Back to the Future — The Browser War

Fierce competition is back on the web browser front. After Microsoft crushed the Netscape challenge in the mid to late 90’s, Microsoft Explorer cruised for years as the overwhelming leader in the web browser market. It still is, with approximately 75% market share. But out of the Netscape defeat rose the Mozilla Foundation, a non-profit that launched the open source Firefox browser and has been refining it since. Here’s a good overview from Brad Stone of the NY Times:

http://tinyurl.com/6rux9g

Yesterday Microsoft struck back announcing a deal with Hewlett-Packard. Starting in January 2009 Microsoft’s Live Search will be the default search engine on all HP computers, taking that spot away from Yahoo. The deal is for North America only — Microsoft probably decided it has enough anti-trust issues right now with the European Union. Danny Sullivan of SearchEngineLand has a typically good piece, highlighting the US market share numbers of the various PC manufacturer/search engine alliances. I also like the idea he floats — why not cut consumers in with lower PC prices when the manufacturer gets big $$ from the search companies?

It fails to mention that HP will gain cash through the deal for effectively selling out their users. That’s not to single out Microsoft. The Google-Dell deal is exactly the same situation. Yes, in both cases, the computer owners are getting access to good search resources. But maybe the vendors should charge less for computer where they benefit by choosing for the consumer? Or maybe they need to disclose more fully why the defaults are the way they are?

http://searchengineland.com/080602-090000.php

But the struggle isn’t over when the default is set. Users can of course change their search option. Or they can be cajoled/coerced into doing so. Here’s a piece from Danny last year on that mostly behind-the-scenes battle:

http://searchengineland.com/070115-111111.php

There is one element of the HP/MS deal Danny doesn’t focus on, maybe because its not related to search. In addition to Live Search being the default on HP computers, Microsoft’s Silverlight animation software will be built in as well. This is the MS product that competes with Flash, and having millions of computers on the market that can view Silverlight without needing any plug-ins should be a big market advantage. Ars Technica thinks that will end up being more significant than the default search element:

http://arstechnica.com/news.ars/post/20080602-new-hp-microsoft-live-search-deal-is-all-about-silverlight.html

Personally I prefer Firefox. It seems faster than Explorer, and useful add-ons like the Alexa traffic reader are easy to implement. I don’t mind that Firefox has decided for me that Google should be my default choice for search — at least not yet. We users need to remember we can always make up our own minds.

RIM Battles Apple for the $79 PC Market

(graphic credit New York Times)

Interesting article in the Times today about the battle between Research In Motion (RIM) and Apple for dominance of the smartphone market. Smartphones are becoming so capable these days I call them $79 personal computers. As the article notes, until the introduction of the iPhone the market was focused on the enterprise, not on consumers. The success of the iPhone has changed that, and the dominant player RIM is trying to adapt.

Brad Stone lays out a compelling simple narrative, as he should for a horizontal publication like the Times. However a few things get missed or glossed over in his straight-forward RIM vs. Apple telling of this story. The focus is totally North American — it goes unmentioned that Symbian is the most popular OS for smartphones globally by a wide margin, but has very small presence in NA. Here’s the link:

http://www.nytimes.com/2008/04/27/technology/27rim.html?_r=1&th=&emc=th&pagewanted=print

First off, he seems to give RIM an unquestioned advantage in the area of security, and giving enterprise IT departments what they need. Seemed strange to me that he made no mention of the service outages that have plagued RIM as recently as last month. That’s a security concern right there to companies that can’t afford to lose access. Post from engadget on March outage questioning RIM’s explanation:

http://www.engadget.com/2008/02/13/blackberry-outage-shows-that-rim-learned-nothing-in-2007/

Second, I know from personal experience that some potential customers, primarily government, see RIM’s operation of its own Network Operating Center (NOC) as a deal killer for any adoption. Defense agencies in particular need to control their communications, and will not work with a solution that depends on an external, third party network.

Finally, there are new entrants into the market that give enterprises strong and effective security solutions for their distributed workforces, no matter what operating system drives the devices. For all these reasons, better security IMO isn’t the strongest factor supporting Blackberry’s market leadership here in North America.

Two factors are more important than security to maintaining RIM’s lead. One is the exclusive focus on the smartphone market the article mentions – unlike their competitors this is all RIM does. Second and even more important is their strategic decision to work with the major carriers in NA, rather than try to go around them. Of course RIM really has no other choice. But I give their co-ceo Jim Balsillie kudos for being so honest on this point:

R.I.M. makes its alliances clear. “We are sort of polite and amiable and we gently interrelate with the carriers and try to find compatibility,” Mr. Balsillie said. “It may be a better strategy to fight the carrier. We may be wrong. The carrier may get disintermediated, in which case we fade with them.”

Pretty clear-cut! RIM is betting on the carriers and the business model that has been constructed in NA over the past 12 years or so. As long as RIM continues to innovate its offerings to enterprises and provide more features consumers want in their devices (a big caveat I realize), they either dominate or stay a very strong presence.

If Apple and Google succeed with their open network push and disintermediate (big word for go around) the carriers and appeal to consumers directly, RIM becomes a niche player fast.

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Google — As Dominant as Advertised?

Google didn’t have a particularly good week, despite Neilsen Online reporting on Wednesday that Google continues to widen its lead in US search share over Yahoo and Microsoft. Google now handles almost 59% of all searches here, and almost 63% globally, although that number is down slightly: http://www.reuters.com/article/companyNews/idUSN1931199720080319

More important from a revenue standpoint, the growth in paid clicks has stopped. (Marc Hausman, aka Strategic Guy looks at what this means for organic SEO and PR in a good post here)

http://money.cnn.com/2008/03/27/technology/goog_clicks/index.htm?section=money_technology

Less reported in the general business press but IMO very related is a new feature from Google that presents a search box as part of the user’s search engine response page (SERP). The box potentially keeps them from leaving Google and going to a destination site. This could result in the user never leaving Google’s internet property, and therefore Google would not have to share any resulting advertising revenue. Google says it improves the searcher’s user experience. Sue Feldman of IDC, a noted search analyst, calls it potentially “hijacking affiliate revenue” in a new report. Here’s Tom Claburn’s InfoWeek piece:

http://www.informationweek.com/internet/showArticle.jhtml;jsessionid=NNDKNR2BSUYFQQSNDLOSKH0CJUNN2JVN?articleID=206905917

Google has a lot of good will in the online community, especially when you consider how much influence the company wields in online advertising. Much of that good will stems from the wildly successful AdSense program, which allows online publishers of all sizes to quickly and easily add contextual advertising to their sites. This creates a revenue stream that simply did not exist previously. If Google is perceived as cutting out the affiliate publishers, that good will could vanish quickly. 

There may be many strategy changes to come as Google grapples with the challenge of being a public company and maintaining its stratospheric stock price (down over 30% so far this year). But its founders have fundamentally changed course before. Back when they were grad students, Larry Page and Sergey Brin wrote that advertising supported search engines would always be biased towards advertisers and not serve users well. Saul Hansell of the NY Times uncovered that nugget back in late 2005:

http://www.nytimes.com/2005/10/30/business/yourmoney/30google.html?adxnnl=1&pagewanted=print&adxnnlx=1206716647-vSbEXfp/9xdAjnHAXscMhA

Mobile Outlook for 2008 Event

This morning I attended an interesting panel discussion on the mobile marketplace. It was sponsored by Potomac Tech Wire and the Fairfax County Economic Development Authority.

I was particularly interested in this event because I knew two of the panelists. I worked for Tom Wheeler at CTIA when he led that organization, and I worked with Paul Palmieri when we were both at Advertising.com. Tom is now a Partner at Core Capital, and Paul is CEO of Millennial Media. More background information about the entire panel and the event here.

Paul Sherman of PTW moderated. He kept things moving by asking each panelist for three interesting trends, and one issue they felt was currently overhyped.  This led to some debate since some thought mobile video was overhyped, and others disagreed.

Overall it was an interesting, high level discussion. By and large the panelists made points that demonstrated where their company played in the mobile ecosystem — aggregator, ad network, investor, mobile publisher, mobile commerce.  The most animated discussions were driven by the above mentioned opinions on mobile TV — is the business model there, what kind of experience customers want? – and open access — what does it mean, hasn’t been defined,  does the spectrum auction really suggest a new day in North American telecom?

Some selected nuggets:

Tom Wheeler — telecom business in this country currently has three distinct areas – the network, retail stores and the billing relationship with the customer. The last one is the relationship that has real value — look to share networks as in other countries, streamline and trim retail locations. Look to free up capital and speed time to market.

Pragnesh Shah, Mobilians International –  iPhone success has woken up every OEM and carrier, the big carrier slept on the threat of VOIP in the 90’s and now they realize the “collision of computing and telecom,” incumbents will fight real open access, work to just open their networks a crack.

Paul Palmieri — for video to take off the business model needs to move from paying monthly tariff to free/ad supported model, part of the problem is you can’t market it as “TV on your phone” because it isn’t, but telecom marketing doesn’t do subtle messaging, they carpet bomb.  On the other hand Paul is an old Verizon guy, and defended the carriers when the abuse was starting to pile high.

Kevin Bertram, Distributive Networks – shared how painful and lengthy is was negotiating with multiple carriers so his company could handle text messaging for the Obama campaign, made the point that mobile isn’t just a new platform for advertising it can be used as a call to action directed at offline ads, and interestingly noted his company has a “no blackberry” rule, to preserve quality of life. Refreshing!  

Something interesting happened during the Q&A. Paul Sherman has asked the panel about Google’s goals in the FCC C Block auction, and it seemed like the consensus was Google did not want to actually win the spectrum and have to build a wireless business. So I had a question to ask, and luckily I know Paul and I got to ask it, since there were probably 250+ people in the room. I asked whether anyone felt another reason Google didn’t actually want the spectrum was because they can help finance the WiMax network to be built by Sprint and Clearwire. Any panelist have any thoughts on that?

Total silence. No one would touch it, it was radioactive for some reason. I asked another question, but thought this was very strange. I emailed Paul S. afterwards and he thought so as well.

So if any big news goes down on that front, you heard it here first! And finally, there is a major survey coming out early next week on mobile video use in Europe and the States. The survey size is 34,000 users, and some of the findings directly relate to the debate this morning about user uptake, expectations and so forth. Watch this space — I’ll be able to share the results Tuesday morning.

Google’s Checkbook Leads to Open Access Opportunity?

Brian Dolan over at FierceWireless wrote a very interesting editorial today.

Now I can get as tired as the next guy with the media’s preoccupation with the big G. But I think Brian is on to something. He posits that rather than actually wanting to win any of the spectrum in the FCC auction, Google is participating to ensure that the C block bidding reaches the reserve price of $4.6B, which triggers the open access provisions. Similarly, Google is now reported to be part of a joint venture that Sprint and Clearwire will tap to help finance a nationwide WiMAX network. 

Very clever — don’t let constructing a wireless network distract from the core focus of search, but use some billions to ensure an open source environment develops in which the company thinks they will prosper. (Although Nokia purchasing Trolltech this week clearly shows they will have stiff competition)

I’d wager these stories are no accident, and the folks inside the Googleplex are promoting this viewpoint. It dovetails so nice with Google’s “do no evil” mantra.

Article here.