Google Plus - familiar territory

I had a look at Google Plus. (Here's their tour.) My initial reaction is: hmm, all sounds very familiar. Midentity (social software start-up that I co-founded that ran between 2002 and 2006) had many of the attributes of Google Plus.

A key concept of Midentity was the ability to divide one's network of contacts into sub-groups. Midentity believed that you shared different content about yourself, based on the identity that you presented to them: Business, University friends, close buddies, tennis club, in-laws, etc.

In this way, you could share content appropriately and selectively with others in a way that is relevant to your connections. ie Google Circles.

Midentity's go-to-market service was a group text messaging service called Circles (text your message to your Circle's number, then the service delivered your message to all participants; if a participant replied, the reply went to all). ie Google's Huddle.

And yes, we were heavily focussed on mobile (the name Midentity stood for My Identity and Mobile Identity) and we experimented integrating with some instant upload features using early version of Shozu's phone software. ie Google Instant Upload.

Techcrunch carried an article, When Google Circles Collide, about how the author, Rocky Agrawal, uses multiple products to selectively share his content with his followers.

Do scroll down the article to heading 'The unsolved social network problem' in the article.

Streams of Content

The biggest unsolved problem in social networking remains unsolved with Google+: separating signal from noise. Twitter, it seems, doesn’t even want to try.

One person I follow on Twitter actually tags most of his posts. I’m interested in his content on tech, business and aviation. But I couldn’t care less about his Chicago tweets

I totally agree that this has become one of the pains of social networks – finding the updates that matter.

Actually, this is the reason why I purchased this stream121 domain – as I envisaged the problem in 2005 – the problem of filtering everyone else's content that's relevant to an individual. ie Google Sparks.

With that said, I have never gone out to solve this problem....... An opportunity lost? Yes for sure, but I always believed that the identity problem was a more fundamental one to solve.

(Apologies that this entry was so long in the making - it was stuck in draft mode for some unknown reason.)

LinkedIn's IPO and Lumpy Bubbles

The LinkedIn IPO on NY Stock Exchange (not the NASDQ) on 20th May generated a frenzy of debate on the front page of business sections. Here are the bare bones of the story:

• The company had hired Morgan Stanley and Bank of America’s Merrill Lynch division to manage the I.P.O. process. After gauging market demand — which is what they’re paid to do — the investment bankers priced the shares at $45. 
• The 7.84 million shares it sold raised $352 million for the company. For this, the bankers were paid 7 percent of the deal as their fee.
  The price soared on the first day to $120 in intra day trading. The price has remained above $70 per share since then.

(Source: Google Finance)

I, like others eg NY Times' Joe Nocera think that LinkedIn's were (embarrassingly) poorly advised by Morgan Stanley.

This first day trading spike generated lots of chatter about another bubble. Here's the graphic from the Economist article: Welcome to IPOville - Social-media firms see champagne; others see bubbles




My view from this side of the Atlantic is much more conservative. There are pockets of frothiness, but it isn't across multiple sectors or sustained. Some companies will generate a disproportionate amount of interest (and column inches), but outside of that one company under the spotlight, there isn't tremendous demand pushing up prices across multiple companies.

I agree with this sentiment expressed in the Register: There is no big Silicon Valley tech bubble, says VC king in early May.

Forget what you may have heard: there is no massive tech bubble in Silicon Valley.

Instead there are hundreds of little bubbles, and they're set to begin popping at the end of this year. That's according to investor and "co-maintainer" of the bubble-blowing AngelList, Naval Ravikant. 

Fred Wilson of Union Square Ventures expressed it well at the end of April this year in a blog post, The Word Bubble:

But I am equally sure that we are in the glass is half full part of the cycle. Investors are focusing on the upside and ignoring the downside. That part of the investment cycle lasts for a while and then things change and investors focus on the downside and ignore the upside. Markets are defined by greed and fear. We are in the greed mode right now. 

Unfortunately, all these column inches will distract lots of people which will self stoke the entrepreneurial / VC sectors into investing in some very questionable businesses and markets.

I envisage danger down the line.

El Reg pans Orange + Barclaycard's NFC implementation at launch

The Register, that caustic IT news service (motto: "Biting the hand that feeds IT"), gives Orange + Barclaycard's new pay-by-phone service called 'Quick Tap'.

Quick Tap is enabled at 50,000 stores in the UK and for purchases under £15. Here's the official press release and their overview page. The introductory video is below.

The Register gives the service a hammering (El Reg pays by phone – mmmm, free cookies! - a strange headline, but it appears that although the Register's journalist munched the cookies, there was no sign of the transaction in Barclaycards's transaction log!).

The poor reviews doesn't fault the payment process (which appears to be seamless /magical), but the initial setup and configuration of the payment mechanism on the phone and then the ongoing account management.

In conclusion, El Reg reports:

It will be a few months before anyone else commits to using the system, and we're not convinced the infrastructure is quite ready yet despite the point-of-sale process working so well. Proximity payments from phones will happen, and Quick Tap is the first in the UK, but like most first movers it's more than a little rough around the edges.

Product Management – who cares?! A VC speaks

Cambridge Product Management Network's keynote event this year will be held on Wednesday 29th June. More information at CPMN's website.

Who needs product managers anyway? Don’t they just stifle innovation? Don’t they get in the way of building stuff?

Having co-founded nCipher, a successful Cambridge IT company, and now an active entrepreneur and one of the team at Amadeus Capital, Alex van Someren has a view. Now’s your chance to hear it.

---

Alex is a General Partner in the Seed Fund at Amadeus Capital in Cambridge, UK.

Alex has worked in the technology industry since the 1980s. He co-founded ANT Ltd in 1990 to produce networking products, including Web Browser software licensed to the Oracle Corporation. ANT plc was listed on the London AIM market (AIM:ANTP) in 2005.

In 1996 he co-founded nCipher to develop internet security products using advanced cryptography. The company became a world leader in IT security, counting major banks, finance companies and governments among its customers. As CEO at nCipher he raised a total of £14m ($25m) in venture capital funding before he led the company to an IPO on the London Stock Exchange in 2000 (LSE:NCH) at a £350m valuation. nCipher plc was sold to Thales SA in 2008.

Alex lives in Cambridge, UK and is married with three children. He was appointed an Entrepreneur in Residence at the Judge Business School, University of Cambridge in 2005.

Microsoft overpays for Skype

  
Microsoft acquires Skype for $8.5bn, becoming MS's largest acquisition. Quick history (with big numbers) associated with Skype:

• Skype was founded in 2003 by Swedish entrepreneur Niklas Zennström and Dane Janus Friis
• In October 2005, EBay outbid Google and Yahoo! Inc. for the loss-making company and paid $2.6 billion for the privilege. (I thought that was madness then!)
• Zennström and Friis fell out with Ebay about patent licensing of some of the key technology in Skype (Truly incompetent due diligence from Skype - surely the IP should have been bundled into the acquisition?!?)
• In 2007, EBay wrote down the value of Skype by $900 million.
• EBay's CEO, John Donahoe, sold 70 percent of Skype to a consortium of investors (Silver Lake Partners, CPPIB, Andreessen Horowitz)  in November 2008 in a deal that valued Skype at $2.75 billion. 

Today

• Skype has 663 million global users (145m active users in an average month)
• Windows Live Messenger has 299 million accounts worldwide in June 2010. (Source: Microsoft by the numbers) 
• Skype is the largest international voice carrier and owns 13% international call market share (Source: Skype Commands 13 Percent of International Phone Calls)

The Deal

• Microsoft pays Skype for $8.5bn
• This marked a 300% increase in value for the company in the three years since the eBay write-down in October 2007.
• The price Microsoft agreed to pay for the company is 32 times Skype's operating profits
• EBay said it will reap more than a 50% return from the company’s $2.6 billion investment in Skype Technologies SA six years ago. (Source: Bloomberg)
• $14.70 is what Microsoft paid per user for Skype. When eBay bought Skype back in 2005, they paid $45.60 per user. (Source: 14 And 116: These Two Numbers Explain Why Microsoft Dropped $8.5 Billion On Skype)
• 116 is the number of days until Microsoft makes the money back in operating cash flow. Microsoft had $26 billion in operating cash flow last year. So $8.5 billion works out to around 116 days of cash flow for Microsoft (Source: 14 And 116: These Two Numbers Explain Why Microsoft Dropped $8.5 Billion On Skype)

Was the deal over valued?
Lots of respected analysts think that this was a fair investment by MS - given all the possible synergies between so many of Microsoft's products (Windows Phone 7, Kinect, Lync, etc.), but in my opinion they overpaid.

MS are no novices in any of this technology. Skype does have some advantages - intelligent routing for one (see Skype's explanation of its technology)
 
I think there are two logical reasons for this acquisition:

• User Base 166m users making international calls. By plugging Skype into WinMobile 7, it gives MS a way to get a bunch of well connected users making premium international calls from their mobiles. (IMHO, people avoid making international calls from their mobile phones because of its outrage expense.) This gives a neat way for operators whose users on WinMob phones to take voice calls off 3G data network and onto 2G voice network (See my post on 3 launches X-Series for how this could work.)
• Keeps Cisco from getting its hands on Skype Apparently Google came knocking, but was told the starting price was $7bn, but I think this would have muddied Andriod's strategy. An acquisition by Cisco could have seriously dented MS's interest in the enterprise unified communications market now and in the future. (Note that Skype's CEO Tony Bates is a former Cisco execs appointed in October last year.)

Some great blog posts on reasoning:

• ZDNet: Microsoft's purchase of Skype: One expensive game of keep away
• Microsoft Insider: Here's Why We Bought Skype

P2P Social Networks versus Group Management Software

I've been in social software for 9 years – almost before the term was started. I enjoy contributing to the alumni network for Judge Business School at Cambridge University. Naturally, we have our own online network, called the 'Common Room'.

We've run into a problem – recent graduates ie those that did their MBA in 2004/5 onwards are glued to Facebook in order to interact with others – to the detriment of any other social software.

This article intends to explain why the Common Room (and other Group Management software) will continue to remain much more useful and relevant than Facebook.

Group Management at the core of the network

There are two ways to manage a network:

• At the edge: means that each individual manages their connections and the level of information that they share by themselves. 
• At the centre: means that management is done centrally, by an appointed person(s) of the organisation.

Solutions between these two extreme have to make compromises between these two models which introduces technical and user complexity, ultimately confusing the end user which make participation harder.

Facebook Groups falls between these stools.

Facebook is good / bad at ….

Facebook is great – brilliant for connecting for individuals to connect with others – sharing ongoing updates, as well having the one place to house your profile information. It's perfect for students to join up together online (err, that was what is was invented for, right?!?).

Btw, many people outside the US don't realise that a ‘Facebook’ on American university campuses was the ubiquitous book that was handed out to all first year students so that they could quickly get to know each other. It was a book of faces and names possibly with some other information eg home town, birthday, interests, sports. Of course, the first thing that everyone does is flip through it looking for hot guys / girls – I did it myself at my American high school in New England.

Unfortunately, the elegant P2P social network model breaks down when it crosses from being a network of peers to being a group with a common interest. Certainly a group with a common interest can be set up on P2P networks. It fails because every individual has to join that group. Given that setting up the group is free and pretty painless, then lots of similar groups proliferate.

Remember Metcalf's Law? The value of a network is proportional to the square of the number of users of the system. The value of a large network is disproportionately more value than lots of little, ill-formed networks.

For the Alumni of Cambridge Judge Business School, there are Facebook groups for each year, country, location… except that it is inconsistent: many countries are missing, locations are based on the passion of the group leader and the naming convention is (inevitably) inconsistent.

Entrance to the community is done via invitation or more practically by request. The group manager has to undertake the verification of membership. Do they have the time to do that? I doubt it.

What happens when the group leader leaves / resigns / becomes too busy? Unfortunately, there’s no way for someone else to take over the management of the group.

Facebook and Privacy

Facebook have really, REALLY struggled with the issue of privacy. The user generated content is incredibly engaging, but what attracts new users is the mass of information on their friends – the more is disclosed, the more engaging that content becomes. Squirrelling information away is fundamentally destructive to Facebook.

Facebook blundered around the privacy issue. Facebook Beacon was an early version of Facebook Connect which enable certain activities on partner sites to publish activity on third party site to the user's News Feed. The colossal error of judgement was that it was default opt-in, rather than default opt-out. Worse, at launch, there was no opt-out.

Step forward Group Management functionality (again)

I was involved in Social Software before the term existed (it was community software back in the late 90s) so it is good to see its relevance today.

Group Management requires the appointment of someone to act a gatekeeper and referee (if required) to the community. This is required when everyone doesn’t know everyone, but would like to connect across a large network.

The Gatekeeper is nominated by the community to control entrance and exit. Once the community trusts the gatekeeper to do a good job then then the community is likely to be much more virulent and healthy because each member has been vetted and is likely to more trustworthy.

The Gatekeeper acts as a referee. It represents the (independent) court of appeal for any behaviour that is deemed to be detrimental to the community (eg spam or over communication) or a disagreement within the community.

Conclusion

Facebook has its uses, but not really in professional membership organisations. Bring on Group Management functionality please!

UI Challenges of Paperphone and Snaplet

Researchers at the Human Multimedia Lab at Queen's University, Canada have developed two functional paper computing devices: Paperphone and Snaplet. What's novel is the use of bending the flexible displays to provide input. For example, bending the top corner of the paper phone is 'go to next page' when reading an e-book.

However, what made my mind boggle was the UI challenges for the Snaplet. If it is bent around your wrist, it acts as a super duper watch / media player / calendar, etc. If you take it off your wrist and it is flat, then it converts to a note-taking tablet.

Here's a video of switching between the two modes.

Product Management Interview Questions

Ken Norton, Senior Product Manager at Google, formerly at Yahoo!, Jotspot, Inktomi (see LinkedIn profile), wrote a fantastic article, How to hire a product manager. It was originally published in June, 2005.

The article is a great read. Unfortunately, the author has chosen to prohibit any derivative works (see license), so I unable to precise the article and highlight my favorite parts.

Instead, I point my favorite parts out. Do read the introductory section in which Ken compares Product Management in a large company vs PM in a small company.

Ken's article divides his hiring requirements in six major attributes:

1. Hire all the smart people
2. Strong technical background
3. "Spidey-sense" product instincts and creativity"
4. Leadership that's earned
5. Ability to channel multiple points-of-view
6. Give me someone who's shipped something

My only modification to this list is modify (5)   Ability to channel multiple points-of-view.

I would like to rename it: "Have a good nose to appreciate and understand how other business functions operate".

Ken highlights the point that a Product Manager plays a devil advocate role and representing all (or as many as possible) interests in any discussion. Ken lists pre-sales engineering, support, developer relations, business development, legal, or customers. Of course there are many more.

A product manager has to have a good nose to understand the impact of their decisions on other functions, as product decisions impact many other business functions and processes. For example, choosing to sun set a product (a product management decision ultimately) might have a radical impact on one sales person's commission (sales and sales operations). Before you announce that PM is jettisoning a product, has the impact to that sales person / manager / director / VP been thought through?

Key Questions:

• Are you familiar with the Pragmatic Marketing Framework? How was it / have you applied it in your previous career history? 
• What business functions did you do that were missing from the Framework and why?
• Can you describe an example of unintended consequences of one of your decisions? What could you learn from it? 
• Can you give me an example of how you achieved an objective at the second attempt?

Migrating from Hosted to the Cloud - my case study

 

Here's a case study that I did with Rackspace (who provided the Cloud) and Webmetrics (performance monitoring) about moving from hosted to cloud environment.

Key

Amazon's outage questions Forrester's explosion in cloud usage

Amazon Web Services, the pin-up of the cloud industry, suffered a serious outage (read The Register coverage: Amazon: Some data won't be recovered after cloud outage).

Four days later (with Amazon struggling to put everything back in place), Forrester Research publishes an optimistic report entitled, Sizing the Cloud, about SaaS usage.

Here are some quotes taken from Silicon.com: SaaS spending to rocket in next five years:

• Revenues from SaaS will increase from $21.2bn today to $92.8bn in 2016, by which point SaaS will account for roughly 26 per cent of the packaged software market.
• After 2016, however, the market will come closer to saturation, and SaaS growth will be far less impressive between 2016 and 2020.
• Revenues from SaaS will help the global market for all types of cloud services increase from $40.7bn in 2011 to $241bn in 2020. 
• However Forrester analysts predict that not all cloud-based services will see uninterrupted revenue growth to 2020: The infrastructure as a service (IaaS) market [Arthur: ie Amazon Web Services) is expected to grow from $2.9bn to $5.9bn between 2011 and 2014, before shrinking to $4.8bn in 2020.

Competition in the IaaS space is intense, with over capacity and competition driving down costs leaving only those with massive scale (eg Rackspace) with the deep pockets and the clout to compete.

Continued differentiation in IaaS and SaaS is essential.

GroupMe - Group SMS, teleconferencing and more

GroupMe does Group SMS, presumably much like my own startup, Midentity, did MiCircles in 2003 - hard to think that was 8 years ago! (Click here to see the MiCircles home page on the Way Back Machine.)

GroupMe adds more though teleconferening. Once you're connected with others, then you can share your location or photos.

The analogy that I like to use is that once you have established a washing line between two people, lots of information can be put on the line and winched over.

Getting connected only the first part. The big question is what happens next.

• Facebook have determined that other people's content is the most important thing - sharing photos. Hence why they want people to make public as much information as possible.
• LinkedIn wants to make money out of Job Ads
• etc, etc 

However, I think the real value of being connected, is easing individual to individual communication: uniting (into one common interface) all of the communication protocols that we commonly use would be hugely beneficial (across all devices): a single address book for email, phone calls, SMS, IM.....

Anyone got any product suggestions for this? Or should I pull out my copy of the Midentity business plan (circa 2002) and re-do it all again??

Ubuntu targets disgruntled Windows users

I mentioned Linux Mint in a blog post a couple of months ago, Linux Mint - Desktop OS that should have Microsoft a little worried.

Ubuntu - the operating system on which Mint is built on - has released version 11.04 (code named 'Natty Narwhal'). See Ubuntu's What's New.

Canonical marketing manager Gerry Carr says
"We focus on people who are likely to switch to Ubuntu," he said. "We think it's people who are moderately tech-aware, who – presented with an alternative – are likely to use an Android phone rather than an iPhone, [who are] more likely to use the challenger brand rather than the main brand. The majority of these people haven't just not heard of Ubuntu, but haven't considered an alternative to Windows outside of Mac."

Source: The Register: Ubuntu seeks Android-packin' Windows deserters

Note that the Reg slammed the beta of this release, Worst Ubuntu beta ever
Bugs aside, the reviewer did NOT like the new Unity interface which replaces GNOME.

The real problem is that Unity can't do half of what GNOME can do.

On the surface Unity looks good. In fact, Unity will most likely one day trump GNOME in many ways - it's noticeably snappier than GNOME, works well at just about any screen resolution and even appears to be designed with touch-based devices in mind. Eventually, come Ubuntu 13.04 or so, Unity will seem like a brilliant move, but the transition is going to be bumpy.

LocalMind wins O’Reilly Where 2.0 Startup Showcase

LocalMind wins O’Reilly's Where 2.0 Startup Showcase. Here's the video of the interview with Robert Scoble.

Here's an outline of LocalMind:

Localmind gives you the ability to send any question you want to someone that is at a location you are interested in. That person (who is either a Localmind user or one of your Foursquare friends) receives the question to their phone and responds, in real-time.

Lenny was my Engineering Manager whilst I was the Product Manager at Webmetrics.  He was a very sharp guy - with wisdom (not merely knowledge) beyond his years. From a product manager's perspective, he was a highly adept project manager, meaning that I didn't have to do low-level project management or run sprint / scrum meetings - a massive relief.

Lenny was a star at Webmetrics - the man deserves to do well  with LocalMind!!

Update: Scoble posted this earlier: LocalWhat’s the best SXSW app? So far, for me, it’s LocalMind. Here's a great video interview with Lenny explaining the service:

Some good but tough questions for new ventures

I don't recall how I landed on this article about willingness to invest in web 2.0 start-ups, written by Tom Shields, managing director at the Woodside Fund, a venture capital firm.

He asks some great questions for any business idea, but particularly for Web2.0 ventures. Worth paraphrasing I thought:

1) What gives you an unfair advantage?” 

Most likely that takes the form of deep technology, proprietary content, or an exclusive business deal.

2) What is your business model?

One thing technical founders often do is put the product or service out for free, planning to put in the business model later. Often, however, the business model needs as much rapid development as the feature set, and can take quite a while to emerge.

3) Are you a feature or a product?

If your service depends on another service or community, like MySpace, then you’re going to face questions about why MySpace wouldn’t just duplicate your functionality. There is a fine line between “boiling the ocean” (trying to do too much) and being just a feature, and that’s where you want to position yourself.

Finally, there are a couple of characteristics that will definitely help your case. One is a clear understanding of your short-term direction, and the specific milestones you are trying to reach – e.g. number of visitors, downloads, etc. Another is a culture of rapid prototyping and fast learning.

Social media marketing should sit alongside traditional marketing techniques not replace them

In this Cambridge Network article, "Is using cheap social media a cop-out for marketers?", Simon Carter from Fujitsu eloquently makes the point that leaping from product concept to social media marketing misses out critical steps in the marketing process:

Junior Brand Managers think social media is a great way of getting their message out to a wider audience at virtually no cost. The problem is that it’s cheap churn and too often, the stuff we as marketers are taught in the classroom about targeting; about the right message; about good creative and the proposition and so on, are forgotten.”

I couldn't agree more: SOOO many times I have seen the splurge to social media when the product and business proposition is poorly thought out.

The whole Agile development movement with its iterative development enables (I won't say encourages!) the 'chuck it out and see what happens and we'll respond quickly' approach.

Marketers need to stop and think and go back to the basics before opening their mouths and preaching something that hasn't been thought through.

Stopping and thinking logically (with an external perspective) is a lot of what I do for my clients: I call it market analysis and product roadmapping.

Voting on Social Network Users’ Bill of Rights

SXSW panel kicked this off. Here's the voting on the each right - taken from Jon Pincus's Liminal States blog:

41 yes 0 no Honesty: Honor your privacy policy and terms of service

41 yes 0 no Clarity: Make sure that policies, terms of service, and settings are easy to find and understand

41 yes 0 no Freedom of speech: Do not delete or modify my data without a clear policy and justification

33 yes 4 no Empowerment : Support assistive technologies and universal accessibility

35 yes 2 no Self-protection: Support privacy-enhancing technologies

37 yes 3 no Data minimization: Minimize the information I am required to provide and share with others

39 yes 1 no Control: Let me control my data, and don’t facilitate sharing it unless I agree first

39 yes 1 no Predictability: Obtain my prior consent before significantly changing who can see my data.

38 yes 0 no Data portability: Make it easy for me to obtain a copy of my data

39 yes 0 no Protection: Treat my data as securely as your own confidential data unless I choose to share it, and notify me if it is compromised

36 yes 2 no Right to know: Show me how you are using my data and allow me to see who and what has access to it.

24 yes 13 no Right to self-define: Let me create more than one identity and use pseudonyms. Do not link them without my permission.

35 yes 1 no Right to appeal: Allow me to appeal punitive actions

37 yes 1 no Right to withdraw: Allow me to delete my account, and remove my data

So it’s in general overwhelmingly positive: five rights are unanimous, and another eight at 89% or higher. The one exception: the right to self-define, currently at about 65%. As I said in a comment on the earlier thread, this right is vital for people like whistleblowers, domestic violence victims, political dissidents, closeted LGBTQs. I wonder whether the large minority of people who don’t think it matters are thinking about it from those perspectives.

Detecting Contagious Outbreaks Through Social Networking

Fascinating (and compelling) methodology that has demonstrated to be valid - that you can detect the likelihood of contracting a contagious outbreak of an epidemic by monitoring the health of your friends.

Dr. James Fowler, Professor of Medical Genetics & Political Science at University of California (San Diego) proposed that people who have more friends will tend to become infected by contagions sooner than others with fewer friends. Thus, monitoring friends is a good way to detect outbreaks at an earlier stage.

To test the method, Dr. Fowler and his team recently studied an H1N1 flu epidemic at Harvard College. Results showed that by simply monitoring the friends of randomly selected individuals, two weeks of advanced notice could have been given for this particular outbreak.

Thanks to UCSD Connect's for this notification of a talk by Dr Fowler. 

Tiwtter hardens its API use

In this excellent article on O'Reilly Radar, Mike Loukides is disappointed that Twitter has choosen to harden third party apps to access its API. A number of these provided little or no value-add on top of Twitter own interface - and these are the services that Twitter wishes to eliminate from its ecosystem.

Every service and brand MUST be able to manage its user base / user experience. Asking permission is a key part of playing in the ecosystem. Just because the end service to the user is free doesn't mean that some sort of throttle is morally wrong.

Personally, I think Twitter needs to focus on revenue: improving the quality and reducing the number of satellites will make revenue extraction easier. Arguably, it runs the threat of spurring users to churn to a competitor.

Competitors to Twitter
And, as I keep on saying, there doesn’t appear to be a viable competitor to Twitter yet – and I don’t know why: the service is deadly simple.


We, at Midentity (my own (now failed) start-up) , built Twitter in a morning out of the infrastructure that we had already built in 2003. We had developed a group SMS service, Micircles (here's our home page on the WayBackMachine . A little known fact is that Tweets are limited to 140 characters so that they could fit in an SMS message which is 160 chars max.We couldn’t see how we could make money out of the service – so we didn’t launch it.


Do believe that if a competitor arrives on the scene, then Twitter will fragment – as everyone will realise that it is the individual (ie identity) that is the important thing, not the service.

Google’s secret sauce

Google's secret sauce - or rather one of them - is its operational expertise at deploying and managing vast (I mean really vast) numbers of servers in its operation.

Google’s Servers
It uses commodity computers with its own Linux-based Operating System (see Wikipedia), both of which have been tuned to Google’s requirements.

It is ‘reasonably’ estimated that it has 1 million of them - the largest server farm in the world by far. Here’s an eye watering graphic from Gizmodo: Google’s Insane Number of Servers Visualized (April 2010).

(Want to know who the other big server boys? see DataCenterKnowledge)

Google are notoriously secret about its hardware, so I think these figures are only ball park estimates.


Performance IS important
This operational horse power is a key competitive advantage is Google's business operation. For example, user responsiveness is critical. These stats are taken from the Velocity Conference 2009 and reported by its organiser, Steve Souders on his blog post, Velocity and the Bottom Line:

• Bing found that a 2 second slowdown changed queries/user by -1.8% and revenue/user by -4.3%.
• Google Search found that a 400 millisecond delay resulted in a -0.59% change in searches/user.
• At Google, one experiment increased the number of search results per page from 10 to 30, with a corresponding increase in page load times from 400 milliseconds to 900 milliseconds. This resulted in a 25% dropoff in first result page searches.
• At Shopzilla, a year-long performance redesign resulted in a 5 second speed up (from ~7 seconds to ~2 seconds). This resulted in a 25% increase in page views, a 7-12% increase in revenue, and a 50% reduction in hardware.

Google’s own dedicated network
Google itself has a massive internal network. If you think of all the crawling that Google does, then the spider will be want to shuttle that information back to its nearest home base. Given the number of sites that Google crawls, it’s a really good idea to have ‘home’ nearby.

Here’s one estimate for the volume of traffic:

60 percent of Google's traffic was being channelled through direct interconnects that link its massive data centres to one another.

Significance?
Given Google's secrecy around its operational expertise, then it should take note of Facebook open sourcing its data centre design recently.

Facebook open sources data centre design

Facebook's has committed to open source its data centre design. This will surely threaten Google competitive advantage.

Firstly, this is what Facebook did:

Facebook then took the revolutionary step of releasing the designs for most of the hardware in the datacenter under the Creative Commons license. They released everything from the power supply and battery backup systems to the rack hardware, motherboards, chassis, battery cabinets, and even their electrical and mechanical construction specifications.

(from O’Reilly’s Jesse Robbins' blog post)

The result: Facebook’s shiny, new, custom-built datacentre in Prineville, Oregon, USA uses 38% less energy to do the same work as Facebook's existing facilities, while costing 24% less.

Side note: Dunno quite why Prineville was chosen. Cost of electricity is a massive factor, which is why Google and other choose locations near hydro power plants, but this is not the case in Prineville. See article at OregonLive.com.

Facebook can do this because its competitive weapon is entrenched and massive user base which is unlikely to wander off anywhere soon. Facebook is sticky, 'coz all your friends are there too.

Why should Google be concerned? Well, Google isn’t a one trick pony, but search is very, very, VERY important to it and user can more easily churn to another search engine than users of Facebook.

Search needs muscle - and operational muscle is one of Google's secret sauces - see my next post on Google's Secret Sauce.