Showing posts with label April 1. Show all posts
Showing posts with label April 1. Show all posts

A dissenting view on the Yahoo - New York Times merger

The reactions to the New York Times - Yahoo merger announcement this morning were predictably brutal. "The best corporate merger since AOL-TimeWarner," TechCrunch wrote. On the radio this morning, one of the commentators talked about "the blind leading the crippled," and joked that they should both merge with General Motors so we could "get all the deadwood together in one place." The impromptu picketing of Yahoo headquarters by angry Flickr users probably didn't help.

I have a different take on the deal, though. After years of failed "new media" ventures based more on hope than synergy, I think this one might actually make business sense. Here's why:

No more paid content fantasies. The Times had been headed down the road toward making its content paid-only for anyone reading more than a few articles a month. In my opinion, this was a huge roll of the dice that could have destroyed the company's long-term prospects. The Times online edition is the most popular newspaper site in the US, and has been very gradually closing the gap with CNN, the US online news leader. Moving to a paid model would have cut the Times audience very substantially, leaving some other news operation to seize the number one position. As we know from other areas of the web, there are very strong network effects online. Once the Times surrendered the online traffic lead, I think its role as the newspaper of record in the US would have gradually been lost.

No more Yahoo search fantasies. Yahoo has had a terrible time deciding what sort of company it wants to be. For a long time it was supposed to be a "new media" company, which apparently meant it had the business practices of a film studio without the cool movie premieres. Many people in Silicon Valley still think of Yahoo as the failed Google wannabe, which is kind of like criticizing Sweden for failing to be Germany.

Unfortunately, Yahoo has been feeding that comparison lately with radio ads touting the benefits of Yahoo search. One was a scenario about a woman who was able to use search to find where a movie was playing, but not the actual showing times of the movies. Let's do a reality check, gang. Have you ever looked up a movie online? Do you know how hard it is to confirm where a movie is playing without also finding the showtimes? The effect of the ad is to position Yahoo as the search engine for stupid people.

And besides, it put the focus back on search, where Yahoo is destined to be an also-ran forever. The company shouldn't drop that business (it generates a lot of cash), but it's not the future engine of Yahoo's growth.

So, what is Yahoo's future? I think its biggest strength, what we used to call in business school its "core competence," is its ability to pair brand ads with content. Yahoo is world class in its ability to work with major brand advertisers to match their online ads with words and pictures that attract the people they want to target. It's not as sexy a business as search advertising (because the revenues and growth rates are not as good), but it's a real business and Yahoo does it better than anyone else I know of.

Yahoo's challenge, in my opinion, has been that not all of its content is top quality, so some of its sites are not as attractive to advertisers as they should be. In places where Yahoo has great content, such as Yahoo Finance, the engine seems to work very nicely. In other areas, Yahoo's content is very me-too, and so are the results.

The synergy. The New York Times' challenge is that it has great content but can't make the online audience large enough to pay for its huge editorial staff (the Times currently reaches 1.25 percent of global Internet users each day, according to Alexa). Yahoo's challenge is that it has huge reach (27% daily reach of global Internet users) but inconsistent quality. Pair the Times' outstanding content with Yahoo's reach and advertising expertise, and maybe you could make the world's most powerful online publisher.

Anyway, that's what the merger's going to test.

Next steps: Clear the decks. To make the merger work, both companies are going to need to focus on what they do best, which means paring away the other businesses they've added in the past as diversification experiments. In the NYT's case, that means letting go of a lot of other media properties the company has picked up over the years. There's going to be just one national news leader, not three, and it doesn't make sense to keep on paying full editorial staffs at several different places, many of them duplicating each others' work.

And at Yahoo, that means stepping back from being an internet conglomerate. Search is important as an on-ramp to quickly get eyeballs to the content of the new Yahoo, but it's not the long-term goal in itself. A friend at Yahoo told me the other day that a third of the company would probably quit if Yahoo decided to focus on publishing. My thought: that might be better than gradually bleeding the best and the brightest throughout the company as they lose faith in Yahoo's overall direction.

A human resources executive at Apple once listened to employees complaining about a reorganization, and then said, "when the caravan starts moving, the dogs all bark." It was a heartless comment, but he had a point. In that spirit, the picketing by Flickr users is probably a sign of healthy change.

Or it would be if any of this post were true. But it's April 1, and I'm indulging in a little bit of tech industry fantasy. In this case, though, I'd call it a dream.

Memories of past April Firsts:

The tech industry bailout (link)
iPhones worn as body piercings (link)
Spitr: Twitter meets telepathy (link)
Sprint and Google, a match made in Kansas (link)

Thoughts on the tech industry bailout

I presume the big topic of discussion at the CTIA conference this week is going to be the government's emergency bailout package for the tech industry. I was surprised this morning when US Treasury Secretary Tim Geithner replaced RIM CEO Mike Lazaridis at the CTIA keynote to announce the package, and ever since I've been scrambling to sort through all the details. A lot of it's still fuzzy, but here's what I've been able to figure out so far:


--The largest single element in the bailout seems to be the $20 billion in subsidies for Motorola. I think the biggest shock here was President Obama's decision to replace Moto's co-CEO Greg Brown with Steve Wozniak. "We tried to get Steve Jobs, but he demanded control over the Seventh Fleet as compensation," Geithner explained. "So we went for the closest substitute we could find. Besides, Woz was available since he just got kicked off Dancing with the Stars."

Geithner said the subsidies to Motorola were originally designed to protect high-paying phone manufacturing jobs in the United States, but then the government discovered that those were all outsourced to China a decade ago. So the government settled on a requirement that the guy who glues the bat-wing logos onto Motorola's phones has to be an American citizen. He has already been hired, his name is Joey Carbonic, he lives in Wenonah, Illinois, and the crowd at CTIA gave him a nice ovation when he was introduced during Geithner's keynote.

There's a rumor at the show that the government also agreed to buy 500,000 unsold ROKR handsets and give them free to poor countries as a gesture of friendship, but that was denied by a government official who spoke to me off the record. "We're trying to get people in those countries to like us," he explained.


--In the spirit of the forced mergers between failing banks, Geithner announced the combination of Sun, Sprint, AOL, and 3Com. Called 3Sprun and combining the best of all four companies, the new firm will specialize in Java-based 56kbps wireless modems.


--I haven't been able to confirm this yet, but Palm has apparently been offered $2 billion in loans if it adapts the Pre to run on biomass power and merges within 30 days with either Black & Decker, Digg, or SonyEricsson. Ironically, reports from Stockholm say that the Swedish government has offered SonyEricsson 20 billion kronor if it merges with Airbus Industrie, so we may get a three-way deal that would see Treos built into the seat backs of every A380.


--Geithner also said $40 billion in grants have been reserved for use by Yahoo and/or Microsoft. "We like to plan ahead," he explained.


Those are just the highlights. There are apparently a lot more deals being arranged, with venture capitalists and members of Congress competing to get subsidies for various firms. The most intriguing rumor so far is the plan to provide three Twitter accounts to every American as part of the stimulus package, to produce the illusion that the country's population has suddenly tripled. And then there's Cisco's buyout of Six Flags to advance the creation of networked roller coasters (hey, it makes at least as much sense as their purchase of Pure Digital).

I don't know how those will turn out, but things are certainly going to get more and more interesting now that the government has decided that the free market can't be trusted to run the tech industry.

By now you've probably realized that this is April 1, and like the extended iPhone survey last year (link), the Spitr announcement in 2007 (link), and the Google-Sprint merger in 2006 (link), nothing I wrote above is true.

I hope.

Some other things you didn't know about iPhone users

Earlier today I told you about the survey of US iPhone users that Rubicon Consulting just conducted (link). When you publish a big study like this, there are always a few secondary data points that don't fit into the whitepaper -- kind of like outtakes in a movie.

I thought you might be interested in seeing the outtakes. So, here are some other interesting factoids about iPhone users...


How do you carry your iPhone?

To me, one of the most interesting findings of the study was that half of iPhone users are under age 30. I had expected them to be older, because PDA and smartphone users have traditionally been in their 30s and 40s.

With the younger age of iPhone users comes some other differences, including how they choose to carry their iPhones...

"How do you carry your iPhone?"



What was your primary motivation for buying an iPhone?

People usually have multiple reasons for buying a product, some of which they won't even admit to themselves. But when we asked iPhone users why they bought the product, I found their answers to be refreshingly candid...

"When you obtained your iPhone, what was your number one motivation?"



The iPhone is a babe (or guy) magnet

One of the benefits of a popular new technology product is its ability to attract members of the opposite sex when displayed at a party or bar. We assumed that the iPhone would have such an effect, and more almost 70% of iPhone users agreed.

"Does the iPhone help you meet members of the opposite sex?"



Which websites do iPhone users visit?

In our whitepaper on the survey, we reported that most iPhone users say they browse on the iPhone a lot more than they did on their previous mobile device. But we didn't have enough space to report which websites they visit on the iPhone most often...

"Which websites do you visit on your iPhone, and how often?"


I was very surprised that the new social communication service Spitr (link) didn't make the list.


What other devices did the iPhone replace?

About a quarter of iPhone users said it is replacing use of a notebook computer. But given the enthusiasm of iPhone users, it's not surprising that they are also using it to replace some other technology products:

"What else did the iPhone replace?"



What other features do you want in the iPhone?

In the whitepaper, we listed some of the most desired iPhone features. We didn't have room to list other features that people also asked for. Here they are...

"What other features would you like to see added to the iPhone?"

Eight point scale: Strongly interested = 7 or 8, mildly interested = 5 or 6,
mildly disinterested = 3 or 4, strongly disinterested = 1 or 2.


Personally, I was disappointed that Strategic Conquest (link) wasn't listed higher.


When and where do you use the iPhone?

An advantage of a mobile device is that it can go with you anywhere. This leads to some unusual usage patterns that the industry doesn't like to acknowledge. I think it's important to report them.

"When and where do you use your iPhone?"



So now you have the full picture of iPhone users. As you can imagine, these usage patterns are having a profound effect on the thinking and behavior of companies in the mobile industry. I think they probably had a lot to do with Google's decision to buy Sprint (link).

I should add one other piece of information -- as I said in my earlier post on the iPhone user study, the study is definitely not an April Fools joke. However, I can't make that same assurance about the post you're reading now.

An early look at the ultimate social networking tool

For several weeks I've been in a private beta test of a new social networking service designed to help mobile and PC users keep in touch and share ideas. I think it's the sexiest new product I've seen since the Nokia 7650, and even though it's still in early beta I want to talk about it.

I promised not to describe some of the details of their implementation, because the patents haven't all been filed, so I apologize in advance that I'll have to leave some blanks. But here goes...

The company, Inrvoice LLC, has great credentials -- it was founded by former engineers from Netscape and RIM, who teamed up with a group of biomedical researchers from UC San Francisco. It's funded by a consortium of A-list VCs from Stockholm and Palo Alto. That in itself is unusual -- usually startups like this are funded only in one region. But I think the cross-cultural aspect of the service make its appeal universal.

The folks at Inrvoice are targeting one of the key drawbacks of today's social networking software -- the need to type ideas and comments in order to share them with others. Instead, Inrvoice's software directly captures the thoughts of users, as they happen, and shares them automatically with everyone in the user's social network.

I'm not allowed to give all the details of the process, but suffice it to say that it involves Bluetooth wireless, the user swallowing a small sensor pill, and one of the first commercial deployments of nanomachines that I've heard of.

The product is called Spitr, and I'm sure you'll be hearing a lot more about it in the weeks to come.



Spitr's ability to share thoughts rather than typed words dramatically increases the efficiency and richness of interactions on social networks. No longer do you have to guess what one of your friends might be thinking on a moment to moment basis; no longer do you miss out on nuances or ideas that they might not normally have time to share.

As an example of Spitr's power, here's a real Spew (the company's term for a transcript of a user's thoughts). I've been asked not to give the user's name, but I can tell you that he/she is a blogger and executive at a major Web company, attending a recent conference:
11:45:39 i wonder if there are any new comments on my blog
11:45:44 huh, the next speaker is making a web service that recycles composted kitchen waste
11:45:47 i dont get it. who eats at home anymore
11:45:49 when the hell is the lunch break
11:45:48 this company doesnt make sense to me but arrington likes it so i should invest
11:45:53 i wonder if there are any new comments on my blog
11:45:57 damn my new shoes look cool
11:46:03 hey what the hell was that. did something bite me or did i just sit on a tack. wait if i grab my butt i'll look stupid. dont move
11:46:07 ow ow ow it really hurts
11:46:01 dont move dont move
11:46:04 maybe if i pretend to adjust my sock i can lean over and
11:46:07 ahhh much better
11:46:08 damn i sat on my usb drive. hope i didn't break another one
11:46:10 is that guy still talking about kitchen waste
11:46:12 tim looks really good in that jacket
11:46:15 i wonder if there are any new comments on my blog

Currently, Spitr Spews are only one-way: the user's thoughts are transcribed and sent in writing to other members, who read them on their PC or mobile phone. The company is working on two-way Spews which transfer thoughts directly between the minds of recipients, but needs to do more work before it turns on the feature. In an early two-way test, the thoughts of Steve Ballmer and Eric Schmidt were accidentally linked in a single session, producing a destructive feedback loop that took down Sprint's EVDO data network for twenty minutes. The company is confident that new filtering software can prevent those loops in the future.

Even in its one-way mode, Spitr makes an incredible improvement in the frequency and detail of social messaging. But once it becomes two-way, it'll really take off. I think some of the most promising usages are:

Workgroup collaboration. A work team in a company could be continuously linked to one-another in a two-way Spew. The effect would be like a continuous staff meeting 24/7, but removing all remaining illusions that people might actually be paying attention.

International understanding. Another exciting aspect of Spitr is that the company is exposing an API to the service, enabling others to create mash-ups of Spitr with additional web services. One of the first mashups has combined Spitr with BabelFish to produce BabelSpit, which produces instant translation of a user's thoughts into six different languages. Here's the translated Spew from a Japanese tech executive attending that same recent conference:

11:45:33 As for me it is not possible to believe those which these people make their kitchen scraps.
11:45:42 I putting, tonight it is possible to be able, whether or not you think in doubt.
11:45:48 I me Tokyo yakitori which is eaten and desire the fact that it returns to the beer which is drunk.
11:45:57 As for me it is necessary to arrange the hair of my ear.
11:46:07 That man is he grabbing his underside?
11:46:12 Whether or not there is new comment in my blog, I think.

Spitr's potential impact on international communication is obvious.

Celebrity interest groups. Fans of a celebrity could subscribe to a one-way Spew feed (a "Spweed") to monitor the thoughts of celebrities throughout the day. Inrvoice hasn't yet disclosed its financial model, but I believe this is how it will monetize the service. Imagine how much fans would pay to track Paris Hilton as she tries to remember whether she has a valid driver's license, or Britney Spears as she ponders the underwear yes/no question.

I think that's just the start, though. Every Spitr account automatically generates a Spew feed, giving each and every one of us the opportunity to auction off the last shreds of our privacy and create a circle of obsessive admirers. This is the ultimate evolution of social networking, and I expect to see Spweeds pop up rapidly on MySpace and weblog sidebars.

Biometric sharing. Since they're already placing sensors in the body, an obvious next step for Inrvoice is to add biometric data to the Spew feed. That's apparently what the company is planning, judging from the screen shot below that I found on a bulletin board:



One application of this could be to help a social group of teenage girls plan a shared trip to the bathroom.

I think this is a very powerful and extensible feature. Picture the company pairing the biometric data with the GPS in your mobile to deliver customized location-aware services. For example, you could configure your phone to automatically order a pizza delivered to your location whenever you reach a certain hunger level. Or you could scan a dance club for people with compatible levels of libido and blood alcohol.

The possibilities are endless.

Implications for the industry. I'll be interested to see how the Spitr service develops over time. There are sure to be efforts at clones from other companies, although the Inrvoice folks seem to be pretty confident that their patents will hold up. Google and Microsoft would obviously be interested, if only for the possibility of slipping ads directly into the thought streams of users. And I think it would be interesting to see what Apple would do with it, especially since Mac owners are already close to a group entity.

I'm sure we'll know more by the next time April first rolls around.