Entrepreneur Watch

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.

 

FTC kowtows to Google competitors, begins investigation of Google practices

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.

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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

4. MapsOnUs.com

So why the claim of bias agains MapQuestt? Because most people type "maps" instead of "map." When you do that, the results are:

1.Google Maps

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.

UTTER NONSENSE

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.

 

 

 

 

 

 

 

Google Chromebook -- No iPad. Microsoft killer?

People have been waiting for Google to come out with an iPad competitor.

The Google Chromebook is not it.

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.

Google TV: The Sequel

Reports are coming out that Google TV 2.0 is in the works. AllThingsD reports that Google is acknowledging the fact that TV producers are going to block it for now, and the new version will emphasize adding Internet programming to the TV stuff you're already getting. Just needs some inroads.

The system also needs design improvements. ZDNet says it should get rid of the keyboard.

Business Insider says it will have faster chips, a better user interface, and Android apps.

Someday the TV programming business is going to have to accept the fact that all programming will come through the Internet. Come on, everything digital is moving to the Internet. Legacy businesses just can't stand change.

Will this end up as another iPhone/Android competition between Apple and Google? We might have an idea next week when the new Google TV is announced at the Google/IO developer conference.

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.

 

Will Steve Jobs make a cheap iPhone?

Sources told Peter Burrows at Bloomberg BusinessWeek that Apple is working on a small, cheap (and out of control?) version of the iPhone to slow the infiltration of the Android from Google. 

Really, really interesting, and a major strategy shift rom Steve Jobs if true.

Since his comeback, Jobs has seemed content to stick to his pre-firing strategy of capturing the high end of markets and letting the "clones" take the bulk of the business. That happened in PCs, where imitations of the Mac OS (a product from Microsoft called "Windows") took over the PC business, leaving the Mac as a niche player. An important, cutting-edge, Mercedes-type niche, but still a niche.

Jobs has seemed willing to continue that strategy in smart phones and now tablets, letting Google play the old Microsoft role: Imitate Apple's software and license it to all hardware makers. That means Micros- er, Google, sells more units and attracts more apps from the independent market over the long-term.

It's been working for Google. Canalys says Android phones have started taking over current sales of the smart phone market.

At the end of 2009, Android captured 9% of smart phones sales, while iPhone got 16%.

One year later, Android took 33%, iPhone 16.0%.

(Raw numbers from Canalys here)

I figured Jobs was happy with this approach. After all, Apple's profits and stock price are outstanding. But I've had a bad habit of underestimating him. I admit it. He's a genius. (Well, I've always admitted that.) He's smarter than I. He's the greatest pioneer since Thomas Edison said "Let there be light bulbs." He will continue to surprise everyone, no matter how used we've become at being surprised by him.

Perhaps Jobs is entering a new phase: Undisputed market leader. Bad for Google if he decides to do that.

Maybe he's still just thinking about this mass-market iPhone. Now that the iPhone is coming out on the Verizon network, we'll have to see if Android will continue its momentum. If not, Jobs may not have to make this change. Or maybe he'll do it anyway.

Hell, what do I know?

 

 

Nokia + Microsoft vs. iPhone vs. Android

Ed Burnette at ZDNET has a funny interpretation of the announcement that Microsoft and Nokia are teaming up to create a "new ecosystem" in smart phones.

Right.

I'm always wary of underestimating Microsoft. It tends to create good products after the third try. It created a nice search engine with Bing. And it's gaining. Hitwise reports that Google's market share is stalled at only 71% of the market, while Bing has risen a point or so in the last sixth months, powering up to about a 9% market share. Comscore says Bing is up to 11.5% while Google is only at 65.5%.

Besides, Bing is the new Yahoo! That oughta help.

So what's this new ecosystem stuff? A powerful new Smart Phone system based on Nokia hardware and Microsoft software! 

Microsoft has done it before. I mean, Windows for the PC became a great ecosystem. Sure, it got a little head start by becoming the OS for the IBM PC back in the Lower Cretaceous Period of the PC. And Bill Gates was smart enough to keep the right to license it to others and take over the PC world like the marsupials that took over the dead dinosaur niche and eventually evolved into Bill Gates.

But, hey, now it's got Nokia to give it a ... well, a fourth place head start. I'm sure the same strategy will work as other smart phone makers jump on the "Nokia Windows Phone Smart Phone" (NWPSP) standard!

OK, it doesnt have the pizazz of the "IBM PC" standard. They're working on that, I'm sure.

Ballmer points out that there must be millions of apps companies who already know how to build Windows apps -- you know, those folks that build apps for PCs, like Word, Excel, PowerPoint, etc. -- and are anxious to leverage their Windows skills for the smart phone market. Or, at least, the apps developers hope they will find themselves in the pole position once the NWPSP ecosystem takes off the way Bing has.

Already, Ballmer says there are over 8,000 apps for Windows Phone. The iPhone apps market, by contrast, is stalled at about 300,000 apps.

He also notes that by combining Nokia's power in phone hardware and Microsoft's huge advertising budget, the two of them will create "a shared roadmap so that we can really align and drive the future evolution of the mobile phone."

God knows that's needed. Steve Jobs and Sergey Brin don't seem to have much of a road map.

Nokia and Microsot are now the underdogs in this fight, so they're going to fight harder. And they've both been there before. About 30 years ago.

I'm sure they still remember how it's done.

Drive a Plug-In Prius, Ford Focus, Toyota Highlander Fuel Cell Hybrid. $10

If you're in the San Francisco Bay Area Oct. 9, you have a chance to take an early drive in some green cars not yet on the market.

The Green Drive Expo, billed as an "eco-car event" will feature over a dozen alternative-fuel vehicles with free test drives (the $10 is for admission to the Expo.)

Some vehicles you can drive:

Ford Focus, Think City and Mitsubishi iMiEV all-electric vehicles; Toyota Plug-In Prius; Ford Escape Plug-In Hybrid; Toyota Highlander Fuel Cell Hybrid vehicle; Lincoln MKZ Hybrid; and many more including bicycles and electric scooters.

The event also includes "expert panels" and technology presentations about climate legislation, the future of green cars, updates on alternative fuels.

They'll also show off Tesla Roadsters (no, you can't drive one of those) and some home-built eco-cars.

Hey, it's only ten bucks.

When: Oct. 9 from 10 a.m. to 5 p.m.

Where: Craneway Pavilion

Address: 1414 Harbour Way South, Richmond, CA 94804.

Tickets: $10 for adults; no charge for youths 16 and under. For free passes, go to www.GreenDriveExpo.com. Info: 510-621-7803.