewire in iPod. It also shows the broader evolution in the personal computing architecture over time. The source blogpost for the picture is here.

Toyota Prius Recall--A Software Glitch?

I am sure you have been hearing about possible software glitch that may be the cause of Toyota's impending recall of third-generation Prius model automobiles although technology does not seem to be the root cause of the broader recall by Toyota.

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As automobiles become more digitized--especially with the forthcoming shift to hybrid power-trains, we will see more cases of software becoming critical differentiators of automotive performance, reliability and safety.  This is a new competency that the automakers need to develop, refine and master as subsystems as shown in the table below are knitted together by powerful and complex software.  

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It is worth thinking about the implications of the following paragraphs excerpted from the Discovery News article.

The cost of electronics as a percent of vehicle costs climbed from around 5 percent in the late 1970s to 15 percent by 2005 (excluding final assembly costs). For hybrids, where the amount of software needed for engine control alone is nearly twice as great as that for a standard car, the cost of electronics as a percent of vehicle costs is closer to 45 percent. Within 10 years, some experts predict that the percentages relating to the cost of electronics as a percent of vehicle cost are expected to rise to 50 percent for conventional vehicles and 80 percent for hybrids.
....For today’s premium cars, ”the cost of software and electronics can reach 35 to 40 percent of the cost of a car,” states Broy, with software development contributing about 13 to 15 percent of that cost. He says that if it costs US $10 a line for developed software -- a cost he says is low -- for a premium car, its software alone represents about a billion dollars’ worth of investment.

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It is clear to see the impact and implications of IT strategy on business strategy but the real question is: What will be the shape of the future automobile sector and what IT-enabled competencies will differentiate winners from the also-ran? 

Update (Feb 9, 2010): It is now official that there is a software glitch in the Prius hybrid--which will be fixed as part of the recall.  

Rivalry in the eBooks (iBooks!) market

There has been a lot of debate over where Apple ipad fits in. However the publishers surely know where it fits in as implied by revolt of Macmillan. Excerpts from the article:

Just days after the wraps were taken off the iPad, Macmillan informed Amazon it wanted to begin charging between 12.99 and 14.99 dollars for e-book versions of most hardcover new releases and bestsellers.

Some interesting points worth debating:

1. Apple complained about Google entering its core market with Android. Google CEO Eric Schmidt's resignation from Apple board and Steve Jobs statement elucidates increase in rivalry. It seems with iBooks from Apple, Google vs Apple rivalry will dominate the Google vs Microsoft rivalry.

2. It remains to be seen if Google and Amazon will partner forgetting earlier rivalry considering Apple is attracting a lot of publishers.

3. Last but not the least, in a two sided network, there is a subsidy side. With the publishers like Macmillan revolting and demanding higher price for their titles, it remains to be seen how Amazon walks the tightrope of not annoying Kindle users (A reader will not like to pay $14.99 when he is used to pay $9.99 for an ebook).

Microsoft's Upcoming Challenges

Microsoft had successfully outmaneuvered many challenges in the past; the author of this article questions Microsoft's ability and agility in meeting new market challenges. Four concerns were referenced:

• Continue Selling Windows 7
• Gain more market share in smartphones' OS
• Watch out for Google
• Grow the Bing search engine

These recommendations seem closely tied to Microsoft's ability to control the next (and current) generation of computer technology. To remain competitive, Microsoft must expand the capabilities of it's OS and seek to grow in upcoming substitutes to traditional computers (e.g. smartphones). It will be interesting to see if Microsoft will be able to do this successfully in the coming years.


(edited by Venkat by placing the link as a hyperlink within the body of the blog).

IT Crowdsourcing for the State of California

http://ca_it.ideascale.com/

The California government has decided to open its doors to the opinions of the people. The state is looking for ideas on how to improve its IT infrastructure (hardware, software, apps, systems and processes).

The CTO of California, P.K. Agarwal, has challenged the people to find unique ways for the state to transfer its legacy systems to more modern technologies. Traditionally, the state would would put out an RFP to suppliers and wait for them to flood the gates, but the state thinks there could be better ways to find strategic partners.

Instead of using its own resources or hiring expensive consultants, the state is using a free resource...the crowd (note: I did not say, "the cloud"). Though this slightly innovative idea seems like it will attract some decent IT implementation ideas, the problem is in the analysis of all the submitted ideas. Even if an idea becomes "popular" or voted up by the site visitors, the state still needs to do an in depth analysis of the costs/benefits/alternatives...and do they have the right inside people to do this analysis?

In the end, I think that the ideas generated will be more innovative, but the government will still incur the same costs and take the same sluggish amount of time to implement anything.

Good talk with David Carr, Michael Arrington and Walter Mossberg with Charlie Rose about the iPad.

Apple's move from the Mac to the iPad

I found an interesting article on Financial Times that attempts to provide an answer to Ashish's question on why Apple's devices do not support Flash. Apple had the choice to launch an iPad that was similar to the Mac in terms of architecture, i.e., allow the Mac users to run softwares of their own choice. However, it chose the iPhone architecture that tightly controls the softwares that the owner can run.

In my opinion, Apple is trying to monopolize a lot of industries such as telecom, software and hardware at the same time. Is the world looking at a more serious threat to free competition than the act of bundling IE with Windows?

Apple and Flash

Ahead of our discussion of Apple next week, I thought this may be relevant. I was listening to NPR yesterday and they were speculating on why Apple, with all of it's web-enabled devices, would not adopt Flash for its product. According to the report, nearly 80 of the top 100 websites in the world employ Flash is some way to display their content. An iPhone user such as myself can't access them without receiving an error message.

I believe this is a strategic move on the part of Apple. They are banking on their own network effects from handheld devices to promote the creation on a new "open standard" that will undermine a competitor. Clearly it has not significantly hurt sales of Apple devices however I am concerned about the affect this will have on the iPad. More people in the tablet market will be relying on the device for large scale web browsing than they did with handhelds. I would love to hear the class' opinion on the reasons behind this move. Especially because Steve Jobs will not tell us!

Amazon's Foray into Touchscreens

The news today that Amazon might be buying a touch screen start up points to competition between Amazon and Apple. The question becomes if this is the right stratigic decision - do you compete with the design masters in a head to head design battle, or do you go with where your core users - devout readers - are, and what they want for the next generation device?

This is the $100,000 strategy question.

Building the "Killer" App on your own Platform

Ray Ozzie’s blog post on the Software Platform Dynamics states that Ozzie believes businesses have to build nontrivial apps on their own platforms.

“For any platform to attract a sustainable ecosystem, it is required that the entity building the platform additionally and directly invest in building nontrivial ‘layered offerings’ on that platform, in order to gain experience with the costs that would be to ecosystem partners, and in order to ensure that the platform's capabilities are complete enough to provide actual value to the ecosystem partners. This is later guaranteed to catalyze ecosystem conflict, but it is a necessary cost of driving a successful platform.”

Does this thinking still hold true? Must internet platforms create “killer” apps layer on of their platforms. Neither Facebook nor Twitter has created nontrivial apps on its platforms, but still appear to be succeeding in driving platform adoption.

Has Apple even created nontrivial app on the iPhone platform. Maybe, if you count the Phone App or the Email app. While this statement by Ozzie sounds intuitively true, in my opinion fewer companies are following this advice while still succeeding.

Microsoft's Creative Destruction

In the latest battles of innovation, e.g. Amazon Kindle vs Apple iPad, iPhone vs Blackberry, Facebook vs Twitter nobody seems to mention the name that was associated with bringing us the future for a long time - Microsoft. Consider these contradictions -

• A clumsy, uncompetitive company, tarnished image due to 1990s antitrust prosecution, and inept marketing
• A company with $100 billion in cumulative profits in last 10 years, largest and best corporate laboratories in the world, luxury of not one but three CTOs

What happened? Unlike other companies, Microsoft never developed a true system for innovation. In fact, some former senior employees think that the company routinely manages to frustrate the efforts of its visionary thinkers. Internal competition has been uncontrolled and destructive. "It has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence." Examples of suffered projects include MS-Office on Microsoft's Tablet PC in 2001, Potential of ClearType on any screen.

Finally, it is not an accident that almost all the top Microsoft executives in charge of their music, e-books, phone, online search and tablet PC efforts over the past decade have left the company.

http://www.nytimes.com/2010/02/04/opinion/04brass.html?hp

Consumers Impact on IT Strategy

In reading Bill Gates' Memo "The Internet Tidal Wave" sent to Microsoft employees on May 26th, 1995 I was struck by the quote:

"Amazingly, it is easier to find information on the Web than it is to find information on the Microsoft Corporate Network. This inversion where a public network solves a problem better than a private network is quite stunning"

As early as '95 we see the impact that consumers have on IT strategy at the enterprise level. How individual users engage with technology has a profound effect in the ways in which companies' innovate. Internally, a staff that is accustomed to instant connectivity and infinite storage capabilities will come to expect that in the organization they work for. Externally, consumers changing the ways in which they communicate with one another, research and make purchases forces enterprise to evolve in the same manner.

Crucial to our discussion of IT Strategy are consumers. No longer can enterprise solely dictate the path in which innovation occurs. Consumers have considerable impact and control of the path in which IT Strategy will evolve.

Microsoft's 'Three Screens and the Cloud" Vision

Here are two videos that provide some context and elaboration to the phrase--'Three Screens and the Cloud." 


Ray Ozzie's articulation of the vision:





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Here's how a financial services company uses the idea to create channel integration approach to service delivery:

Commoditization of PCs

Here are three WSJ articles that show the increasing trend toward the commoditization of PCs and the profit of the home computer/laptop stack being further pushed toward the software and chip layers.

PCs sales were up over 22% for the holiday quarter, year to year. This drove strong earnings for Microsoft and Intel. However, PC manufacturers like HP and Dell saw only single digit growth.

The Hotness of Windows 7 (Microsoft earnings)

http://blogs.wsj.com/marketbeat/2010/01/28/the-hotness-of-windows-7/

Asian Techs Rally on Intel

http://online.wsj.com/article/SB10001424052748704281204575003713185330320.html

Windows 7 Fails to Boost Profits of PC Makers

http://online.wsj.com/article/SB10001424052748704343104575034233214601248.html?mod=WSJ_Tech_LEFTTopNews