Trends I'm Watching

Obama's Plans

Trend: The president elect reveals some specifics about his plans to increase employment by fixing and upgrading infrastructure within the US.

Obama plans to: increase energy efficiency, fix roads and bridges, modernize school buildings, improve the information superhighway, and modernize medical record keeping.

Link: President-elect Barack Obama lays out key parts of Economic Recovery Plan | Change.gov: The Obama-Biden Transition Team.

 First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won’t just save you, the American taxpayer, billions of dollars each year. It will put people back to work.

Second, we will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s. We’ll invest your precious tax dollars in new and smarter ways, and we’ll set a simple rule – use it or lose it. If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.

Third, my economic recovery plan will launch the most sweeping effort to modernize and upgrade school buildings that this country has ever seen.  We will repair broken schools, make them energy-efficient, and put new computers in our classrooms. Because to help our children compete in a 21st century economy, we need to send them to 21st century schools.

As we renew our schools and highways, we’ll also renew our information superhighway. It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the internet, every child should have the chance to get online, and they’ll get that chance when I’m President – because that’s how we’ll strengthen America’s competitiveness in the world.

In addition to connecting our libraries and schools to the internet, we must also ensure that our hospitals are connected to each other through the internet. That is why the economic recovery plan I’m proposing will help modernize our health care system – and that won’t just save jobs, it will save lives. We will make sure that every doctor’s office and hospital in this country is using cutting edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes, and help save billions of dollars each year.

Web Search on Cell Phones

Trend: Web advertisers will increasingly rely on personalization because cell phone screens are too small to display many ads.

Businessweek describes the future of online advertising on small screens and the Google's strategy to adapt. Excerpts below.

Link: The Real Threat to Google.

As more people use cell phones and their tiny glass screens to gain access to the Internet, Google and its fellow online advertisers will have less space, or what's called ad inventory, to place marketing messages for customers. Google makes money selling ad inventory. And its ad inventory is diminished on a cell phone.

Google can now fit about 10 ads on a standard computer screen. (If you look at Google search results on a PC monitor, paid ads are the listings at the very top and along the right.) But on your cell phone, if you type in a search query at google.com you get only one or two paid ads in response.

Almost two-thirds of Americans have had some experience with mobile Internet use, and the adoption trend is most pronounced among teens and young adults, according to Pew Research Center. About 60% of adults 18 to 29 use text messaging every day, compared with only 14% of their parents. Nearly one-third of young adults use mobile Internet. This is the future, because people take their media habits with them as they age.

Google will try to expand ad "shelf space," especially by redesigning cell-phone software. In November, Google announced it was launching an Open Handset Alliance to design a new operating system, code-named Android, which would provide a "truly open and comprehensive platform" for cell-phone users. A few scratched their heads as to why Google would get into the cell-phone interface business. But now it's clear; Web screens will soon be two inches wide, and Google wants a say in what fits on that tiny screen.

Implications of Google's Postini Purchase

Trend: Google is moving into enterprise software. Companies like Microsoft, IBM, and Oracle cannot ignore their most recent move.

Bill Burnham at Burnham's Beat discusses Google's July 9 purchase of Postini for $625M in cash. Excerpts below.

Link: Burnham's Beat: Google's Postini Buy Has Some Interesting Implications

Google is definitely going after Microsoft's Exchange franchise.  With the addition of Postini, if they just add push e-mail support and an off-line client, GMail will basically be as good, if not better than Exchange.

This is not good news for other anti-spam companies, especially if GOOG decides to offer Postini's basic anti-spam services for free.

If you look at Google's recent enterprise oriented acquisitions they are building a pretty compelling set of hosted applications.  Not only do they have e-mail covered but they have the big three productivity apps (word processor, spreadsheet, presentation) covered as well.  They also added in Wiki capability (via JotSpot).  To link all this together all they need is a hosted file server and integrated search across all these apps (basically a hosted version of Google Desktop).  That's a pretty powerful suite of services.

Google not only can afford to pay more for companies, it does pay more.  Google's competitors simply can't compete with Google's prodigious cash flow, multiples, and willingness to take dilution. Google not only pays more, but is perceived as a better place to work by most targets.  Thus, the management team is happy to support a Google deal because they know their team will be happy.   This does not bode well in the short term for Google's competitors.

Subscriptions on Cell Phones to challenge Web Search?

Trend: Subscriptions to web sites and alerts allow cell phone users to track events and receive incremental information immediately.

Rajesh Jain at Emergic.org descrbes why mobile users with subscriptions will be the next big trend on the Web, especially in places where mobiles are the primary means of accessing the web. Excerpts below.

Link: Emergic: May 16, 2007 Archives.

Search engines are the primary way to navigate the Reference Web. We no longer bookmark sites or even try and remember their URLs; we Google everything. This becomes possible because we trust Google to have made a copy of everything that has been created and appropriately ingested it with its algorithms. Search works very well with the PC screen -- most of the space is taken up by the results with some relevant ads thrown around. This works great for us, the search engines and the advertisers.

As the Live Web starts to occupy a greater importance in our lives, Search on a PC will no longer be the dominant form of interaction. Instead, I believe it will be Subscriptions delivered to a mobile screen. Let me explain.

The Live Web is about events and incremental information. There are a number of things we would like to know as soon as they happen. In this context, the best way to be alerted is to set up an alert. So, when we want to track something, we can set up a Subscription to that site.... The mobile is the perfect device to send out an alert to since we can be pretty sure that the user will see the message almost immediately.

In emerging markets like India, access to the PC is still limited, but mobiles (and SMS for now) can reach over 150 million users.... The mobile thus becomes the ideal device to send people information about the Live Web.

Search does not become irrelevant for the Live Web. In fact, we will still use Search for things we cannot Subscribe to in advance. My point is that Subscription will be the dominant way we interact with the Live Web ? just like Search is the primary way we interface with the Reference Web.

With this change in behaviour and device, the business model will also morph.

The Rise of Mobiles

Trend: Mobile communication devices will be the primary connection tool to people and the internet in emerging markets, with different dynamics than PC-based technologies.

Emergic.org describes the rise of hand-held communication devices. Excerpts below.

Link: Emergic: May 14, 2007 Archives

...emerging markets like India and China that will give rise of the next set of global technology companies. These companies will create solutions for a mobile-centric world. Mobiles will be the dominant form of Internet access devices in the developing markets.

...Today, mobiles masquerade as handheld multimedia computers (see the campaign for Nokia's N95). Wireless data networks are near ubiquitous because they are layered on an ever-expanding mobile infrastructure. For consumers in emerging markets, the mobile has rapidly become the centre of their lives, an extension of their body.

...In emerging markets, the mobile is the primary, if not the only, interactive device that people own. This "Mobiles First" and "Only Mobiles" environment and lifestyle is going to very different from that of the developed markets. For example, SMS and not email becomes the dominant form of asynchronous communication. The Contacts on the phone and not the IM Buddy List is at the centre of social interactions.

Yahoo Partners with Comcast

Trend: The era of personalized advertising on contained networks has begun.

Media mogul Mark Cuban sees a significant advertising breakthrough in the Yahoo-Comcast deal. Excerpts below.

Link: Yahoo - Comcast = The Deal of the Year - Blog Maverick

Little has been written about yesterdays announcement that Yahoo would be selling display and video ads for Comcast's websites, in particular, Comcast.net.

What's so special about this deal beyond the sheer size of Comcast and the inventory it makes available to Yahoo to sell its the network.

The one thing that Google doesn't have is a contained network. Comcast does. The implications are significant.

For the first time, an advertising monetization platform, such as Yahoo's Panama, can be integrated into a NON internet video platform. When Comcast serves video from comcast.net to its own high speed data customers, those are NOT internet customers. They are private network subscribers.

In short, Yahoo and Comcast can start working together to develop video content and ad platforms that Google can't touch. Any video that is streamed from Comcast.net can be streamed at bit rates that match the user's throughput, including commercials. If Comcast can deliver on demand video at full DVD quality to PCs, it can deliver commercials at that quality. All without ever touching the internet.

More importantly, since all the users of Comcast.net video are Comcast customers, the two companies can work together to leverage customer data (within privacy limits) to deliver ads that are not only personalized, but also can evolve to be "over the top" of the set top box and be delivered to the TV in the future using Comcasts future switched digital capabilities and OCAP features.

Together Comcast and Yahoo have created an advertising playground that could potentially define the future of advertising on the net. Rules that even Google and Microsoft would have to follow.

The competitive landscape for video advertising just changed, and no one even noticed.

If done right, this is the first step towards integration of integrating advertising from websites

Secrecy vs. Transparency

Trend: Sharing inside information has become a viable strategy for many leaders.

Wired describes how companies and their leaders are using the Internet to communicate more openly with the public. Excerpts below.

Link: Wired 15.04: The See-Through CEO

Radical forms of transparency are now the norm at startups - and even some Fortune 500 companies. It is a strange and abrupt reversal of corporate values. Not long ago, the only public statements a company ever made were professionally written press releases and the rare, stage-managed speech by the CEO. Now firms spill information in torrents, posting internal memos and strategy goals, letting everyone from the top dog to shop-floor workers blog publicly about what their firm is doing right - and wrong. Jonathan Schwartz, the CEO of Sun Microsystems, dishes company dirt and apologizes to startups he's accidentally screwed. Venture capitalists now demand that CEOs be fluent in blogspeak. In February, after JetBlue trapped passengers for hours in its storm-grounded planes and canceled 1,100 flights, CEO David Neeleman tried to deflect the blast of bad publicity by using YouTube to air his own blunt mea culpa. Microsoft, once a paragon of buttoned-down control, now posts uncensored internal videos - and encourages its engineers to blog freely about their projects (see page 140). The very process of developing ideas, products, and messages is changing - from musing about it in a room with your top people to throwing it out on the Web and asking the global smartmob for a little help.

The Internet has inverted the social physics of information. Companies used to assume that details about their internal workings were valuable precisely because they were secret. If you were cagey about your plans, you had the upper hand; if you kept your next big idea to yourself, people couldn't steal it. Now, billion- dollar ideas come to CEOs who give them away; corporations that publicize their failings grow stronger. Power comes not from your Rolodex but from how many bloggers link to you - and everyone trembles before search engine rankings.

Here Comes XBRL

Trend: Standardized information formats make transparency possible and reduce compliance costs.

Robert G. Eccles, Liv Watson, and Mike Willis describe XBRL (Extensible Business Reporting Language) in the Harvard Business Review article Breakthrough Ideas for 2007. (Isn't this a better idea than SOX?) Excerpts below.

Link: The HBR List: Breakthrough Ideas for 2007.

When the U.S. Securities and Exchange Commission last September announced a $54 million project to accelerate the implementation of XBRL, a new information standard for financial and business reporting, the event hardly seemed like a landmark for companies. The advantage for investors—an enhanced ability to electronically download, analyze, and compare company information submitted to the SEC—got top billing. The SEC chairman, Christopher Cox, briefly noted that adopting the new standard—which is voluntary for SEC filings, at least for now—would also make it easier and less costly for companies to comply with his agency’s requirements. But that’s just the beginning.

What has largely been overlooked is that XBRL (Extensible Business Reporting Language) will make it much easier to generate, validate, aggregate, and analyze business and financial information, which in turn will improve the quality, timeliness, completeness, and comparability of the information that companies use to make decisions. The new language will allow them to strengthen and ensure the reliability of their internal controls, thereby lowering the cost of maintaining these pervasively manual compliance processes. It will make ERP (enterprise resource planning) systems much more flexible and easier to upgrade or change, dramatically cutting the investments needed to maintain these beasts. And by significantly reducing the amount of effort needed to change and integrate business reporting systems, XBRL will make digesting acquisitions, shedding businesses, reorganizing, and adding new products and business units far less difficult.

XBRL is an open-source standard that was developed by an international public consortium of nearly 500 organizations from 27 countries, including companies, investors, analysts, auditors, regulators, and aggregators of financial data, such as Standard & Poor’s. (For more background, see www.xbrl.org, the standard’s official Web site.)

Virtual Gold Farms

Trend: 3D virtual games are becoming a global marketplace that transcend culture and language.

GigaOM describes a MTV documentary about virtual gold farms, gray market companies which collect and sell virtual gold (primarily from World of Warcraft) to wealthier gamers in the developed world.

Link: GigaOM » Inside World of Warcraft Gold Farm, Future of Work

Drawing from an fascinating upcoming documentary⁵ by UC San Diego grad student Ge Jin (YouTube clip from his film here⁶), the MTV segment features interviews with workers and managers of several gold farms, which resemble a cross between a 24 hour LAN party and a very shabby college dorm. By the segment’s estimate, an astounding half million Chinese now make a living - about $100 a month - from the acquisition and sale of WoW gold to US and EU gamers. Why is this is the future of work online? Consider the numbers, youth, and low wages of the gold farmers, and the growing interest in outsourcing tasks online.

In Second Life, a Hollywood production company is outsourcing its Second Life projects to its Vietnamese branch⁸, where highly-skilled workers can create professional 3D environments for a fraction of the cost, were it done here. It’s easy to see how the Chinese farmers of Warcraft might evolve into the blue collar workers of the 3D Internet.

MTV producer Matt Sunbulli put us in touch with Ge Jin, and we asked him about this phenomenon, and sought his own thoughts on its relation to the future of work online.

I think these gold farms indicate that the game platform has the potential to engage more people in Internet-driven economy. The gaming workers in China don’t have skills like English, software or graphic design to participate in other forms of Internet-driven work, but they can communicate and navigate in a 3D game world whose tools and routines they are familiar with… So if more social and economic activities happen in an accessible 3D game world, people who don’t have access to other culture capital but gaming knowledge will be more likely to be included in global interaction.

Google Moving On Up in Market Cap

Trend: Google, a company less than a decade old, now has a larger market cap than IBM, Intel, and HP.

Ticker Sense shows a list of the current market cap of top S&P 500 companies, featuring Google.

Link: Ticker Sense: Moving On Up