SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for May, 2010

Netflix’s Movie Cloud is Moving into the Amazon Cloud

Posted by Bob Warfield on May 7, 2010

Netfllix has always been an extremely progressive company.  I know the founders, Marc Randolph and Reed Hastings well, and many of the employees too.  There is an amazing amount of brainpower behind the scenes there and it shows with their great products and great story.

I read with interest Larry Dignan’s piece about their usage of Amazon Web Services to move key parts of the Netflix infrastructure into the Cloud.  It doesn’t seem that long since I remember being asked to visit Netflix and tell them about my company’s experience moving into the Amazon Cloud.  I expected to meet in Reed Hasting’s office with perhaps a couple of people, but was surprised to find they had assembled a small auditorium of developers to hear the story.  I spent a little over an hour telling them how we’d done it and answering questions and then went away.

As an aside, this is how smart companies go to school–by sharing information broadly rather than hoarding it at the top, and by bringing in outsiders who can add to the collective knowledge pool.  When was the last time your company did something like this?  It’s so easy here in Silicon Valley, which is dense with sharp insights and hard-won experience.  Take advantage of it, it’s the least you can do after paying the high cost of living here!

I admit, I wondered whether they’d carry it off or even get started, or whether they were just curious.  Moving to the Cloud is a big step for a big thriving company.  There are a lot of moving parts that have to be orchestrated for it to be successful.  But as I said, they are an extremely progressive company with a lot of very bright people.  Color me very impressed with the speed at which they were able to move.

Cool beans!

PS  Amazon has a press release / case study with more detail on just what Netflix is doing.

Posted in amazon, cloud, ec2, saas | 2 Comments »

Tim Bray’s Schtick: He Likes 3270 Green Screens as UI

Posted by Bob Warfield on May 6, 2010

So I’m reading Bray’s blog as usual, and I come across his argument against Flash that I see occasionally–namely, that all Flash UI sucks.

Why?  Here are his words:

What’s not to like, then? Well, the user experience, which in my experience is fourth-rate for anything but games; No “Back” button, feaugh. And of the course the fact that it remains essentially proprietary.

So, I use a Flash-blocker every day, and I am not a friend of Flash inside Google, but none of my arguments have anything to do with being part of the Web, or not.

The closest thing to an explanation is that there is no “back” button.  Hmmm, is that really the issue?  Needing to understand more, I did a search for “Tim Bray RIA”.   Sure enough, I find this article which says:

One of his points is that Rich Internet Applications aren’t worth the hype. He says that web applications are generally better than desktop applications, because they enforce simplicity and support a back button, and that users prefer them.

WTF?  Really?  All this for a frickin’ back button?

When you get down to it, Web UI sans AJAX, Flash, or some other RIA (Rich Internet Application) engine is just like the 3270 green screens of old.  It’s fill in the form and press the “Enter” button (BTW, that’s why it’s called the “Enter” button).  Yeah sure its simple.  Darned right, it doesn’t get much simpler.  And for many things, it’s just exactly the right thing.  But heck, if its the only way to do everything we’re really selling the web short.  It’s the old when you have a hammer everything is a nail.  I just can’t get my head around the idea that “web applications are generally better than desktop applications” if for no other reason than there’s so many types of user interaction that just don’t make sense for a 3270 Green Screen.

Maybe its a Learning Style thing, I dunno, but it’s not for me.  Give me a simple UI where simple makes sense and a Rich UI where that makes sense, which is a lot more places than just games.

Posted in ria, software development, user interface | 7 Comments »

What is the iPhone’s Market Share?

Posted by Bob Warfield on May 5, 2010

After my last post on the iPhone, there are still a lot of people arguing that Apple doesn’t have nearly the market share of a monopolist. 

I’ll get to that, but first, there are also a fair number of fans who are hurt that Apple may in some way be “penalized” or taken to task for having built an insanely great product.  In any such discussion, its important to remember that it isn’t illegal to have a monopoly.  Many exist.  It isn’t even “Evil”, in the Google sense.  It is only when companies abuse their monopoly in some unfair way in order to take unfair advantage of it that problems start.

OK, with that shocking moral dilemma out of the way (phew, fanboys relax!), let’s look at some market numbers.  It’s interesting to try to drill down further on the iPhone phenomenon. 

A good place to start is to ask what a Smartphone is anyway, since Apple apparently has a relatively small share of the Smartphone market.  The answer, so far as I can tell, is it is any phone that can do more than, well, be a phone.  As I suspected, not a very interesting answer, and certainly the iPhone is a Smartphone, but it is a whole lot more besides.

Smartphone OS share is one source of that 25% market share and under number we keep hearing about the iPhone:

iPhone:  17%

Symbian:  47%

Blackberry:  15%

Windows Mobile:  14%

Android:  5%

Others (such as Palm):  2%

No monopoly there.  But that’s kind of like looking at everything that has a microprocessor in it and saying because there are so many, PC’s and Mac’s have no market share.

How about the share of Internet traffic due to Smartphones?  That’s much closer to what this discussion is all about, much closer to what makes iPhones different and what I think their real market is:

Apple:  69%

RIM:  13%

HTC:  10%

Palm:  3%

Other:  5%

Wow, that’s a lot different picture, isn’t it?  Some will argue that’s just a random slice and not a market.  But Apple is monetizing that random slice like crazy in all kinds of ways, which makes it a market.  Moreover, it is access to and participation in that market that the Apple/Adobe wars are all about.  Lastly, Apple is making arbitrary rules to prohibit access by anyone that doesn’t use a very narrowly defined set of tools that happen to coincide nicely with Apple’s interests.

Mary Meeker provides another slice of numbers that tell us about Apple’s monetization of that market.  First thing she says is that mobile will shortly overtake desktop Internet use and that it is ramping much faster than the desktop did.  BTW, she attributes $8B in revenue for Q409 alone to this monetization, so its no small thing.  There’s a reason Apple’s market cap has soared.

What kinds of share numbers have led to this monetization?

  • iPhone has 54% of page views
  • It has 51% of app usage
  • 44% of all ads to Smartphones are served to iPhones, but Android is coming on strong at 42%

This is all no accident.  Until the skirmishes with Flash, I don’t think many would have argued Apple was doing anything Draconian.  They simple have a way better user experience that makes their users much more likely to participate:

  • 65% of iPhone subscribers buy music versus 35% for Smartphones in general
  • 61% buy games versus 48%
  • 58% participate in Social Networking vs 43%

If there is a category where iPhone users don’t over achieve versus the Smartphone industry average, I haven’t seen it.  Bravo Apple, we love your products!

With that said, this argument that we have to only use exactly the tools Steve Jobs likes because we might otherwise build crappy apps and damage the precious platform is just silly.  We’ve been down this road before.  It always starts out this way with Steve, and then eventually sanity prevails (or the market intrudes with competition) and the company backs off. 

Macs started with no arrow keys because they were afraid the availability of arrow keys would allow crappy apps onto the platform.  18 months later, the arrow keys were back.  Some will argue their absence was pivotal to the platform’s success, but that’s just silly. 

The Mac was introduced with great applications that showed the way.  A rush to deliver “arrow key” applications would’ve been a joke.  The platform would never have been choked by them because the people who wanted that platform wanted it precisely because they wanted what the new Mac apps had. 

If you don’t believe me, look at the early days of Windows.  There was no end of crappy software hastily ported.  Some of it had huge brand support behind it from the market leaders of the time such as Lotus (for spreadsheets) and Word Perfect (for word processors).  It didn’t matter a whit.  That software was crushed by software built right for the new platform.

Steve, you and your gang build great products for us users.  But you sure don’t think much of our ability to select those products out of the noise.  We don’t need a Big Brother to watch over us and tell us what to do.  We just want more choices, and then we’ll make the right ones.  Your customers are actually pretty smart about it.  If you think about it, that’s a good thing, isn’t it?

Related Posts

Steve Cheney writes a brilliant post about all the things Apple is doing to secure its control of the platform.  Take away–there are two key reasons to deny Flash (and other write once run everywhere tools):

-  Secure their tax on every app.  You can’t allow an app that can run other apps lest it let others sneak into the tent without paying.

-  Take shelfspace.  In the bricks and mortar world, shelfspace is a huge determiner of success.  If some of your cereals are must-haves, and you insist on stores carrying every one of them to get the must haves, then competitors have less shelf space available.  If Steve Jobs forces you to use tools that only work on the iPhone, then he ensures that the pool of scarce talent expends all of their energies on his platform first.  He hopes they will have little energy or desire to do it all over again on some other platform.

Posted in apple | 2 Comments »

Is the iPhone a Monopoly or Not?

Posted by Bob Warfield on May 5, 2010

In the Flash Wars between Apple and Adobe, many commentators have said that there is no anti-trust case because iPhone only has a 25% share.  Larry Dignan has written along those lines, for example.
 
Yet, I have to ask, a 25% share of what?  What is this market definition that they only have 25% of?  I don’t know, but I’ll bet it isn’t the real iPhone market at all.
 
What about the market of phones that can do more than phone + email (sorry, Blackberry-holics)?  What about the market for phones that can run apps?  I submit the iPhone’s share is much much higher under those definitions, and it really is a monopoly.
 
This came to mind as I was reading a number of blog posts that were all talking about how high a proportion of some business or other’s mobile traffic is iPhone.  Topix, for example, says it is 70%.  I use Google Analytics on all my own web sites, and it tells me that mobile visits are 84% iPhone.

 
That’s monopoly territory for sure.  The question is whether the definition of the market will be one the FTC finds interesting and that Apple’s lawyers can’t derail.  Certainly if it boils down to the mobile application ecosystem, I think it will be hard to argue Apple doesn’t have a monopoly.

 
Former FTC lawyer Glazer tries some fancy footwork to get around this argument when he says you can’t consider a market for smart-phone applications an Apple monopoly because its not a market that Apple is in.  But it is certainly a market Apple is making money from hand over fist.  Their desire to keep that tax in place is part of the reason they’re at war with Adobe in the first place.

 
At the same time, another former FTC policy director, David Balto, says:
What they’re doing is clearly anticompetitive…They want one superhighway and they’re the tollkeeper on that superhighway.

 
It’s been my experience that the courts have a terrible time understanding technology.  Probably this case will be no better.

Posted in apple | Leave a Comment »

 
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