Musings on Google, Amazon.com, interesting entrepreneurs, happenings in the tech community.
"The Google Guys: Inside the Brilliant Minds of Google Founders Larry Page and Serge Brin" is out in paperback.
"ONE CLICK: JEFF BEZOS AND THE RISE OF AMAZON.COM" arrives Oct. 26
This blog will soon be transferred to my new site, RichardLBrandt.com. Please check it out.
There's an interesting contrast in style in a Forbes article this week: Steve Ballmer looks to the past, insisting there is still life in the PC. Jeff Bezos continually looks to new opportunities, such as the Kindle Fire and cloud computing. Maybe we should start referring to Microsoft.toast.
The interesting thing is that Ballmer isn't that different from Gates in his latter days at Microsoft. In the late 1990s I asked him if the internet might start displacing the PC model, and he tried his usual tactic of sarcastic argument through belittlement. "Oh, sure, I mean, the internet can do everything!" He went on to say, "Do you think the demand for software is going to go away? I mean ,if that's true, then Microsoft is in trouble!"
There's still demand for software, just not Microsoft's software. The problem is that Microsoft always looked to the past. Gates always emphasized compatibility. It's how he took over the PC software market. Every IBM-style PC was compatible with the others and backwards compatible with previous generations (to an extent.) It kept everyone locked in to DOS, then Windows. Nobody else could gain a foothold, except Apple, which gained only a toehold when measured by volume sales.
Microsoft never evolved beyond that strategy. The need now is for software that can run mobile phones, tablet computers and other new devices. Gates -- and now Ballmer -- made the same mistake. They want to cram Windows into the small portable devices and maintain some level of compatibility. But they should have learned from IBM. You can take a small computer operating system and make it bigger, more powerful as the machines themselves get more powerful, but you can't trim a piece of bloated software down to make it fit in a smaller device with weaker processors.
That strategy hasn't worked for a decade. They should get over it. If you've got a good OS, software companies will develop for it. Relying on your locked-in installed base shows a lack of faith in your own ability to design new software.
Meanwhile, back in the Republic of Chad...
Another Forbes article shows Bill Gates is tackling his post-Microsoft role as the bringer of medicine to poor countries. He's forward-thinking here, creating new models to get pharma companies to develop vaccines, and making sure the drugs get to the right people. He always planned on being a philanthropist after Microsoft, and seems to be doing it well.
Jeff Bezos really wants to get into space. He has put up a new website about Blue Origin, which is working on a vehicle to take people into sub-orbital space. The site has a short video of a successful test launch of the Vertical Takeoff and Vertical Landing vehicle, but does not mention that one of its prototypes crashed in another test launch in September. But he also notes on the site, "Accomplishing this mission will take time, and we're working on it methodically." Believe me, he has the patience -- and money -- to pursue this for a long time.
He's also hoping Blue Origin can get some of the NASA funding set aside for private space vehicle companies. Elon Musk's Space Exploration Techologies company (http://www.spacex.com/) is also hoping for some of that money.
"Amid the flood of tributes to the late Apple co-founder Steve Jobs, it might seem like an unfortunate time to come out with a book about Jeff Bezos and his online retailing giant, Amazon.com. But in some ways, Bezos’s achievements are just as impressive, and perhaps more instructive for would-be entrepreneurs."
People keep wondering if Jeff Bezos will be the new Steve Jobs.
He will not. Nobody has Jobs's flair for creating new products that we didn't even know we wanted until he offered them. Nobody designs hardware like Jobs, and we will all suffer for his loss. Even those of us who don't buy many Apple products have benefitted by all the knockoffs created by others, including the iPad-like Kindle Fire.
But Bezos is not about hardware. He's not even primarily about online retailing any more. He's primarily about cloud computing.
Steven Levy at Wired has the best article in the world about Jeff Bezos right now. Anyone who is interested in Bezos and the future of Amazon must read this article. Levy gets behind the facts and analyst speculations and into the heart of the Bezos story.
He points out that Bezos has caught on to the cloud computing paradigm as the future for all computing. Bezos has established the lead position in providing cloud computing services for consumers, and is now doing everything he can to pull further ahead and strengthen that lead.
While Jobs was all about creating the greatest hardware in the world, Bezos's hardware designs, including the Kindle Fire, are merely the delivery devices that will give us access to Amazon's real products: computing, media and other services delivered through the internet. The devices don't even have to be that powerful. The heavy computing is done in the cloud, on Amazon's computers, and delivered to us via that device in our hands, which will largely just need to play back what we've gathered from the Internet.
In many ways, this is a grander vision than even that of Steve Jobs. The future of computing is not so much in the hardware any more -- although it sure was nice to have those great hardware designs that Jobs came up with. The future of computing IS the internet, and Bezos is the one figuring out how bring the internet to our homes as a virtual supercomputer that seems to sit in the palm of our hands.
It's no longer about computers. It's about computing. A decade from now we may not even think of Amazon as an online retailer. Amazon will be the company that revolutionizes the use of the internet as the computing platform of choice. Perhaps more than any other company, Amazon now has the potential to become the world's leading computing company.
Interestingly, it brings up one of the biggest criticisms I got about the book. I was too soft on them about privacy and other issues that show how evil they are.
Great opinion, but in my opinion a paranoid one. Look, I address those issues in the book I just don't buy the argument that they're evil. I did a lot of reporting, and everyone -- I mean EVERYONE -- I could find who knows and/or worked with them said they're honest, idealistic, and really feel that internet search is too important to corrupt in an attempt to make an extra buck.
In fact, that's why Google is successful. Gues what? If you actually focus on your customers, put them first, make them more important than advertisers, Wall Street analysts or stockholders, then you win in the market. Is this such a strange concept? Are people that cynical?
What's disturbing to me is what I believe to be the reason for the criticism. People have come to believe that ALL corporate executives are evil and have no priorities other than making themselves rich. Unfortunately, that's largely true, but not universal.
In 30 years of covering business, I have never come across anyone who seems to be as trustworthy as Larry and Sergey. And that's not just because I wrote a book about them. I also wrote a book about Jeff Bezos, and he doesn't come close to the idealism and honesty of Larry and Sergey.
If you think Google is evil, tell me why. I'll debate it with you. But the fact that they collect data about you online does NOT make them evil. I've got news for you, there are thousands of organizations collecting data about you every day. Get over it. Google is the only one that promises not to sell your data to others. (No, it does not sell it to advertisers. Google matches up your interests or Web sites with the ads, and Google decides where the ads go based on the data, not the advertisers.)
In fact, I'll go further and make you this offer: If you want to review the book -- on a blog, on Amazon, in an email to a friend, or just over the dinner table -- let me know and I'll send you a copy. Free. And I will not give, lend, sell or otherwise provide any information about you to anyone. Not even my wife.
Your review doesn't have to be positive, just honest. But be forewarned, I may respond in the Comments section wherever you review it, if there is one. I love honest debate and appreciate any help in spreading the word.
I'm still amazed at the short-term, unimaginative strategies dreamed up by most executives these days.
Here's one scenario: Banks see a revenue delcline coming because Congress cuts the amount of fees they can charge when they use ATM cards. Damn, we can't charge merchants when customers use their ATM instead of cash? No problem, we'll charge the customers to get their cash back from us instead.
The result? Customers get pissed off, activists announce a national Bank Transfer Day, encouraging people to move to credit unions. A PR disaster, banks have to back off the plan. But now the idea is out there. Why use banks, whose only concern about customers is how much money they can collect from them through any means their botton-line focused minds can dream up?
Here's another scenario: Amazon.com CEO Jeff Bezos wakes up in early 2000 to find that stock prices for unprofitable dot-com companies have been devastated by a tech stock crash. What to do? Raising prices would be the knee-jerk reactino from most executives. No, Bezos decides to keep prices low, cutting costs instead and turning Amazon into a hugely profitable company.
Then, in 2011, Bezos decides to invest in new Kindle products and in distribution centers to better serve customers. Profits drop dramatically for the quarter, the stock drops 13 percent in one day. Bezos shrugs. He'll get it back in the long run.
Nobody announces Amazon Transfer Day.
Most companies -- and financial institutions, who seem to see customers only as wallets -- are happy to punish their customers in order to try and raise revenues and profits. Even Netflix decided to raise prices without any increase in service, even though potential competitors, including Amazon, are looming on the horizon.
The smart companies deicde -- gasp! -- that customers come first. Serve your customers well, and they'll reward you in the long run.
Is that idea really so hard to comprehend?
Not to me. I switched from Citibank to a credit union months ago. I held off for years because I needed access to ATMs that wouldn't charge me a fee to get my money. Citibank has a deal with an ATM network prominent in 7-Eleven stores. Guess what? So does my credit union (Redwood Credit Union.) Think I'll ever go back? Let's see, that would be a no.
To the rest of you, stop being banking sheep, a group to which I belonged for years. Look into a credit union. Your bank is simply betting that inertia will keep you there and they'll use that to milk you for everything they can.
"... a good story told well. If you want to understand the Bezos phenomenon, this is an easy and efficient way to do it - just like shopping on Amazon."
If any of you would like a review copy to post in a blog or on Amazon.com, send me a message at email@example.com with "One Click" in the subject line and I'll send you one. Doesn't have to be a glowing review, just an honest one.
Jeff Bezos is one of the quirkier CEOs in the business. Brilliant, but a tough micro-manager. Great financial manager, but known to pay appalling wages to the lower echelon who work under tough conditions. Incredible strategist with a tendency to come up with some of the most bizarre and controversial patents in technology. My book arrives Oct. 27. Read the WSJ excerpt.
What is the nature of time? Not an easy question. Is it as fundamental a property of the universe as space or mass, or just something our minds have created to make sense of the fact that seasons change and we grow older?
Hell, I don't know. But the New Scientist has an interesting series of articles about time. Need a free registration to read the articles.
The Kindle Fire is out, and it's going to be the hottest Trojan Horse we've seen since .. the original Kindle. Jeff Bezos has started building computer hardware with one primary purpose in mind: to make Amazon a software company. An unusual approach, but one that will ultimately succeed.
Sure the Kindle Fire will be the only significant competitor to Apple's iPad, but it is also showing that Microsoft is still stuck in the 20th Century. (Have you noticed that Microsoft really doesn't generate much buzz these days?) Microsoft just hasn't figured out the Internet software business.
Bezos started selling hardware (books, then other physical consumer products) because the market for selling software through the Internet wasn't there yet. Now he's favoring electronic books, music, video and cloud computing services because that's where his real future lies. It costs nothing to distribute software, as long as there's a device out there to receive it. Much cheaper than UPS.
The market is different now. The 21st Century calls for great devices that get their software--this time in the form of content and services--through the Internet. So he's borrowing strategies from both Microsoft and Apple to make sure the hardware and software infrastructure is there.
Steve Jobs loves making hardware hardware AND software, and likes to integrate them into great products. His hardware products are great showcases that create whole new categories of consumer electronics. He also gets the advantage of using the devices to sell his own software--music, books, video, etc. Jobs likes the high-margin strategy of building premium products and pushing old versions down the price ladder as he introduces new top-end products.
Bezos likes building harware and software primarily because he wants to sell software. Similar to Jobs's strategy, he puts out exclusive devices that run his software so that he can sell more of that software. So he makes sure that his products, while not as great as Apple's, are still impressive enough to compete with Apple while other hardware makers fail. And part of their appeal is the very fact that he has a lot of software to sell, making the hardware more appealing.
But Bezos is also copying pieces of Microsoft's strategy: start at the low end of the hardware market in order to sell his software, and build up. Microsoft ensured that Windows would be the operating system for the masses by licensing Windows to all PC makers, creating price competition and ensuring low PC prices and high Windows volume.
Bezos is aiming at the mass market with cheaper hardware that appeals to more that just the early adopters. The Kindle Fire doesn't have all the features of the iPad and is smaller, but is half the price. By creating his own hardware, he also gets Apple's advantage of selling devices that favor his own software. He'll sell you electronic books, movies, TV programs, and will throw in cloud computing services for free, just to make them more appealing. It's great that you can read a book on one device, then pick up where you left off on another device. That's because your books--and memory of what page you're on--is stored in the cloud, on Amazon's servers. The Kindle Fire will allow you to do the same thing with movies and TV shows.
But he wisely doesn't try to compete in the OS market for new devices. Increasingly, that's a war between Google and Apple (in this case, Google takes on Microsoft's old role.) Why should he? He gets the Android OS for free.
Microsoft just can't seem to compete with Apple, Amazon and Google in the Internet software business. It can't make inroads into the mobile phone and tablet markets. Sorry, Ballmer.
So look for Bezos to move deeper into the content and software services business. There have already been rumors that he would like to buy Hulu as well as Netflix's streaming movie service. He could have trouble keeping the rights to that content, but he's a tough-ass competitor, and if he (like Jobs) has the hardware to play it, the content producers will have to give in.
At least, once those content companies finally get the fact that the rules have changed in the 21st century.
We might also see Amazon making its own cell phones and other devices that will bring in service revenues. Technology is becoming a service business, and Amazon is becoming a technology retailer. It's got a great future there.
Thet's just hope that Jobs can remain active enough at Apple to ensure that Apple still has a great future as well.
First of all, you should know that I'm considered a Google apologist. I admit it, I like and respect Google. I have no relationship with the company, other than using Google ads on my blog, which has never brought me any income. I wrote a book about Google's founders and how the company got started. I was paid by the book publisher, not Google, and I used my own reporting plus the reporting and research of three other journalists, all of whom were paid by me. My opinions come from that reporting.
THE FTC IS INVESTIGATING WHETHER GOOGLE BIASES ITS SEARCH RESULTS
The FTC decision to investigate Google is utter nonsense, a waste of time and money that distracts the FTC from investigating real abuses. Here's what Google has to say about it. (Not much useful. Google is bad at defending itself.)
The Wall Street Journal broke the story that the probe was going forward yesterday. It pointed out that the probe will look into whether Google "unfairly channels users to its own growing network of services at the expense of rivals." The European Commission is investigating the same thing.
In an article today, WSJ says the probe could be "as much of a watershed event for antitrust policy as the Justice Department's landmark lawsuit against Microsoft Corp. in the 1990s."
GOOGLE IS NOT MICROSOFT
I was a reporter at Business Week, then editor of Upside magazine during the 1990s. I followed the Microsoft case carefully and wrote about it. Microsoft was using a clearly anti-competitive practice: PC makers had to put Windows on EVERY ONE of their machines, or they would have to pay a higher price. This wasn't simple volume discounting. If you sold 100,000 PCs a year and put Windows on every one, you got the cheapest price. If you sold a million computers a year and put Windows on 900,000 of them with 100,000 of them using, say Linux, you did not get hte cheapest price. It kept competing operating systems out of the PC market.
There is no smoking gun for Google, merely complaints from competitors offered without evidence.
SO WHY IS THE FTC INVESTIGATING?
The Journal article, like the New York Times, relies on an organization called FairSearch.org to articulate the complaints against Google. FairSearch.org exists only to raise these complaints against Google. It's sponsored by Google competitors who claim that Google doesn't put their result high enough in search results: Microsoft, Expedia, Kayak, Travelocity.
The comments from FairSearch.Org are as useless as the ones from Google. Quoted in the New York Times:
“Google engages in anticompetitive behavior across many vertical categories of search that harms consumers,” the organization said in a statement. “The result of Google’s anticompetitive practices is to curb innovation and investment in new technologies by other companies.”
What a bunch of boilerplate catch-phrases. Harm consumers. Anticompetitive practices. Curb innovation. Prevent investment in new technologies. Just the kinds of things you need to claim in order to get anti-trust organizations to investigate.
WHERE'S THE BEEF?
I looked into the "Fact sheet" at FairSearch.org. Nothing but bun.
Google has power: "On average, 34% of Google's traffic went to the No. 1 result." No kidding. That's true of any search results page. So Google is big. Being big, even being a monopoly, is NOT illegal, as long as you got your dominant market share legally.
It follows with more of the same: "Google dominates search and advertising." "This dominance adds up to power." Hold the presses! Important news if I've never heard any!
Search manipulation. "Google can program its algorithm to exclude, penalize, or promote specific sites or whole categories of sites." Notice that it says CAN, not DOES.
Oh, here's the evidence, according to FairSearch.org--In 1998 Google's founders wrote: : “[A] search engine could add a small factor to search results from friendly companies, and subtract a factor from results from competitors. This type of bias is very difficult to detect but could still have a significant effect on the market.”
This quote came from a paper Larry and Sergey wrote while at Stanford (you should read it yourself.) But this was an argument about why such practices should NOT be done. Nobody remembers that when Google was just getting started, Larry and Sergey did not want it to be ad-supported. Why? Every search engine on the market biased their search results toward advertisers. Larry and Sergey described this as "insidious" in that paper.
Excerpts from that paper: "we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of theconsumers." "search engine bias is particularly insidious."
These were all arguments about WHY Larry and Sergey did not want an ad-supported search engine. When Google was released, it was the ONLY search engine that did not use this bias. It worked. Google gave better results. Eventually, Larry and Sergey decided that advertising was the only way to go, so they set their standards: Ads had to be useful and relevant to users, not annoying and distracting, and advertisers would never influence search results.
HAVE LARRY AND SERGEY CHANGED THEIR STRIPES?
Sure, the question now is, have they become corrupted over time? Isn't it inevitable?
As a journalist, I say unequivocably that it is not inevitable (your opinion may vary.) This practice has long been held by every respectable newspaper in the world. Advertising never influences editorial. At Business Week, the reporters were not even allowed to talk to the ad reps. Every news organization, including the New York Times and the Wall Street Journal, knows that if advertisers influence editorial, readers will notice, you will lose credibility, and people will stop paying you for your news.
Larry and Sergey know the same thing. Bias the search results and people will realize they're not getting the best results any more.
MY OWN TEST OF BIAS
Let's put it to the test. On FairSearch.org's site, they quote a MapQuest executive:
"When people are doing searches for maps or directions for the city of New York, Google Maps comes up as the first search result in the organic (not the paid ads) listings."
Go to Google's home page and type in the word MAP. The result I got was that Google finished the word with "quest" (It also offered to finish the word as "maps" "maplestory" "map my run" "maps.yahoo.com"
The results, in order:
1. Mapquest Maps - Driving Directions - Map
2. Directions - MapQuest.com Features
3. Yahoo! Maps, Driving Directions, and Traffic
4. MapQuest 4 Mobile for iPhone, iPod touch, and iPad on the iTunes...
The rest of the results on the homepage are for MapQuest, including the news section.
Finally, at the bottom, after 13 search results, you get "Pages similar to www.mapquest.com" with these results:
1. Google Maps
2. Maps & Directions (MSN's mapblast.com)
3. Rand McNally
So why the claim of bias agains MapQuestt? Because most people type "maps" instead of "map." When you do that, the results are:
2. Yahoo! Maps
3. Mapquest Maps
4. Bing Maps
5. Maps - National Geographic
...and so on. Why the difference? First of all, Only Google and Yahoo were smart enough to start their URLs with the word "maps" -- maps.google.com, maps.yahoo.com. So when you type 'maps' those are the best fits. MapQuest is www.mapquest.com.
This gives no evidence of bias. It could be that on the 'maps' search Google biases its own results over Yahoo, or it could be cecause more people use Google Maps and more people link to it. You need more evidence than that to find Google guilty of bias.
There are many other examples. Type a stock ticker symbol into Google (YHOO or GOOG, for example). You get a top line that lists the major finance sites for info about that stock. There is a bias: Google Finance is farthest to the left, followed by Yahoo Finance, MSN Money, Daily Finance, CNN Money, Reuters. But they're all on the same line. The first actual search result is Yahoo Finance.
I just don't see the evidence here. Check out the FairSearch.org fact sheet for yourself, and tell me if you see anything other than accusations and innuendo with no evidence.
So, fine, an investigation by the FTC and EU may help keep Google honest, if it isn't already. My gripe is that the whole thing unfairly biases people against Google in the press, which just reports the facts, not opinions like me.
But at least I back up my opinions with evidence.
Can you do better? I'd love to hear your evidence of bias. Come up with a good one and I'll buy you a copy of my book from Amazon. Or, if you prefer, my upcoming book on Jeff Bezos.
Notice how I snuck in those ads? Hey, I'm not above self-promotion. But this isn't a news or search site, it's my personal blog. And at least I'm honest about it.
TechCrunch has an article today about InvestorRank, a PageRank-like method of picking the most important VC firms. Instead of ROI or other factors that can change, it rates the firms by their links with other top VC firms.
OK, kinda like PageRank, but not quite. The "links" are based on how many other firms each one co-invests with. That really means that it's just a listing of which firms are the best-connected -- which isn't a bad measure of importance.
But it doesn't mean that the VCs are good at spotting hot new companies, just that they're able to piggyback on good deals their friends come up with. And firms like Kleiner, which tend to get any deal they want because they're so famous, get the great deals because everyone pitches to them, not because of any particular insight.
It's interesting to recall, for example, that Jeff Bezos initially had trouble getting Kleiner to return his phone calls when he set out to get VC money. But he was persistent and tapped all his connections to get John Doerr's attention. Of course, Bezos then played hardball and kept telling Kleiner that he had other offers so that he could get a good deal.
Still, it's worth pitching to one of the well-connected VC firms, because they can bring in other top firms, so the list seems useful.
One other thing to note, however, is that the InvestorRank system was devised by Chris Farmer at General Catalyst Partners, which comes up unusually high on the list: number 6, ahead of NEA and Kleiner.
I'd like to also point out that the best book authors are clearly those who receive the highest ratings from Publishers Weekly. That puts me ahead of Ken Auletta in the "Books about Google" category.
Now I just have to figure out how to translate that into Auletta-type sales.
Instead, Chromebook is the long-awaited competitor to the standard notebook PC. It's designed more as a Microsoft killer than as an Apple killer.
Chromebook addresses many of the shortcomings of a PC:
Big Windows operating systems take forever to load. Chromebook takes eight seconds.
Windows gets slower as you keep adding annoying updates and fixes. Google promises that its system will actually get faster as it automatically updates itself.
Windows faces millions of viruses. Google promises "many layers" of security so you never have to buy anti-virus programs. I'm sure the security systems will also automatically upgrade as well.
Still, you have to use Google apps. This is a computer designed to run in the cloud, where programs and documents are stored. I use mostly Google apps, so won't be much of a problem for me. EXCEPT: Google Docs is OK, but needs work. I have trouble with losing the formatting when I save docs as MS .doc files. I prefer OpenOffice from Oracle, a free program that has weaned me nicely from MS Office.
Larry Dignan at ZDNet has a first impression review. He loves the speed, doesn't like the rubbery case, print driver still in beta, and is not yet comfortable doing everything online.
Ed Baig at USA Today also has a review. Can't stream Netflix movies. (That's Netflix's fault. It doesn't support Chrome browser. I have to switch from the Chrome to IE to stream my Netflix. Either Microsoft is paying Netflix or the Google evangelists have to hit Netflix hard.)
These are just first impressions, because the device ain't done yet.
The big question is if cloud computing has reached the point yet where people are willing to live there instead of in their PC. To me, the biggest obstacle is the MS Office installed base. I need to exchange files in tracking mode with editors and keep the formatting exactly the same.
But if this does work, I believe it will be the next generation of computing. iPad is a different beast. The old DOS/Windows computers are an ancient, slow technology that needs to be replaced. I hope it works.
The devices will go on sale this summer.
ADDENDUM: Oh, and one really great feature I forgot to mention. Since everything is stored in the cloud, including apps and files, you don't have to back anything up. If your computer is stolen or if you drop it and smash it to smithereens, you just get a new device, turn it on, and everything is still there, intact.