News reaches the outpost in rural Ireland that Xiaomi, ‘China’s Apple’, fresh from launching their extraordinarily gorgeous steel-clad Android phone which at the top of the line retails at a similarly astounding €86 / $116, has now launched a $13 fit-band, which also looks really lovely. It appears from firstreviews that the Chinese are figuring out how to do power and style (learned, perhaps, from making stylish things on behalf of those who wrote the book on design) as well as cheap, and that’s set to make some serious waves.
It made me think about the politics of technology, which I do quite a bit anyway. Connected people, and connected commerce ecosystems are clearly on the way. Being able to control those ecosystems gives enormous power. And one suspects that the Chinese are more interested in power than in profit, as while profit is currency limited, and therefore politically relative, power is a political absolute. In other words, if the Chinese can dominate the smartphone / tablet business, and by extension the people instrumentation business, that would undermine American attempts at technological hegemony, and create a strong platform for China. Therefore while Apple seeks to preserve its position as a premium brand with premium margin for premium profits, Xiaomi is playing a different game entirely.
The recent publications in the Guardian about NSA access to Google, Facebook, Yahoo and all the rest have been met with a flurry of leftist abhorrence and mutterings from the twittering, as opposed to the twitter, classes. However, all reports refer to access to data, in such a way as to make people think that their personal emails and photos and so on are being read by the NSA, or their computers – this is not the case. Because the media is governed by soundbites, polemic and an absence of nuance, the headline is that the security services have access to data. The truth is, they don’t need or want access to the data. They need the models. And this allows the internet companies to deny they are granting access to the data.
(reminder and disclaimer – I work for IBM, but these are personal comments)
Almost three years ago, in Febraury 2010 (yeah, I know – three years!) the Economist ran a supplement called “The Data Deluge“, about Big Data and how it was transforming businesses all over the world. In the middle of the supplement was an article called ‘Clicking for Gold‘, in which there’s a quote from Tim O’Reilly, who says that companies like Google, Amazon and Facebook ‘…are uncomfortable bringing so much attention to this because it is at the heart of their competitive advantage. Data are the coin of the realm. They have a big lead over other companies that do not ‘get’ this.’ For the intervening time, I’ve been quoting this to telcos all over the world, and they nod their heads, and – for the most part – don’t do much about it.
Microsoft today announced a write down of $6.2bn in their online advertising business, essentially wiping out their $6.3bn acquisition of aQuantive in 2007, and conceding defeat in the online display ad segment. Display ads are a particular part of the ad business, dominated by Google through it’s acquisition of DoubleClick (in a competitive process against Microsoft) shortly before the Redmond behemoth completed its largest ever acquisition at that time. Search advertising – with Bing – and other parts of its ad portfolio remain, but there are concerns.
Most service providers have a multi-channel strategy, or a digital channel strategy, or some strategic objective to achieve “the right channel mix”. In a typically inside-out view of the world, each new channel that emerges (social media is a “new” channel, for example) is added to the others, and attempts are made to leverage unified processes so that there’s an integrated view of the customer, or a 360 degree view of the customer.
Meanwhile, the entire retail industry is digitizing. Just as IBM (who, in the interests of full disclosure, pay the wages of your correspondent) is talking about the increased importance of the CMO, Forrester have come out with some new research about how eBusiness is moving to the c-Suite. Apple has revolutionised the mobile phone business, the telco business, the consumer electronics business, and – crucially – the retail business. Everyone is racing to catch up, and while the traditional retailers have been lumbering into the online world ten or more years since mainstream internet adoption became real, suddenly they are being overtaken once again by an integrated digital mobile ecosystem that is further eroding retail conventions. So different retailers have done different things. Tesco and Walmart developed the online channel but both continue to struggle in a world that moves too fast for their scale; Best Buy still writhes in anguish; and Borders went bust. Quoting from Peter Sheldon over at Forrester, “In tomorrow’s Wi-fi connected, digitally enabled store, fixed checkout aisles and cash registers will fade away; instead the entire floor becomes the point of sale.”
** Full disclosure – your correspondant works for IBM, though this is entirely a personal view. He does not work in the patent side of the business. He also holds IBM shares.
The tyranny of lawyers is descending upon us. When Oracle bought Sun, most of the headlines concentrated on Oracle’s new found love for hardware (notwithstanding its insistence on the irrelevance of cloud computing). As a software company, however, it was its merger with the doyen of Open Source Software that was more important. MySQL, OpenOffice, and in particular the Java programming language were managed by Sun, were now to be housed in one of the most profiable software companies in the world. The Sun ecosystem had been driven around hardware sales, but how would ‘free’ software sit inside Oracle? One blogger wrote that “Oracle could finally democratize the JCP (Java Community Process) by making it more transparent and inclusive,” though most were more circumspect. The majority of concern centered on MySQL, a free database that clearly competed with Oracle’s core software business.
Slowly however it began to dawn on the outside world that the rationale for the acquisition may have been driven more by the lawyers than the technology strategists. The R&D credentials of Sun were huge. The patent register was impressive. The extent to which Oracle could use its ownership of Sun to ward off nefarious encroachment by all sorts of interlopers who would steal its clothes. It became obvious for Oracle’s actions not immediately, as speculation focused on how and whether Oracle would deal with the hardware business. But in 2010, Oracle launched a lawsuit against Google for a billion dollars because Android had been written in Java. Huh? Yeah. Suddenly, everyone got jittery.
Google bought Motorola Mobility, substantially for it’s patents. Facebook, Yahoo and Microsoft all executed moves to develop their patent portfolio. Facebook recently countersued Yahoo with a patent it had registered by a former Yahoo employee! The great Daddy of them all IBM spends $6bn a year on R&D and has led patent registrations for many, many years. Apple’s patents- the subject of many high profile battles with Samsung and others – are primarily hardware related.
Now, we’re seeing a rash of litigation that threatens to undermine the entire technology business. Value, and the openness that has characterised the innovation of the Internet, is pushed into the background as defensive landgrabs from major ecosystems and major (predominantly US) players establish what appear to be zones of control. Oracle’s case against Google – is particularly interesting in that it posits that the Java language is itself intellectual property (rather than the code / binaries that it produces) and therefore that Google’s android software owes Oracle compensation for its use of Java. The thing is, an enormous amount of the world’s software is written in Java. That would mean undermining a massive swath of the economics of the software business – and potentially massively enriching Oracle.
One can’t get away from the sense that this is only the first act – and that the main event will happen when these US behemoths take on the Indian and Chinese companies that are coming in the next decade or two. And the lawyers will be in the vanguard.
The Australian Courts have found Google guilty of deceiving search users by placing ‘misleading’ results to searchers. Essentially, someone looking for “Honda” would be shown an ad for “CarSales” which was competitive to Honda. Several issues arise here. There is no contract between Google and the searcher that their search will provide exactly what they are looking for. Google is not a finder of truth. Google is an advertising business, a customer-salesman matching business, and it continues to attract customers not because it is a purveyor of truth, but because it invariably helps people to find what they need, which is in many circumstances different from what they are looking for. The implication of the ruling is that there is some contract that has been breached, or some duty that has been abrogated, in this ‘deception’.