Web Services / Cloud Computing

Chris Anderson, Wired Magazine's editor, dreams up a new schtick with which to beat us every few years. First the Long Tail, then FreeConomics, the pattern is the same - lots of sturm und drang on the Wired platform, mo' PR off it, and then a book is out before the people who know it doesn't quite hang together can get a blog post in edgeways.

Anyway, with the Long Tail disproved and FreeConomics debunked and diluted to Freemium (or Paymiium, in the case of the book), there is a need for a new schtick to beat the Wired horse with. This is (possibly) that - "The Web is Dead - Long Live the Internet".. (To be fair, I understand that in the printed article* John Battelle and Tim O'Reilly give their ripostes).

[Update - the riposte is now online - styled as a Debate though i think Linkbate is more appropriate ]


Anway, the gist of the argument is that:

You wake up and check your email on your bedside iPad — that’s one app. During breakfast you browse Facebook, Twitter, and The New York Times — three more apps. On the way to the office, you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service.

You’ve spent the day on the Internet — but not on the Web. And you are not alone.

Now this is really going to shock the young 'uns, but this is not so much a Brave New Thing as The Way Its Always Been:

(i) There was a time the internet existed before the Web

(ii) We have been using the Internet without the Web all this time - think email, VoIP, Adobe Air, online gameworlds etc etc.

(iii) This will continue, and in fact its not impossible to imagine that the Web is a temporary phase.

In other words the correct response to this thesis is "We know. And"?

(OK, the 'And' is that some very succesful Today Web companies will wither and some new Tomorrow App companies will prosper. But that was ever thus)

Now the reason for all this excitement is Video and Mobile Apps

Video is exciting not because it Loses a Lot of Money (or more accurately uses a lot of high quality bandwidth that no one right now pays for) but because it puts a lot of traffic on the web, and that must be a sign that all is well, right?

Mobile Apps (or Programs That Run On Your Own Device, as Apps used to be called in old money) are going to replace the Web in the way we access functionality (Better tell Google - after all, Microsoft Office is just an App, albeit quite a big one). Yes, gentle reader, the digerati of today have effectively re-branded the Olde Client/Server tradeoff debate to now be the Apps/Cloud debate.

The reason for Apps is not because Smartphones are smart, but because they are still dumb. If they were smarter, with bigger screens, and better UI like Laptops are we would use the Web much more on them. Its just that smartphones are smarter than dumbphones which could only use very small Programs That Run On Your Own Device, which are called Widgets. And the reason everyone is so excited about Smartphone Apps is because they think they will make tons of money from them. Like they thought with Widgets. Except they won't. Like they didn't with Widgets.

Now to be fair, Wired have worked out that all these new App environments are not quite as open as the Web (part of the reason they will not do as well as expected, but more on that later) but that too is hardly New news. Still, it tells you something about the Wired (Print) Edition's reader base. Not quite the Digerati as they once were, methinks?

Anyway, it will take about 12 months for the market to realise there is very little money in Smartphone Apps, so I calculate a Book by next spring should get in nicely before the Apps hype cycle rollercoasters on down

Update - as Gawker delights in pointing out, this whole thing is even sillier than at first glance:

- Irony 1: Wired released its cover story package first to the Web, on Wired.com. You won't find it in Wired's iPad edition, and it's not out in print yet. The death of the web might be the "inevitable course of capitalism," but it apparently pays better to deliver that news via a dying medium.

- Irony 2: Revenue is up at Wired's profitable website this year, despite a fairly severe reduction in staff last year. Yet Anderson, who has no control over Wired.com, writes that most Web publishers haven't been able to "reverse the hollowing-out trend of analog dollars turning into digital pennies... and by the looks of it there's no light at the end of that tunnel ." That tunnel being the one Wired, itself, is not in, apparently.

- Irony 3: At the same time, circulation — and thus revenue, almost surely — are down for Wired's iPad edition, which was approaching (and possibly even surpassing) 100,000 copies for the debut issue but has since fallen off — to less than a fourth of what it was, one source claims. However large or small the decline, it could certainly be corrected; dropping off from a big bang launch is common enough in print and online media alike.

But Wired's iPad tumble does raise the possibility that Anderson is speaking as much from his hopes as from his analysis when he writes, "We are choosing a new form of Quality of Service: custom applications that just work." The iPad team belongs to Anderson, after all (unlike, again, the web team).

- Irony 4: Isn't this the guy who wrote a book called Free and noted, "You know this freaky land of free as the Web. A decade and a half into the great online experiment, the last debates over free versus pay online are ending?" Eh, maybe not so much; Anderson today writes, "Much as we love freedom and choice, we also love things that just work, reliably and seamlessly. And if we have to pay for what we love, well, that increasingly seems OK."

Even funnier, apparently Wired predicted the End Of the Browser in 1997 as well

There is Linkbait, and there is plain looking dumb...........

*I haven't bought the Wired print edition for years....

It would appear that Rupert Murdoch will launch an Ipad/Tablet only newspaper - Paul Carr savages it, as is his wont:

“Rupert Murdoch To Launch New National Newspaper”.

As headlines go, that’s up there with “DeLorean To Unveil New ‘Gull-Wing’ Car”, “Freddy Laker Reveals Trans-Atlantic Airline Plans” and “Charge! says Light Brigade” – reading it, you assume either there’s been some kind of historical glitch in your RSS reader or that someone is making a wry joke about extreme business hubris. Surely no-one, not even a dyed-in-the-wool newspaperman like Murdoch, would be stupid enough to launch a new national title in the current climate.

But no – the story’s true, albeit with a technological twist that makes the move sound only 1% less suicidal: Murdoch’s new paper (launching ‘by the end of the year’) will be available only on tablets like the iPad. And readers will have to pay to view it. Oh, Rupert, you crazy old lunatic.

Love the crack about the Light Brigade....

This is an easy shot, but I would hold off with the snark just yet. After all, its not as if the current approach is of Free! or extremely low priced Ads is particular effective. Give News Corp their due, they are at least trying new things out.

Personally I don't think the web paywall will work (except with the WSJ) as there are just too many alternative sources. But the idea of specialist media for a mobile device (where people are more used to paying and there is a likely to be a premium on easy-to-use services on the limited capabilities of tablets, as their is for Apps on smartphones). Now as Paul notes, the initial aim may be a bit off:

Murdoch hopes that his new e-daily will ‘reach readers who increasingly consume their news on the go… offering short, snappy stories that could be digested quickly.’ Says the man himself: “We’ll have young people reading newspapers… It’s a real game changer in the presentation of news.”

Now where have I heard that before? Oh yeah. I heard it back in London, in 2006, when a company by the name of News International launched a new free daily newspaper called ‘thelondonpaper’ (punctuation theirs – the paper was aimed squarely at the ‘web generation’ who, like their 7th century counterparts, are too busy for spaces between their words).

But one of the commentators makes a good point:

I think Mr Carr doesnt get Wall street mentality. Mr Murdoch’s reader base are investors, wall street ypes, who earn like 300k a year and could care less about spending $17 a month to read the WSJ without annoying ads, and iPads are apparently super popular in the financial circle. So calling him a “lunatic” is stupid atleast and rude at worst

That is probably just the punt that Mr Murdoch should be making in my view.

Overall, it may not work, but then again it just may...... and if it does I suspect the payback is far bigger than the investment in repurposing NI content for a tablet.

We have already highlighted some worries about Google Streetmapping as a surveillance tool, but it would seem Google Earth is now being used to spy on citizens in their own backyards - TechCrunch:

“Under the table” pools may be the catalyst of the next technology revolution in government. During last February’s economic collapse in Greece, the normally technophobic Greek government used Google Maps and Google Earth to find people who had craftily evaded taxes by failing to declare a pool.

Now Google Earth-enabled law enforcement has come to the USA. The town ofRiverhead, Long Island, taking a lesson from the Greeks, is also using Google Earth to track down about 250 “unpermitted” pools. And using the satellite imaging service has proved profitable, Riverhead officials have collected over $75,000 in fines from pool owners who never filled out the required paperwork.

While Google Earth was originally intended to help people find their way around, Riverhead is one of the first incidences of what will inevitably be many more cases of the tool being used by local and national governments to catch people evading their duties as citizens, unless Google somehow intervenes. We’ve contacted Google for comment on this somewhat alarming unintended use.

Google of course is shocked - shocked - that people would stoop so low and reminds us that Google Earth should be used for A Higher Purpose:

Google Earth is built from information that is available from a broad range of both commercial and public sources. The same information is available to anyone who buys it from these widely-available public sources. Google’s freely available technology has been used for a variety of purposes ranging from travel planning to scientific research to emergency response, rescue, and relief in natural disasters such as Hurricane Katrina and the Haiti Earthquake

Of course, this opens up the possibilty an entire industry of fascinating new Surveillance Services. The Imagination runs riot with the mashups possible between Googlestuff and location based services, surveillance satellites and social networks.

In my more paranoid moments I start to think about what "cloaking" devices I need to put on my physical as well as digital footprints.

Update - the article has got quite a number of comments on TechCrunch - and here's the very scary thing: most commenters see nothing wrong about the surveillance and are sympathetic to catching "tax evaders" (those questioning whether pool tax is right are shouted down quickly).

We have been reflecting on the poor performance of "Wisdom of Crowds" prediction markets and on historical Statistics to predict future occurrences, as shown in the chart above (see the original article here)

News reached Broadstuff Towers yesterday that a new, and better, prediction method has been found - an octopus:

The creature, known as Paul, has correctly chosen all of his German homeland's results so far. This time hie is predicting Spain vs Holland

With food in both boxes to attract Paul, it is then a matter of waiting until he opens one of them to determine his predicted winner. The eight-legged mystic has a perfect record at this tournament - and is said to have had an 80% success rate during Euro 2008.

Here he is on YouTube



I recall a test done many years ago - the Monkey Market Fund - where stocks were picked based on where monkeys were looking, and it outperformed the stock market average. Maybe ancient soothsayers had it right after all - who needs algorithms when you have entrails.

This being South Africa's World Cup, I am surprised that there have been no stories of the local sangomas divining the Footballl results.....

Update - And, of course, Spain won...........

All the angst about England going out in the last 16 of the World Cup has me befuddled, as its exactly what was predicted statistically by its rankings over the last 18 months (Germany has been Top 4 on average, England nudging Top 8 ). Its the same old litany of English football - the British media overhypes the team above what the odds say is plausible, then there is the predictable and inevitable disappointment, the ritual sacrifice of the Manager, the FA Inquest, the Reports, the Burying Under The Carpet, the New Favourite Manager appointed to the hysterical plaudits of the Football press, and the same sad cycle again 2 years later.

(You may be able to lie with statistics, but its a lot easier without them ;-0 )

Anyway, it may be interesting to see what the Prediction Markets are saying about the Last 8. I looked at the Inklings market, mainly because its data is publically visible unlike Yahoo's much heralded Predictor (Note to Yahoo - putting stuff people pay for behind a wall is sensible, but free stuff????)

As you can see in the diagram above, the prediction market is fairly clear about Brazil's probability of winning, and about Spain's. The probabilities for Argentina v Germany and Uruguay v Ghana are far closer. Incidentally, FIFA results largely agree except they place Germany (6th ranked) above Argentina (7th ranked), and Spain (2nd ranked) way above them).

(erratum - I have Spain beating Argentina (FIFA prediction) whereas the Prediction Market has it the other way)

So, thats the prediction market view as of close of play today.....lets see how it turns out.

Update 1 - Holland beats Brazil, totally against the predictions

Update 2 - Uruguay beat Ghana in a very close game by a cynical handball stopping a certain goal. In Rugby that would be a penalty try, game to Ghana. Football is not a "sport", and its laws are an ass.

Update 3 - Germany hammers Argentina 4-0 against prediction

Update 4 - Spain narrowly beat Paraguay 1-0

This afternoon McAfee sent an update that closed down all my client's XP machines. In essence DAT update No. 5958 deletes the svchost.exe file which then tries to continually re-establish itself and nails the computer and network.

One expects virusses to do this, not one's security company. This also has impacted many other companies it seems!

Now, lets talk money - its taken several hours to get the machines back up. We're not talking the IT department sorting it, we're talking the people whose machines are going haywire having to pass memory sticks around to each other and bring their own machines up (a few of us had non McAfee machines - there is a lesson for you in efficient redundancy). Now, High End Consultancies charge several hundred dollars per hour, so wasting several hours per consultant is tens of years worth of McAfee licences in fees lost - each. And I'm sure those economics translate one way or another for many other companies too.

Security software is the sort of thing that is a commodity price item, one wants to pay once and never have to worry about - certainly not find it costing many times its price in hassle. There are many other competitors. So how does McAfee handle the situation? On the website they say:

Our initial investigation indicates that the error can result in moderate to significant performance issues on systems running Windows XP Service Pack 3...

....McAfee apologizes for any inconvenience to our customers

And the fix is ok, but manual and technically non-trivial.

In other words "We Apologise" is not nearly enough.

It will be interesting to see how McAfee handle this.

Interesting post on AVC:

I got out of college in the early 80s when the desktop revolution was upon us. A bunch of my friends from MIT were piling into startups in Cambridge building products on top of this new desktop computing platform. One of them was a company called General Computer that made external hard drives for the original Macintosh, which you might recall came with only a floppy drive. General Computer did fantastic for a while but its business eventually faded away as Apple filled in the holes in the Macintosh product.

Contrast that with Lotus, another Cambridge company that built something entirely new on top of the desktop platform. Or Aldus, who started the desktop publishing business that "saved Mac" as my friend points out.

And then a bit later.....

Much of the early work on the Twitter Platform has been filling holes in the Twitter product. It is the kind of work General Computer was doing in Cambridge in the early 80s. Some of the most popular third party services on Twitter are like that. Mobile clients come to mind. Photo sharing services come to mind. URL shorteners come to mind. Search comes to mind. Twitter really should have had all of that when it launched or it should have built those services right into the Twitter experience. Note to all prospective Tweetxxxx platform funders. Be sure to check if your proposed fundee is a Lotus, not a Floppy

Fred is really just repeating what Tim O'Reilly said in Berlin18 months year ago, ie build real stuff:

I believe we are entering a new phase now. Twitter is a global platform, the 33rd largest in the world according to Comscore, with almost 70mm uvs worldwide in February. It is a large company now with the resources to service the ecosystem in ways it never could before. It's hosting its first developers conference, Chirp, in San Francisco next week. And so it's time for Twitter and its developer ecosystem to work together to create entirely new things that will shape the Internet in the coming years. I'm excited to see it happen.

That's about as clear as it gets.....

There have been many guides to business strategy that have (mis)used some sage or hero of the past (or future) - Attila the Hun, Shaka the Zulu, Caesar the Roman, Sun Tzu of China, Yoda the ..... - you name it. And today I thought that a group famous for their simple wisdom, that have not been given a chance to elucidate their strategy, were being called on. Yes, I saw the TechCrunch headline:

Apple's Secret Cloud Strategy And Why Lala Is Critical

At last! Someone is putting Teletubby wisdom into our wonderful web world, I thought, though I was a bit worried that Dipsy, Tinky Winky and Po were being ignored. But it turns out that its not the Teletubbies, no, there really is a thing called LaLa, and it is in fact critical to Apple's Secret Cloud strategy:

What is of value is the personal music storage service which was an often overlooked component of Lala’s business. As Apple did with the original iPods, Lala realized that any music solution must include music already possessed by the user. The Lala setup process provides software to store a personal music library online and then play it from any web browser alongside web songs they vend. This technology plus the engineering and management team is the true value of Lala to Apple.

Which is all very interesting, especially as its Secret - except that if they are going to store that music the user possesses online, or even point to it for re-use, it may be an issue if it is - ahem - not paid for. Now, the TechCrunch reader base, smart fellows that they are had already listed all the Things That May Go wrong, chief one of course is that its very likely to be deemed illegal.

But on to the real purpose of this post, which is to outline how to use Teletubby strategy for these sorts of situations, to wit to invent secret strategies for high buzz count companies for improbable services in nonexistent markets, based of course in The Cloud.

There are Five Core Assumptions of Teletubby Cloud Strategy Model:

1. The business climate portrayed shall always be sunny and pleasant save for occasional inclement moments, and a bit of snow at Christmas time. There are no dark clouds in Teletubby Strategy

2. All users are already fully wired and carry their own personal signal receiver and an iPad screen (Teletubby 2.0) in their tummies to receive whatever messages you send 'em, wherever they are

3. All users will continually, constantly and comprehensively collaborate in this closed world

4. There will always be an automated system to clean up the mess when things go wrong, freeing users to carry on playing with their stuff.

5. When times are getting tough, The Cloud will send a Calliope with rocking horses, and a man who tap dances with a cane down from The Clouds to amaze the users. .... interestingly, no other Cloud based social network system has thought of these applications yet.

And Lo, today we read about the failings of other players vis a vis Apple:

There ought to be some soul searching going on right now among Apple's competitors. For this is not the first time the company has picked up a discredited idea and created not just a successful product, but a whole new industry. There were MP3 players before the iPod. There were smartphones before the iPhone. And there were plenty of tablet computers before the iPad, even if they did run Windows.

It is clearly Time for a Teletubby Cloud Strategy - Po, TinkyWinky and Dipsy are still free..........

Network World reporting on news from Gartner:

Sixty percent of virtual servers are less secure than the physical servers they replace, the analyst firm Gartner said in new research Monday.

This state of affairs will remain true until 2012, but security should improve substantially after that point, Gartner said.

Gartner predicted that by 2015, only 30% of virtualized servers will be less secure than the physical machines they replaced.

The basis of the issue is the new layer of virtualizing middleware that is emerging to help such virtual systems operate easily. These are new pieces of software, largely untested, and 40% are developed by people who know not a lot about high end system security.

There are 5 other main risks identified (see the press release here)

- A Compromise of the Virtualization Layer Could Result in the Compromise of All Hosted Workloads

- The Lack of Visibility and Controls on Internal Virtual Networks Created for VM-to-VM

- Workloads of Different Trust Levels Are Consolidated Onto a Single Physical Server Without Sufficient Separation

- Adequate Controls on Administrative Access to the Hypervisor/VMM Layer and to Administrative Tools Are Lacking

- There Is a Potential Loss of Separation of Duties for Network and Security Controls

Quite why its going to get amazingly better in 5 years is not made clear in the press release, I would have thought there is at least 5 years of FUD and Greed in there. The report is sitting behind a $95 paywall - so here's a free opinion:

There will be a load of cowboys entering the game in the next 3 years, by 2015 there will have been some major security f*ckups, and by 2015 many customers will have been spooked - and the big players who do this stuff in their sleep (they are called Telcos and Web 1.0 Hosters) will enter the game and just integrate it all as part of their infrastructure.

A few days ago we remarked on the inevitability of Twitter looking at the best 3rd party Apps areas and grabbing them for itself. News comes today of Facebook throttling developers ability to virally market (aka spam) their apps - All Facebook:

Just over 24 hours after Facebook turned off application notifications, developers are reporting a dramatic decrease in traffic. Speaking to a number of developers, we’ve heard traffic has decreased in the range of 10 to 50 percent, depending on the application, most hovering between an 18 to 27 percent decrease. While our poll sample was small, Facebook developers are now entering the “post-notifications era”.

And why do this? To regain control of their own distribution channels and put their own castles on them of course:

With an estimated $350 million in revenue last year from performance advertising, Facebook is heavily focused on this space. However, virtual goods are also an area which Facebook is hoping to experience a large amount of growth.

While it’s not known whether or not Facebook will force developers to use their Credits platform, there’s a very good chance Facebook will become the primary payment provider of all virtual goods on their site. This means Credits could very well become a business worth over $300 million a year if the platform is expected to generate over $1 billion in revenue each year.

..............

There are two parties now who are “paying to play”: developers, who will now purchase more ads to drive traffic to their applications, and users, who will increasingly pay for virtual goods in games. While it appears that application requests and other channels still drive traffic, developers have become one of the largest buyers of Facebook ads.

Do developers have other options? In theory they can decamp to other platforms but of course those have their own dominant ecosystems so new entrants have to spend even more resources to clamber up the greasy pole, and it is probably inevitable that all ecosystem holders will increase rents over time. But in the sort term....

...developers will have to deal with the short-term implications of the removal of notifications and figure out ways to regain traction, as they always do. The entire time it’s important for developers operating on the Facebook Platform realize: this is Facebook’s world. If you don’t want to put up with the challenges of the platform, you can just set up your application off the site.

So - for app developers a caveat. Its a jungle out there - and its their jungle, not yours. As an ecosystem matures, life is probably going to be nasty, as the interests of customer and ecosystem holder do not align with that of the developer once the Ecosystem is functioning. Its also going to be brutish, as its about who gets (a lot of) the money, and - if you are a funding VC you will need to take this into consideration - its probably going to be short. In this eat-or-be-eaten world, there is probably only one App in each category that can sell itself to the Ecosystem, the others will have real problems surviving.