Entrepreneur Watch

Jeff Bezos vs. Steve Ballmer vs. Bill Gates

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: No Steve Jobs, but more instructive for entrepreneurs

A review from Canada of my book, "One Click: Jeff Bezos and the Rise of Amazon.com."

"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."

Why Jeff Bezos will become a powerhouse in the future of computing

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.

Amazon's Kindle Fire: Trojan Horse and ... Microsoft Killer!

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.

Apple-like Strategies

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.

Microsoft-like Strategies

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.

 

Who Is Jeff Bezos?

A tax dodger? ... A ruthless competitor? ... An incredible CEO? ... A tough SOB? --- An extraordinary entrepreneur?

All of the above?

"One Click: Jeff Bezos and the Rise of Amazon.com"

Pre-order sales available:

Barnes & Noble  BOOKSAMILLION  INDIEBOUND  AMAZON.COM  800-CEO-READ

 

 

Get your free Kindle: June 2012

The current buzz is about the coming of the free Kindle. 

Well, don't get too excited yet.This isn't new speculation. It just seems to be gaining momentum because some bloggers have recently discovered the idea.

Just so you know, though, I think it's a great idea and a real possibility. I'm just finishing up a book about Jeff Bezos and Amazon, and this seems like just the kind of bold move he might make. He's not afraid to take chances.

But the current web of speculation:

I write about it today because Myles Tanzer, a blogger at the Village Voice, wrote about it today because Amy Gahran, a blogger at CNN.com, wrote about it yesterday because blogger Kevin Kelly wrote about it in February because Michael Arrington wrote about it a year ago and because blogger John Walkenbach wrote about it in 2009.

Hasn't happened yet. But that doesn't mean it won't.

The buzz started when Walkenbach graphed the declining price of the Kindle, and noticed it was pretty much on a straight-line decline. Straight lines eventually hit the X-axis, which means the price hits zero.

So the price should hit zero in about three months.

Kevin Kelly adjusted the graph with a new data point.

So the price should hit zero in about eight months.

I thought I'd try my own chart, with all the data: The cheapest Kindles at any given time and the dates they were announced. Here it is. 

Oops. Not quite a straight line. It seems that John and Kevin neglected to put in all the data points. Like the original price in 2007. Plus, the last data point wasn't available yet. I added a best-fit straight line (linear regression) to my data.

So the price should hit zero in about 15 months. Wanna bet?

I should note the other info from the previous bloggers that led them to believe this would happen. 

In August 2010, Kevin Kelly asked Bezos about those unusually straight trendlines. Bezos smiled and said, “Oh, you noticed that.” And then smiled again. Yeah, well, Bezos might say that just to yank his chain.

Michael Arrington quoted “a reliable source” that says Bezos wants to give a free Kindle to every Amazon Prime subscriber (Amazon customers who pay $79 a year to get unlimited free two-day shipping and one-day shipping for $3.99 per item.) Although, as a former real journalist, I have to say that no real journalist would report something like this with only one anonymous source.

Amy Gahran pointed out that the economics of e-book sales might justify a free Kindle. Market researcher Forrester estimates that people bought $1 billion worth of e-books in 2010, and that by 2015, it will grow to $3 billion annually. I bet it'll hit $3 billion by June 2012. Hey, I can guess as well as the next market researcher.

For now, the Kindle still leads the market for e-book readers at its current price. Research company ChangeWave estimates that the Kindle had the largest share of the market in early 2011, at 47 percent. Apple's iPad (which does much more than just read books and is more expensive) had a 32 percent share. The Sony Reader and the Barnes & Noble Nook were laggards, with just five percent and four percent of the market, respectively. However, Amazon had the market almost to itself until the iPad was intoduced, so it looks like it could use more price cuts.

E-books are clearly a huge part of Amazon's future. The question is whether the Kindle itself will be a part of that future. After all, Amazon also provides free applications that allow people to turn their computers and cell phones into e-readers in order to buy and download e-books from Amazon.

If Bezos wants to keep his share of the e-book market, maybe discounting the Kindle to $0 makes more sense than trying to discount the e-books themselves. He's been fighting the publishers to cut the prices, and losing. It's a delicate balance.

But I'm sure Bezos has a flow chart to figure out if it could work.

If it does, go for June 2012. At least I used real data.

 

Journalism's Near-Death Experience. Can Google help?

Journalism isn't dead, but it's about as robust as an octogenarian with Chronic Fatigue Syndrome.

People like to place blame on their favorite scapegoat: Google News stealing their stories, Craigslist stealing their classified ads, bloggers stealing their audience.

I don't buy it. The real culprit is unstoppable. It's the Internet itself, Stupid! News and a lot of feature stories are going online, and from there, they're shared everywhere. What we're seeing now is the chasm journalists have to cross as the trade moves to a new online model.

Journalism won't die. There is a critical need for good reporters doing the legwork to dig out the stories and writing about them with healthy skepticism and insight. Blogs--including my own--just can't do that. You have to get paid a decent wage to do the legwork.

The new model to make online journalism work is really quite simple. It's just that no one is doing it. 

Google understands what the new model is. Late last year, Google CEO Eric Schmidt wrote a piece for the Wall Street Journal, "How Google Can Help Newspapers." He describes a compact device for the year 2015. If you want to know what type of tablet computer/e-reader Google and Verizon are likely to unveil to compete with the Kindle and the iPad, read this description from Schmidt:

Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in The Wall Street Journal and a piece about Iraq from Egypt's Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.

Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I'd never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.

That's how it will be done. But Schmidt doesn't go quite far enough. Aside from providing these services on the reading device, across a nearly infinite number of news sources, these services need to be provided by online publications themselves.

Today's online pubs don't recognize their audience beyond their sign-in ID. They don't recommend stories that we may be interested in. Worst of all, their ads are completely irrelevant to our interests.

That's an artifact of the way the old-dog publishers traditionally dealt with print. They haven't yet learned new tricks.

If an online pub is well-tailored to a reader, she will be willing to pay a subscription. If the ads are properly targeted, they will actually bring in decent revenues.

But it's important that the news/features sites have these capabilities themselves, not just through a new tablet from Google. It's critical to maintaining loyalty to a particular publication. It's critical to bringing in loyal advertisers and revenues without paying a percentage to Google.

I would be willing to license the appropriate technology from Google to get this capability on a news/features site of my own.

Anybody want to provide some funding to try it?

Google violates Kansas copyrights

Once again, Google has shown its blatant disregard for international copyright standards.

Earlier today, Google CEO Eric "Oh aren't I smart with my Ph.D©" Schmidt announced that the Mountain View, California company was changing its name to Topeka. 

Why? Because the city of Topeka, Kansas had supposedly given up the rights to that name when it announced it was changing its name to Google.

This argument doesn't wash any better than my uncle Ernie after a night drinking with the hoboes in U.N Plaza in San Francisco.©  

Google, sorry, Topeka, knew that the people of Topeka, sorry, Google, were only planning on making the change temporary.

The Topekans, sorry, Googlans, simply wanted to call attention to the fact that children in that city of 122,000 have never had the luxury of Web-surfing faster than 122K baud, 1,000 times slower than that enjoyed by children in more developed parts of the world like Singapore. The good people of Topeka, sorry, Google, Kansas want to convince Google, sorry, Topeka, to install a Singapore-speed© broadband network in its fair city. 

Google, sorry, Topeka, has promised to do that for any U.S. city willing to change its name to Google, sorry, Topeka, wait, I'm confused now. So that city-that-must-not-be-renamed in Kansas obliged, but only for a month.

I know that Google knew this change was temporary because, in another blatant copyright violation in its attempt to destroy mainstream media, Google CEO Eric "Oh, aren't I smart with my Ph.D" Schmidt's announcement actually linked to a CNN article that described Topeka's, sorry, Google's sad attempt to gain Schmidt's attention so that the children of Kansas might catch up to the technology of the "Singapore Age"©. In that article, mayor Bill "No, I don't have a PH.D."© Bunten said it was only for a month.

CNN, of course, is owned by Rupert Murdoch©, who has complained about Google, sorry, oh to hell with it, Google stealing his intellectual property by linking to his news articles. Dr. so-smart Schmidt is just trying to goad Murdoch© into doing something stupid, like blocking his news articles from Google searches. 

When is Google going to learn that EVERY WORD any American ever writes down or steals from a native American tribe is automatically copyrighted and nobody else has ANY rights to it? Just because Topeka is temporarily relinquishing the name, Schmidt cannot violate the city's copyright©. The city has exclusive rights to that name for 123 years past the death of the city's last living resident.

Please, write to your Congressman and ask the Justice Department to crack down on Google before it becomes any more powerful. Before long, it will have a monopoly on every city name in America©.

Let's face it, if this doesn't prove that Google is evil, nothing will. ©

"Millions" of Amazon Kindles sold, revenue and profits up strongly. So why so secretive?

Jeff Bezos has finally opened up--a little--about the number of people who now own Kindles.

"Millions."

My guess is just over 2 million. Bezos has been suspiciously tight-lipped about how many he has sold. Apple's iPad probably pressured him to give a number. Kindle is likely to be the main victim of the iPad, assuming a lot of people actually decide to buy an iPad.

Bezos probably also waited until he passed the 2 million-unit remark before giving a number. Better than saying "over a million," which would have made me conclude that 1.01 million had been sold.

Still, the company is doing well. revenues and profits way up. So why so secretive?

TechCrunch has a summary (this article via Washington Post) of the conference call that gave out this info.