Tag Archives: amazon

Software

App store has risk to become a burden for Apple

January 20, 2011 –

The expectations are that by March this year the App Store will surpass the iTunes store in number of downloads. I am confident that the associated revenue will surpass music sales pretty soon too. What this says about the music business is not where I wanted to talk about in this post.

I want to talk about that as the apps economy is growing to enormous proportions it brings a significant risks for Apple. The applications bring new functionalities and services to their platform. With that I ask myself two questions:

1. What happens if Apple incorporates new functionalities into iOS and makes a particular group of applications redundant?

2. What happens if Apple wants to introduce a new service for which different competing services are available?

Incorporating functionalities inside iOS

There is a serious risk that any enhancement to iOS will make a certain set of applications redundant. What happens then? Especially developers who make their living from selling their applications on the App Store will not be amused by such a move.
If Apple uses the App Store as inspiration to set the development roadmap of iOS then it can lead to serious consequences. For most it can lead to developers moving away from the platform and thereby reducing the ecosystem of the platform.
The success of the platform and a healthy application economy supporting it becomes more important to Apple from a revenue perspective. For this reason it will restrict the options Apple has on extending the iOS platform at some point.
Another risk is since Apple controls the complete platform from top to bottom it can be seen as monopolistic behavior. This is a route Apple definitely does not want to go into.

At some point the whole App Store ecosystem can be more of a burden to Apple than the success of today predicts.

Introducing new services by Apple

Apple has developed a healthy set of services around the platform. Music, movies, TV series and applications can be bought, rented and downloaded to their iphones, ipods, macbooks etc. But there are competitors on the market who wants access to the platform. The platform represents a huge market opportunity and Apple likes to be their own services to be successful to bring in the most revenue.

At this moment Apple allows competitors access to their platform. I wonder if all competitors are welcome. It is not completely clear since this part of the market is not really transparent. The negotiations between companies of this size are behind doors. For instance Apple holds back on allowing Flash to be ported to the iOS platform or stopped competing browsers to enter the App Store.
At the same time Amazon delivers books through their Kindle application while Apple sells books through their own store.

It is logical from Apple’s perspective to protect the revenue stream for their own services but it could be seen as monopolistic behavior. The iOS platform holds a significant amount of the market and closing access to competing services can be a serious problem for competitors and consumers.

Conclusions

The Apple controlled ecosystem of the iOS platform brings serious risks for Apple in the future. At this moment they will feel euphoric about the success but there is a significant change it becomes a burden for the creation of new products and services.

If Apple makes the wrong decisions it can be seen as monopolistic behavior and this can have serious consequences. I am sure Apple’s ecosystem is and will be on close watch with the market regulation organizations in different countries.

The only option for Apple is to tip toe through any changes and new introductions. And I wonder if that will slow down Apple in bringing new products and services to the market.

Tags amazon, app store, apple, itunes, monopoly | Permalink | Comment (0)
Internet

Internet wants to be free

June 20, 2010 –

StarBucks announced this week they will start offering free internet in their coffeeplaces later this year. McDonalds already offers free internet in their restaurants. Several hotel chains offer free in-room internet. Internet access is used as an incentive to bring in customers.

Internet access at home is very affordable nowadays. This is also part of the reason why those $10/hour WIFI networks simply do not work anymore. People are not prepared to pay for internet access. It is as cheap as electricity. Know a hotel where you have to pay for your electricity usage?

The major challenge is how the economics around internet access will work out. I see 3 relevant parties on the internet:

  1. content provider
  2. network provider
  3. site provider (physical location of internet access)

The telco’s should better be prepared to become the electricity companies of the 21st century. Their role will be relegated to building and maintaining the network. Content will move more and more outside the reach of the network providers. As long as net neutrality is kept intact there is nothing they can do about it.
The site provider owns the physical location of the internet access point. They pay for making the access point to the internet available.

Value is only created on either end of the internet connection — either by the content provider and the site provider. For most site providers the internet access is a service they provide to their customers. But like StarBucks there is much more opportunity to make money from internet access. StarBucks offers a physical location enabling to mix online and offline marketing. Via affiliate marketing StarBucks can get extra revenue from their internet access point.

Internet wants to be free. In the near future the internet will be available everywhere without or for very low costs. Google gladly wants to pay to get people on the internet. They have to because that is how they make their money. More people on the internet are more people which use their service and see the ads. Google is a content provider and they are not the only one. Amazon, Facebook and all the other major destinations are content providers too and without internet users they cannot make money

The next 5 years will be very interesting. Question is will it be a rocky road — like with the music / movie companies — or will the companies part of the internet ecosystem adapt?

Tags amazon, content provider, facebook, future, google, Internet, network provider, service provider | Permalink | Comment (0)
Hardware Internet Software

Companies who are control freaks

June 13, 2010 –

One of the major drivers behind innovation is openness. Through openness knowledge is shared, reused or build upon to create bigger and better things. And this openness is at risk. Companies – but also universities – are becoming control freaks trying desperately control the use of their knowledge, products and content. This is a serious risk for keeping pace with innovation and moving society as a whole forward. The examples are abundant: In this article I will highlight some of them.

One of the most visible examples is digital rights management (DRM). You will find it everywhere. It is part of every television sold, every copy of Microsoft Windows, ebooks and game consoles like the Playstation or Xbox.

Using DRM companies control the use of content. The user does not own the content anymore but buys a license or right to use it. The user may only use the content based on license bought. This seriously restricts the options the user has for the content. Without technical circumvention a user cannot for instance copy a DVD to their Ipod for viewing on the go.

Sometimes this leads to very odd situations – especially from the consumer point of view. A prime example is what happened with the ebook 1985 of George Orwell sold by Amazon. At some point it was determined that Amazon did not have the right to sell this ebook. Amazon promptly send out a recall command to all their Kindle devices which erased the ebook from these devices. Just imagine you were halfway through the book you thought you owned and then it suddenly disappears. Of course this led to some very disappointed customers and Amazon had to apologize publicly for their mistake. But it also showed clearly the problem with licensing content and not owning content.

In the past you could lend a book to someone, but this also not possible with ebooks. The companies selling the ebook restrict the copying of ebooks. This is a serious restriction for sharing knowledge. And overall ebooks are sold for the same price as regular books which you do own and can lend to a friend.

Another example are closed ecosystems around products like you see with Apple products or in the game console market. The barrier of entry to create an application (like a game) on a platform like Sony’s playstation or Microsoft’s Xbox is quite high due to high cost of their software development kits. It is just not that easy for a developer to create an application for these devices.

And although the openness of the Apple product line (mainly Ipods, Ipads and Iphones) is much higher than in the game console market developers still need to pass the nod of approval to be able to offer their software through Apple AppStore. The requirements to get your application approved are not very clear and applications are rejected for unclear reasons.

Companies create these closed ecosystems to control the use of their own products.

But industries grow based on openness. Standards and open platforms enable other companies (or organizations or individuals) to take part of the ecosystem. Perfect examples are GSM standard for mobile phones or MP3 for digital music. You can buy your music at one store and play it on different players. Without these open standards the industries would have grown much slower.

Tags amazon, Drm, mp3, playstation, xbox | Permalink | Comment (0)
Internet

Electronic media: the price is right

May 10, 2010 –

The trend to make content available as electronic media has been going on for a while now. It started with music back in around 1997. The introduction did not go very smoothly since the music industry did not understand the potential of electronic media and you could argue that they still do not.
Back then music was made available in music formats like WMA with limiting options on using the content using digital rights management (DRM). Around 2009 music became available without restrictions using the MP3 format most of the time. This led to a price increase.
Pricing of ebooks on Amazon.com were lower than real books on introduction. But with the introduction of the iPad and Apple’s bookstore the publishing industry managed to increase the price of ebooks to the same level as real books.

Overall the prices of electronic media is more or less the same as their physical equivalents. The question is if that is fair?

I argue this is not fair and I have several reasons for that. First reason is that it is not physical good. This means no printing and packaging costs. Moreover the stock and logistic costs are much lower than for a physical good. Second reason is that most electronic media come with restrictions on its usage. I cannot simply resell my ebooks to someone else when I am done reading. I cannot lend a book to a friend for instance. And the third reason is that I do not own the content itself but I get a license to use to content within a set of restrictions.
To me electronic media has a much lower value than real physical goods.

If you look at the revenue model of the publishers there will be a significant increase in volume because of the restrictions on electronic media. As I cannot lend or resell my item to someone else other people will have to acquire their own copy. This increases volume.

In short to make electronic media really take off the publishing companies have to seriously consider changing the prices and bring them in line with the actual usage options users have. The changing media consumption is a real revolution for the industry and clearly this industry is struggling to cope with this change. They have to understand that this change will happen anyway. The companies who really understand the new game of electronic media will end up coming on top. Unfortunately most publishing companies show that they have a long way to go.

Tags amazon, apple, ebook, electronic media, emedia, itunes, mp3 | Permalink | Comment (0)
Internet

The next trend on the internet

April 10, 2010 –

The internet is one of the major achievements of mankind in the last decades. It has changed our lives significantly. I cannot even imagine how life would look like or how to manage without it.
As the internet develops or reinvents itself every 4-5 years I see new trends popping up and this post I would to give you my view on how the internet developed and what my take is on the next big trend on the internet.

Data exchange age
When the internet was invented is primarily data exchange network. The US army and (mostly) North American universities used it to exchange data with each other. I call it the data exchange age. The internet population mostly consisted of academics and military personnel.

Communication age
In the 80s the internet changed to a communication network. Users used E-Mail and IRC (chat) to communicate. Standardized communication protocols were implemented to facilitate the communication. In these years the internet expanded rapidly from a primarily US-presence to the rest of the world. It was the communication age. At this time the internet population was still mostly composed of academics and military personnel. But above that students started using the internet more frequently.

Communication age
After communication age came the information age. It started with the invention of the world wide web in 1990. Companies were promoting their products online. The digital brochure was born. Simple websites were setup all over the world and the first web browsers like Mosaic and Netscape appeared. Also the first internet providers opened their doors to offer the internet service via dialup for everybody. This changed the internet population dramatically.

Commerce age
In 1995 Amazon started selling its books on the internet and in 1996 Dell its computers. These events started the commerce age. In the commerce age companies started selling their products over the internet. At this time Microsoft started offering their web browser as standard part of their Windows operating system.

Interaction age
Next came the social networks like MySpace (2003), LinkedIn (2003) and Facebook (2006). I call this the interaction age. In this age people start to interact with each other on the internet. Using these social networks people brought their private life to the internet. Before it is was limited to some personal web pages, email and chat. The social networks made it easier to reach other and connect and keep up to date with your social life.

Cooperation age
In upcoming age will be the age of cooperation. Interaction brought to the next level. In this age people start creating together on the internet. And like with any new major age you see the first signs popping up all over the internet. A few examples:

  • NikeID where customers can design their own shoes which Nike will make
  • Dell IdeaStorm where customers can make recommendations and vote on ideas to make Dells products better
  • Lego DesignByMe where customers can design and create their own Lego kits
  • Wikipedia where users work together to make the best encyclopedia in the world
  • Reddit, del.icio.us and Digg where users work together to make the best news sites

The cooperation age enables users to create and work together to make better products and services. These can be in cooperation with commercial organizations like Dell or Nike, but it can also be without commercial involvement like Wikipedia.
The best example of the cooperation age is the open source movement. Programmers develop computer applications and share them freely on the internet. They work together in groups to create large software applications. Great examples are Linux, GNU and Apache. In these groups thousands of developers work together to create the best software possible. These groups are composed of spare time hobbyists on one side of the spectrum to professionals on the other side of the spectrum. Nobody owns the software and everybody is free to use them in their own products. Linux runs now several mobile phones from companies like Nokia, Samsung and Motorola. It runs on televisions from Sony and several brands of netbooks.

Another example is co-creation where designers work together with customers to create new personalized and customized products. These products better fit the need of the customer since they were involved in the creation process. And of course this is not applicable for every product currently available, but a regular BMW 3-series is available in more than 1 million permutations straight from the production line. You can design your personal car on the internet and order it with your dealership. In these are one on one cooperations between a company and their customers. Combine that with cooperation’s between multiple customers, designers and companies and the options are endless. Companies like Ponoko (2007) and Shapeways (2008, my company) are in this arena. I see the creativity of customers designing on a daily basis and it is exciting to see how they use the options we make available to them.

The next trend on the internet will be the cooperation age enabling groups of people working together to create new products and services. This will be another major impact the internet is going to make in our daily life.

Tags amazon, cooperation, digg, email, facebook, history, Internet, open source, ponoko, shapeways, social networks, trend | Permalink | Comment (0)
Internet

Power of the long tail in advertising

February 20, 2010 –


A perfect example of the power of the long tail is the change Google brought in advertising. Their AdWords system brings advertising power to everybody. Advertising was only reserved for big coorporations and huge ad budgets. Google’s system enables anybody to advertise and small coorporations or even individuals are able to advertise on big brand new media sites like Amazon or Google.com itself.

For this reason I created a shameless self promotion ad. Not because I want to advertise myself but just because I can. With a budget of only $5 / month I could advertise myself using my name as keywords. Of course the ad is not shown very often (who searches on Robert Schouwenburg at Google.com or Amazon.com?) but still it works brilliantly.

It feels like advertising on a major TV channel or major subscription magazine. I think it is a great example of the Long Tail. Internet enables niche advertising because you can target very precise target groups with tiny budget.

Tags advertising, adwords, amazon, google, Internet, long tail | Permalink | Comment (0)