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Nokia: Running in molasses
Every time I think about Nokia and Symbian, I can't help picturing a man knee-deep in molasses, running as fast as he can. He's working up a sweat, thrashing and stumbling forward, and proudly points out that for someone knee-deep in molasses he's making really good time.
That thought came to me several times during a briefing day that Nokia and the new Symbian Foundation held recently in San Francisco. A recurring theme was a deeply earnest discussion of how big and complex their business is, and how proud they are that despite the complexity they can make forward progress. For example:
Charles Davies, CTO of the new foundation, pointed out to us that Symbian OS has about 450,000 source files. That's right, half a million files. They're organized into 85 "packages," all of which have been charted out in a diagram that will be posted soon on the foundation's website. Davies was proud that the diagram is in SVG format, so you can zoom in on it and see that "this is an architecture that's not just a plateful of spaghetti."
The diagram looks a bit like a plateful of very colorful spaghetti (although in fairness to Charles, that's true of every OS architecture diagram I've ever seen). Anyway, the big takeaway was how huge the OS is.
Davies talked about the substantial challenges involved in open sourcing a code base that large. He said it will take up to another two years before all of the code is released under the Eclipse license. In the meantime, a majority of the code on launch day of the foundation will be in a more restrictive license that requires registration and a payment of $1,500 for access. There's also a small amount of third party copyrighted code within Symbian, and the foundation is trying to either get the rights to that code, or figure a way to make it available in binary format.
Those are all typical problems when a project is moving to open source, and the upshot of them is that Symbian won't be able to get the full benefits of its move to open source until quite a while after the foundation is launched. What slows the process down is the amount of code that Symbian and Nokia have to move. I believe that Symbian OS is probably the largest software project ever taken from closed to open source. If you've ever dealt with moving code to open source, you'll know how staggeringly complex the legal reviews are. What Nokia and Symbian are doing is heroic, scary, and incredibly tedious. It's like, well, running in molasses.
Lee Williams, Nokia's software platform SVP who is moving over to become head of the Symbian foundation, picked up on the theme of massiveness. He said the OS is on 200 million devices, with 200 device types shipped and another 100 in development. With support for five different baseband modems, seven different processor architectures, symmetric multiprocessing, and a broad set of displays, "your options are dramatic and huge."
This sort of infrastructure is needed, he said, because IT, telecom, and the Internet "have merged almost completely.... It's the perfect storm of convergence. There's almost nothing it can't eat or it won't use." He compared its importance to the creation of movable type, color palettes, and the Renaissance.
He noted that some people think the Symbian Foundation is a response to Android and other competitive moves, but said the company can't move that fast, and actually the change was in the works long before Google announced its software.
At dinner, I had a chance to chat with one of the Nokia managers. He was kind enough to let me play around with a pre-release N97 (more on that below), and the discussion gravitated to the iPhone. He told me how excited he is by the many new products Nokia has in the labs but can't talk about yet, and expressed some frustration that people don't understand why it takes time for Nokia to respond to changes in the market. He described Nokia as a giant ship. "It takes a long time to turn it, but when we do..." he said ominously, and then reminded me that Netscape once had a lead over Microsoft before it was crushed.
The problem with talking to the folks from Nokia is that you're never sure what they believe vs. what's the official story they're trying to put out in the market. They're disciplined enough that they can stay on message quite well, and in most conversations they focus on talking about what they're doing rather than asking for feedback or getting into a two-way conversation.
So I'll assume that Nokia was being serious. In that case, let's look at some financials from 1997 (Netscape vs. Microsoft) and 2007 (Apple vs. Nokia):
All figures in millions of dollars.
Don't worry too much about revenue and net income; those are usually tied up by the ongoing operations of each company. The line I want you to focus on is cash. That is your ammunition -- the extra resource available to fund a big marketing campaign, or a new product development program, or an acquisition of an innovative new technology. Microsoft had 46 times more cash than Netscape in 1997, and it wasn't seriously threatened in any of its other core businesses. It could, and did, spend Netscape into the ground.
Apple has about the same cash hoard as Nokia. Much more importantly, Apple can focus that cash on a narrower battlefront. Its situation relative to Windows is relatively safe. Although Microsoft can never be ignored, it is innovating so slowly that Apple can take some profit from its PC business to fund other things. The music player business is also stable; although it's not growing like it used to, no one has come close to matching the integration of the iPod and iTunes. So Apple is free to spend huge wads of cash to establish its new iPhone business. It can pick the countries and vertical usages it wants to dominate, and as long as it doesn't do too many things at once, it can outspend almost any competitor.
Nokia, on the other hand, has battlefields everywhere:
--In mobile phones it's fighting Samsung, LG, and SonyEricsson, and a badly wounded (therefore desperate) Motorola.
--In entertainment smartphones it's fighting Apple.
--In communicators it's fighting RIM.
--In OS it's fighting Google, Microsoft, etc.
--In online services it's fighting Google, Yahoo, Microsoft, etc.
As Nokia EVP Anssi Vanjoki put it recently (link):
Sweet! He calls out Google and says he'll beat them in their core business. It's a noble effort. I love the company's ambition. But does Nokia have the resources to fight all those battles at once?
If the folks at Nokia really think they are well positioned to crush Apple, they need to go re-read The Innovator's Dilemma. Being big is not a benefit in a rapidly-changing market with emerging segments. A big company can't respond nimbly to that sort of change, and the segments attacked by new entrants are usually too small to justify huge investment by an incumbent. So new challengers like Apple and RIM pop up all around you, you gradually shed little chunks of market share, and you complain that people don't understand how powerful your core business is.
I am not at all saying that Nokia is doomed. They are an outstanding company, with smart people, a great brand, and enormous strengths. But they need to understand that turning the battleship a little faster won't win the war. Nokia's smartphone competitors are not standing in molasses; they won't stay still long enough for the 16-inch guns to be pointed at them. More importantly, the competitors on the services side breed like vampire rabbits. By the time you blow away a clutch of them, three dozen more have hatched and are sucking blood from the other side of the ship.
To succeed in smartphones, I think Nokia needs to start creating the sort of integrated software + hardware solutions that the smartphone winners excel at. And on the services side, it needs to start breeding its own killer rabbits (small entrepreneurial experiments that move fast and die quickly if they fail). So far what I think I see looks like a more design-savvy version of the smartphone business of Samsung (throw hardware at the wall and see what sticks) coupled with an effort to create a 16-inch cannon of services.
That's probably not enough to win in the long run. Nokia still has a lot of time to get it right. But do they really understand what needs to change? I can't tell, because all I usually get from them is monologues on how big their business is and how much cool stuff they have in the lab.
=====
A few other tidbits from the day...
N97: Second cousin twice removed of the Revo. I got a chance to play with a pre-release N97, Nokia's upcoming qwerty phone. The screen slides sideways to reveal a little keyboard underneath.
The look and size of the device reminded me a little bit of the old Psion Revo, although it's a pretty distant echo. The sliding process of the screen has a very nice feel to it; it's the sort of physical detail that Nokia excels at. Even in a pre-release state, the phone felt nice and solid in my hand.
The software needs a lot more work, but they admitted that. It's a pre-release device. No worries at this point.
As for the keyboard, I thought it was mediocre. The keys, and especially the microscopic letters on them, are a little too small for my taste (I have big thumbs). Typing was slower than I expect on a thumb keyboard. I'd put it about on a par with the Blackberry Storm (that's the Blackberry with the on-screen keyboard). The Storm has bigger letters than the N97, and unlike David Pogue I like the tactile feedback when you tap on its screen, although it is not as good as a real keyboard.
So the N97 has real keys but they're too tiny, and the Storm has bigger keys but they're not real. The tiebreaker is the software -- the Storm is notoriously unstable (it took me about 40 seconds to crash it). I think neither product is ready for the market yet. Unfortunately for RIM, the Storm is already shipping.
The destiny of Trolltech. About a year ago, when Nokia purchased Trolltech, I wondered what they were going to do with it (link). Now we know -- Trolltech's Qt software layer is going to become a graphics layer for Symbian. No word on what happens to Trolltech's other products.
That's nice, but what's it good for? Symbian is adding symmetric multiprocessing to the OS. In a session discussing the change, a member of the audience asked what you'd use symmetric multiprocessing for on a mobile device.
Long pause. "Well, some games use it..." Another long pause.
This is the difficulty of taking a technology-only approach when talking to developers. Although software developers are technophiles, what they really care about is what sort of cool products you can enable them to build. If your feature doesn't let them do something cool, they won't care about it.
(By the way, according to an article here, the benefit will be in performance tuning and battery life -- critical to handset vendors, but sanitation issues to application developers.)
Some alternate opinions. Some other people briefed by Nokia are not as worried as me about the molasses thing. In the interest of balance, here are a few examples:
Commentary from SymbianOne (link).
Fabrizio over at Funambol (link).
SonyEricsson on the event (link). (Never mind, that was a report from 2003. I am so embarrassed.)
That thought came to me several times during a briefing day that Nokia and the new Symbian Foundation held recently in San Francisco. A recurring theme was a deeply earnest discussion of how big and complex their business is, and how proud they are that despite the complexity they can make forward progress. For example:
Charles Davies, CTO of the new foundation, pointed out to us that Symbian OS has about 450,000 source files. That's right, half a million files. They're organized into 85 "packages," all of which have been charted out in a diagram that will be posted soon on the foundation's website. Davies was proud that the diagram is in SVG format, so you can zoom in on it and see that "this is an architecture that's not just a plateful of spaghetti."
The diagram looks a bit like a plateful of very colorful spaghetti (although in fairness to Charles, that's true of every OS architecture diagram I've ever seen). Anyway, the big takeaway was how huge the OS is.
Davies talked about the substantial challenges involved in open sourcing a code base that large. He said it will take up to another two years before all of the code is released under the Eclipse license. In the meantime, a majority of the code on launch day of the foundation will be in a more restrictive license that requires registration and a payment of $1,500 for access. There's also a small amount of third party copyrighted code within Symbian, and the foundation is trying to either get the rights to that code, or figure a way to make it available in binary format.
Those are all typical problems when a project is moving to open source, and the upshot of them is that Symbian won't be able to get the full benefits of its move to open source until quite a while after the foundation is launched. What slows the process down is the amount of code that Symbian and Nokia have to move. I believe that Symbian OS is probably the largest software project ever taken from closed to open source. If you've ever dealt with moving code to open source, you'll know how staggeringly complex the legal reviews are. What Nokia and Symbian are doing is heroic, scary, and incredibly tedious. It's like, well, running in molasses.
Lee Williams, Nokia's software platform SVP who is moving over to become head of the Symbian foundation, picked up on the theme of massiveness. He said the OS is on 200 million devices, with 200 device types shipped and another 100 in development. With support for five different baseband modems, seven different processor architectures, symmetric multiprocessing, and a broad set of displays, "your options are dramatic and huge."
This sort of infrastructure is needed, he said, because IT, telecom, and the Internet "have merged almost completely.... It's the perfect storm of convergence. There's almost nothing it can't eat or it won't use." He compared its importance to the creation of movable type, color palettes, and the Renaissance.
He noted that some people think the Symbian Foundation is a response to Android and other competitive moves, but said the company can't move that fast, and actually the change was in the works long before Google announced its software.
At dinner, I had a chance to chat with one of the Nokia managers. He was kind enough to let me play around with a pre-release N97 (more on that below), and the discussion gravitated to the iPhone. He told me how excited he is by the many new products Nokia has in the labs but can't talk about yet, and expressed some frustration that people don't understand why it takes time for Nokia to respond to changes in the market. He described Nokia as a giant ship. "It takes a long time to turn it, but when we do..." he said ominously, and then reminded me that Netscape once had a lead over Microsoft before it was crushed.
The problem with talking to the folks from Nokia is that you're never sure what they believe vs. what's the official story they're trying to put out in the market. They're disciplined enough that they can stay on message quite well, and in most conversations they focus on talking about what they're doing rather than asking for feedback or getting into a two-way conversation.
So I'll assume that Nokia was being serious. In that case, let's look at some financials from 1997 (Netscape vs. Microsoft) and 2007 (Apple vs. Nokia):
All figures in millions of dollars.
Don't worry too much about revenue and net income; those are usually tied up by the ongoing operations of each company. The line I want you to focus on is cash. That is your ammunition -- the extra resource available to fund a big marketing campaign, or a new product development program, or an acquisition of an innovative new technology. Microsoft had 46 times more cash than Netscape in 1997, and it wasn't seriously threatened in any of its other core businesses. It could, and did, spend Netscape into the ground.
Apple has about the same cash hoard as Nokia. Much more importantly, Apple can focus that cash on a narrower battlefront. Its situation relative to Windows is relatively safe. Although Microsoft can never be ignored, it is innovating so slowly that Apple can take some profit from its PC business to fund other things. The music player business is also stable; although it's not growing like it used to, no one has come close to matching the integration of the iPod and iTunes. So Apple is free to spend huge wads of cash to establish its new iPhone business. It can pick the countries and vertical usages it wants to dominate, and as long as it doesn't do too many things at once, it can outspend almost any competitor.
Nokia, on the other hand, has battlefields everywhere:
--In mobile phones it's fighting Samsung, LG, and SonyEricsson, and a badly wounded (therefore desperate) Motorola.
--In entertainment smartphones it's fighting Apple.
--In communicators it's fighting RIM.
--In OS it's fighting Google, Microsoft, etc.
--In online services it's fighting Google, Yahoo, Microsoft, etc.
As Nokia EVP Anssi Vanjoki put it recently (link):
There’s a company that says they can index the world; we are going to go deeper - we are going to coordinate the world.
Sweet! He calls out Google and says he'll beat them in their core business. It's a noble effort. I love the company's ambition. But does Nokia have the resources to fight all those battles at once?
If the folks at Nokia really think they are well positioned to crush Apple, they need to go re-read The Innovator's Dilemma. Being big is not a benefit in a rapidly-changing market with emerging segments. A big company can't respond nimbly to that sort of change, and the segments attacked by new entrants are usually too small to justify huge investment by an incumbent. So new challengers like Apple and RIM pop up all around you, you gradually shed little chunks of market share, and you complain that people don't understand how powerful your core business is.
I am not at all saying that Nokia is doomed. They are an outstanding company, with smart people, a great brand, and enormous strengths. But they need to understand that turning the battleship a little faster won't win the war. Nokia's smartphone competitors are not standing in molasses; they won't stay still long enough for the 16-inch guns to be pointed at them. More importantly, the competitors on the services side breed like vampire rabbits. By the time you blow away a clutch of them, three dozen more have hatched and are sucking blood from the other side of the ship.
To succeed in smartphones, I think Nokia needs to start creating the sort of integrated software + hardware solutions that the smartphone winners excel at. And on the services side, it needs to start breeding its own killer rabbits (small entrepreneurial experiments that move fast and die quickly if they fail). So far what I think I see looks like a more design-savvy version of the smartphone business of Samsung (throw hardware at the wall and see what sticks) coupled with an effort to create a 16-inch cannon of services.
That's probably not enough to win in the long run. Nokia still has a lot of time to get it right. But do they really understand what needs to change? I can't tell, because all I usually get from them is monologues on how big their business is and how much cool stuff they have in the lab.
=====
A few other tidbits from the day...
N97: Second cousin twice removed of the Revo. I got a chance to play with a pre-release N97, Nokia's upcoming qwerty phone. The screen slides sideways to reveal a little keyboard underneath.
The look and size of the device reminded me a little bit of the old Psion Revo, although it's a pretty distant echo. The sliding process of the screen has a very nice feel to it; it's the sort of physical detail that Nokia excels at. Even in a pre-release state, the phone felt nice and solid in my hand.
The software needs a lot more work, but they admitted that. It's a pre-release device. No worries at this point.
As for the keyboard, I thought it was mediocre. The keys, and especially the microscopic letters on them, are a little too small for my taste (I have big thumbs). Typing was slower than I expect on a thumb keyboard. I'd put it about on a par with the Blackberry Storm (that's the Blackberry with the on-screen keyboard). The Storm has bigger letters than the N97, and unlike David Pogue I like the tactile feedback when you tap on its screen, although it is not as good as a real keyboard.
So the N97 has real keys but they're too tiny, and the Storm has bigger keys but they're not real. The tiebreaker is the software -- the Storm is notoriously unstable (it took me about 40 seconds to crash it). I think neither product is ready for the market yet. Unfortunately for RIM, the Storm is already shipping.
The destiny of Trolltech. About a year ago, when Nokia purchased Trolltech, I wondered what they were going to do with it (link). Now we know -- Trolltech's Qt software layer is going to become a graphics layer for Symbian. No word on what happens to Trolltech's other products.
That's nice, but what's it good for? Symbian is adding symmetric multiprocessing to the OS. In a session discussing the change, a member of the audience asked what you'd use symmetric multiprocessing for on a mobile device.
Long pause. "Well, some games use it..." Another long pause.
This is the difficulty of taking a technology-only approach when talking to developers. Although software developers are technophiles, what they really care about is what sort of cool products you can enable them to build. If your feature doesn't let them do something cool, they won't care about it.
(By the way, according to an article here, the benefit will be in performance tuning and battery life -- critical to handset vendors, but sanitation issues to application developers.)
Some alternate opinions. Some other people briefed by Nokia are not as worried as me about the molasses thing. In the interest of balance, here are a few examples:
Commentary from SymbianOne (link).
Fabrizio over at Funambol (link).
Proposition 8 and community review sites: Everyone loses
What happens to a community review site when members of the community use it as a weapon against people they don't approve of? Sites like Yelp and Citysearch are finding out, as users target businesses that supported California's Proposition 8 (the state's recently-enacted gay marriage ban). The results so far are not pretty. They illustrate some of the weaknesses of online reviews, and the complexities of managing a community site.
It's a learning opportunity for any company that relies on online reviews or runs a website that allows user comments. I wrote about it over on the Rubicon site (link).
It's a learning opportunity for any company that relies on online reviews or runs a website that allows user comments. I wrote about it over on the Rubicon site (link).
Mobile data: Be careful what you wish for
The consensus around the industry seems to be that mobile data is starting to take off. Text messaging is still the leading data function, accounting for about 65% of total data revenue, according to Informa (link). But Nielsen reports a steady rise in the number of mobile Internet subscribers (link), and a faster increase in revenue (implying that those who do use the mobile web are increasing their online activity). Young people are apparently important drivers in the increase, with 37% of US adults age 18 to 24 using their phones to access the web, according to the Mobile Marketing Association (link).
The cause is supposedly not just the iPhone and other smartphones; what I'm hearing from multiple companies is that web access and other data usage is rising even on feature phones.
This increased activity is creating an uncomfortable problem for some mobile operators: it's apparently overloading their networks. There have been predictions for years that this could happen -- a report from 2005 pointed out that the typical 3G network would be overloaded if 40% of subscribers used video just eight minutes a day (link). It predicted potential traffic overload by 2007. There have been charges that service problems on the AT&T network in the US have been caused by the iPhone (link).
In the UK, the BBC's popular iPlayer streaming video service is supposedly threatening the economics of even wired ISPs (link -- very interesting article), so it's easy to imagine what it could do to mobile networks if broadly deployed. Supposedly the mobile version of iPlayer for Nokia S60 is set up to stream only over WiFi, but the discussion here (link) points out that restriction is likely to be evaded by enterprising users.
It's very hard to confirm exactly what mobile data is doing to the networks because the operators don't like to discuss this sort of thing in public. But the number of data-capable phones is definitely growing faster than network capacity, so overload is just a matter of time. I've gotten several off-the-record comments from friends in the industry saying that the operators are worried about the problem and are quietly trying to throttle traffic, especially to online multimedia services that consume a lot of bandwidth.
The problem is complicated by the all-you-can-eat data plans that have been adopted by many operators. If you're charging people for the amount of data they consume, their data use becomes self-limiting. But limited plans are unpopular with users, who get practically unlimited data on their PC web connections. When you tell people that they can have the web on their mobiles, they expect to be able to use it like the web they already know.
So the operators are stuck with either throwing out people who use the "unlimited" network heavily, or covertly degrading the quality of their service so they'll stop using so much data. Both practices are very dangerous to their long-term prospects.
The problem is that the people who use a lot of data aren't just the freakish fanatics that the industry would like to imagine them as. They are Internet power users, a group that we labeled the Most Frequent Contributors (MFCs) when we recently researched Internet usage patterns at Rubicon (link). They don't just use a lot of video -- they are generally very involved in all sorts of online activities. Most importantly for the operators, they write the majority of the reviews and user comments posted online.
So, if you kick a power user off your network, or throttle their performance, they are extremely likely to write about you online. Extensively. Where their complaints will be read by most other Internet users. Check out the comments here and here if you want a sample.
Systematically punishing your noisiest customers is not the way to build a sustainable business.
What else can the operators do?
I wish there were some magical formulation that would make users happy and operators financially sound. But there isn't, because the problem is inherent to the way a wireless network operates. And as the installed base of smartphones grows, and video and other multimedia services increase in popularity, the problem is only going to get worse.
The most damaging approach is that one that operators seem to be leaning toward now, covertly throttling traffic. They can probably get away with that for a while, but eventually people online will compare notes, figure out that network performance is being systematically distorted -- and then the class-action lawyers (in the US) and government regulators (in Europe) will be unleashed.
Honesty is the best policy. Ultimately I think there's no alternative to moving to pricing plans that acknowledge the physical limits on the wireless Internet. That, and the operators need to resist the temptation of advertising their Internet as identical to the wired Internet. The MFCs are technically sophisticated, and capable of understanding the need for tiered pricing if it's explained to them clearly and honestly. What causes endless friction is the hypocrisy of calling something "unlimited" and then limiting it.
=====
Belated thanks to Voip Survivor for featuring my post on app stores in the Carnival of the Mobilists (link).
The cause is supposedly not just the iPhone and other smartphones; what I'm hearing from multiple companies is that web access and other data usage is rising even on feature phones.
This increased activity is creating an uncomfortable problem for some mobile operators: it's apparently overloading their networks. There have been predictions for years that this could happen -- a report from 2005 pointed out that the typical 3G network would be overloaded if 40% of subscribers used video just eight minutes a day (link). It predicted potential traffic overload by 2007. There have been charges that service problems on the AT&T network in the US have been caused by the iPhone (link).
In the UK, the BBC's popular iPlayer streaming video service is supposedly threatening the economics of even wired ISPs (link -- very interesting article), so it's easy to imagine what it could do to mobile networks if broadly deployed. Supposedly the mobile version of iPlayer for Nokia S60 is set up to stream only over WiFi, but the discussion here (link) points out that restriction is likely to be evaded by enterprising users.
It's very hard to confirm exactly what mobile data is doing to the networks because the operators don't like to discuss this sort of thing in public. But the number of data-capable phones is definitely growing faster than network capacity, so overload is just a matter of time. I've gotten several off-the-record comments from friends in the industry saying that the operators are worried about the problem and are quietly trying to throttle traffic, especially to online multimedia services that consume a lot of bandwidth.
The problem is complicated by the all-you-can-eat data plans that have been adopted by many operators. If you're charging people for the amount of data they consume, their data use becomes self-limiting. But limited plans are unpopular with users, who get practically unlimited data on their PC web connections. When you tell people that they can have the web on their mobiles, they expect to be able to use it like the web they already know.
So the operators are stuck with either throwing out people who use the "unlimited" network heavily, or covertly degrading the quality of their service so they'll stop using so much data. Both practices are very dangerous to their long-term prospects.
The problem is that the people who use a lot of data aren't just the freakish fanatics that the industry would like to imagine them as. They are Internet power users, a group that we labeled the Most Frequent Contributors (MFCs) when we recently researched Internet usage patterns at Rubicon (link). They don't just use a lot of video -- they are generally very involved in all sorts of online activities. Most importantly for the operators, they write the majority of the reviews and user comments posted online.
So, if you kick a power user off your network, or throttle their performance, they are extremely likely to write about you online. Extensively. Where their complaints will be read by most other Internet users. Check out the comments here and here if you want a sample.
Systematically punishing your noisiest customers is not the way to build a sustainable business.
What else can the operators do?
I wish there were some magical formulation that would make users happy and operators financially sound. But there isn't, because the problem is inherent to the way a wireless network operates. And as the installed base of smartphones grows, and video and other multimedia services increase in popularity, the problem is only going to get worse.
The most damaging approach is that one that operators seem to be leaning toward now, covertly throttling traffic. They can probably get away with that for a while, but eventually people online will compare notes, figure out that network performance is being systematically distorted -- and then the class-action lawyers (in the US) and government regulators (in Europe) will be unleashed.
Honesty is the best policy. Ultimately I think there's no alternative to moving to pricing plans that acknowledge the physical limits on the wireless Internet. That, and the operators need to resist the temptation of advertising their Internet as identical to the wired Internet. The MFCs are technically sophisticated, and capable of understanding the need for tiered pricing if it's explained to them clearly and honestly. What causes endless friction is the hypocrisy of calling something "unlimited" and then limiting it.
=====
Belated thanks to Voip Survivor for featuring my post on app stores in the Carnival of the Mobilists (link).
The Influencers are dead. Or not.
As we continue to sort through the results from Rubicon's recent research on Internet usage (link), we're finding interesting insights on how the web is developing. One insight is around the concept of Influencers.
When we first looked at the results of the survey, we thought they confirmed the Influencer idea. But after some more digging, our thinking has evolved. There are basically two schools of thought online about the influencing process. Some people say a small group of Influencers drive most consumer decisions. Others argue that the Influencer idea is a fantasy, and that ideas spread through society from random starting points, without a hierarchy.
The evidence from our research shows that both groups are wrong in important ways, especially when the web is taken into consideration. That has big implications for how companies market online, so we wrote about it. If you're interested in learning more, you can read the analysis on Rubicon's website here.
When we first looked at the results of the survey, we thought they confirmed the Influencer idea. But after some more digging, our thinking has evolved. There are basically two schools of thought online about the influencing process. Some people say a small group of Influencers drive most consumer decisions. Others argue that the Influencer idea is a fantasy, and that ideas spread through society from random starting points, without a hierarchy.
The evidence from our research shows that both groups are wrong in important ways, especially when the web is taken into consideration. That has big implications for how companies market online, so we wrote about it. If you're interested in learning more, you can read the analysis on Rubicon's website here.
Everything you always wanted to know about web community, and then some
It's been a long time since I posted, and I apologize. In addition to doing a bunch of work for clients at Rubicon, I have been preoccupied with a big strategy project we just finished, on online community. We released the results today, and I think you might find them interesting, so here's a summary.
In our strategy work with tech companies, we're frequently asked about web communities -- how they operate, what they can and can't do, and how a company should work with them. The companies we deal with generally fall into three camps when it comes to community:
--Many companies are still learning about online community and don't know what to do or what to expect.
--Some companies have already tried some online community activity, but were disappointed -- often because they attracted only a few enthusiasts rather than the masses of end users they expected.
--And of course some companies run successful web communities, either as a sideline or as their core business. They're very hungry for information on how other communities operate, and insights on what they could do better.
To help deal with all of those questions, we conducted a study of online community in the US. We surveyed more than 3,000 US web users on their overall internet usage, and then dived deep on their use of online communities and what impact those communities have on their lives. I know some of you will be disappointed that the survey is US-only; we'd be delighted to repeat the research in other parts of the world if anyone wants to sponsor it ;-)
Meanwhile, here are some of the key things we learned:
--Small groups of enthusiasts dominate most online conversations, but that doesn't mean online communities matter only to a narrow segment of people. Most web users read community content rather than contributing to it, and are strongly influenced by the things they see there, especially product reviews and recommendations. Those reviews are now second only to word of mouth as a purchase influencer for web users.
--Because most web users are voyeurs more than contributors, if you're running an online discussion, you should think of it as theatre -- it's a performance in which the community leader(s) interact with a small group of contributors for the education and amusement of the rest of us. All the web's a stage, but we're not all players in it. At least not equal players.
--This means companies that turn away from web communities because they're populated mostly by enthusiasts are missing the point. They've mistaken their fellow actors for the audience. If you're running a community, you need to take care of the active participants in a community so that the rest of the audience will watch and learn.
--If a company needs more incentive to work with the Internet, it turns out that the web has also become the number two source of product support information for web users. After checking the manual, web users are more likely to check a company's website for information or search the web than they are to take traditional steps like calling the manufacturer or asking a dealer. That will be comforting to many companies that want to reduce their support costs, since phone support is very expensive. But how many of those companies have bothered to put detailed support information online, and make sure it's well indexed by the search engines?
--There are an enormous number of tidbits in the study regarding web use. A few items that stood out to me include:
A full report on the findings is available in PDF format here (link). I know many people don't like to read PDFs online, and besides you can't easily comment on them or link to sections in them. So we've also posted the report online, cut into several sections for easy reading:
Part one summarizes the report, and gives detailed information on the use of community online, and what that means for business (link). This is the section that gives information on community usage rates and the "most frequent contributors" who dominate online conversations.
Part two discusses the leading web destinations in the US, measured in several ways, and discusses the role of community in them (link). This is where you'll find learn about the remarkable membership rate of Classmates.com, the #3 social community site in the US when measured by profiles. We also answer questions like: "Is Facebook more popular than MySpace?" "What do web users value more, Wikipedia or NYTimes.com?" and "What are the top five most-visited types of website?"
Part three talks about the role of community sites in the social lives of Americans (link). This is where we compare Republicans and Democrats online, and look at how different age groups use the social networking sites. We answer questions like: "How many young people lie about their age to get access to websites?" and "How many web users create fake identities online?"
What does it mean to mobile?
I always get that question when I post something that's not directly related to the mobile industry. In part, my answer is that I think this information's useful to anyone who's interested in technology. You're soaking in the internet, and it's good to understand how it works.
But community users don't limit themselves to only PC access, so online community will have a big effect on the mobile industry. It's important to understand what's really happening in the wired internet so you can sort out which mobile web opportunities have the best prospects. For example, I saw a presentation by someone senior at a mobile company the other day, and he was touting the importance of Twitter as a driver for the mobile web. I almost laughed out loud, because I had just been working on our report, and I knew how tiny the Twitter audience is. It's a classic case of people in the tech industry assuming something they use a lot is also being adopted by the masses.
That's not to beat up on Twitter specifically; they have a great base of users. But mainstream they ain't.
The other thing mobile people should think about a lot is the huge role that young people play in the generation of online content. As a group they are vastly more active online than older people. We aren't sure exactly what the cause is. Some of it may be that high school and college students just have a lot more time on their hands, and they spend some of it posting to the web. But probably also some of it is generational. Whatever the cause, it's likely that young users will be some of the heaviest drivers of use of the mobile web, especially the uploading of content and comments.
Not that Apple needs another advantage, but that probably plays to the strengths of the iPhone, because Apple has such a good franchise with young people in the US. It also helps to explain why RIM is trying to reach out to young people. In Europe, I think Nokia and SonyEricsson have a better chance at those users, because their brands are strong with young people. But they'll need the right products as well, which is a subject for other posts...
In our strategy work with tech companies, we're frequently asked about web communities -- how they operate, what they can and can't do, and how a company should work with them. The companies we deal with generally fall into three camps when it comes to community:
--Many companies are still learning about online community and don't know what to do or what to expect.
--Some companies have already tried some online community activity, but were disappointed -- often because they attracted only a few enthusiasts rather than the masses of end users they expected.
--And of course some companies run successful web communities, either as a sideline or as their core business. They're very hungry for information on how other communities operate, and insights on what they could do better.
To help deal with all of those questions, we conducted a study of online community in the US. We surveyed more than 3,000 US web users on their overall internet usage, and then dived deep on their use of online communities and what impact those communities have on their lives. I know some of you will be disappointed that the survey is US-only; we'd be delighted to repeat the research in other parts of the world if anyone wants to sponsor it ;-)
Meanwhile, here are some of the key things we learned:
--Small groups of enthusiasts dominate most online conversations, but that doesn't mean online communities matter only to a narrow segment of people. Most web users read community content rather than contributing to it, and are strongly influenced by the things they see there, especially product reviews and recommendations. Those reviews are now second only to word of mouth as a purchase influencer for web users.
--Because most web users are voyeurs more than contributors, if you're running an online discussion, you should think of it as theatre -- it's a performance in which the community leader(s) interact with a small group of contributors for the education and amusement of the rest of us. All the web's a stage, but we're not all players in it. At least not equal players.
--This means companies that turn away from web communities because they're populated mostly by enthusiasts are missing the point. They've mistaken their fellow actors for the audience. If you're running a community, you need to take care of the active participants in a community so that the rest of the audience will watch and learn.
--If a company needs more incentive to work with the Internet, it turns out that the web has also become the number two source of product support information for web users. After checking the manual, web users are more likely to check a company's website for information or search the web than they are to take traditional steps like calling the manufacturer or asking a dealer. That will be comforting to many companies that want to reduce their support costs, since phone support is very expensive. But how many of those companies have bothered to put detailed support information online, and make sure it's well indexed by the search engines?
--There are an enormous number of tidbits in the study regarding web use. A few items that stood out to me include:
- -About a quarter of US web users say they have dated someone they first met online.
- -Although Twitter and SecondLife get a lot of press, their audiences are very narrow when you compare them to major social sites like MySpace, Facebook, and even LinkedIn.
- -Yahoo is the second most valued website in the minds of US web users, after Google. It's ahead of major web properties like YouTube and Facebook. All of the negative press about Yahoo sometimes makes people forget how strong its user base is.
- -The major social networks are much more satisfying and useful to teens than they are to adults. In fact, satisfaction with the social sites declines steadily after age 14.
- -Since we're coming up on an election in the US, it's interesting to look at political ties on the Internet. Democrats are more active online than Republicans, and say the web has a greater influence on their behavior, including voting.
- -Young people dominate online conversations, with people 22 and under producing about half of all user-generated content and comments. So if you sometimes feel like you're dealing with kids online, it may be because you are.
A full report on the findings is available in PDF format here (link). I know many people don't like to read PDFs online, and besides you can't easily comment on them or link to sections in them. So we've also posted the report online, cut into several sections for easy reading:
Part one summarizes the report, and gives detailed information on the use of community online, and what that means for business (link). This is the section that gives information on community usage rates and the "most frequent contributors" who dominate online conversations.
Part two discusses the leading web destinations in the US, measured in several ways, and discusses the role of community in them (link). This is where you'll find learn about the remarkable membership rate of Classmates.com, the #3 social community site in the US when measured by profiles. We also answer questions like: "Is Facebook more popular than MySpace?" "What do web users value more, Wikipedia or NYTimes.com?" and "What are the top five most-visited types of website?"
Part three talks about the role of community sites in the social lives of Americans (link). This is where we compare Republicans and Democrats online, and look at how different age groups use the social networking sites. We answer questions like: "How many young people lie about their age to get access to websites?" and "How many web users create fake identities online?"
What does it mean to mobile?
I always get that question when I post something that's not directly related to the mobile industry. In part, my answer is that I think this information's useful to anyone who's interested in technology. You're soaking in the internet, and it's good to understand how it works.
But community users don't limit themselves to only PC access, so online community will have a big effect on the mobile industry. It's important to understand what's really happening in the wired internet so you can sort out which mobile web opportunities have the best prospects. For example, I saw a presentation by someone senior at a mobile company the other day, and he was touting the importance of Twitter as a driver for the mobile web. I almost laughed out loud, because I had just been working on our report, and I knew how tiny the Twitter audience is. It's a classic case of people in the tech industry assuming something they use a lot is also being adopted by the masses.
That's not to beat up on Twitter specifically; they have a great base of users. But mainstream they ain't.
The other thing mobile people should think about a lot is the huge role that young people play in the generation of online content. As a group they are vastly more active online than older people. We aren't sure exactly what the cause is. Some of it may be that high school and college students just have a lot more time on their hands, and they spend some of it posting to the web. But probably also some of it is generational. Whatever the cause, it's likely that young users will be some of the heaviest drivers of use of the mobile web, especially the uploading of content and comments.
Not that Apple needs another advantage, but that probably plays to the strengths of the iPhone, because Apple has such a good franchise with young people in the US. It also helps to explain why RIM is trying to reach out to young people. In Europe, I think Nokia and SonyEricsson have a better chance at those users, because their brands are strong with young people. But they'll need the right products as well, which is a subject for other posts...
Dramatic Updo
Updos continue to rule this season. Here is a dramatic style that will suit any black bride.
