Rovio – Angry Birds
Posted: January 4, 2012 Filed under: Strategies, Trends | Tags: angry birds, rovio 1 Comment »I spoke to an old colleague about Rovio’s success and today read an article on how much they sold during Christmas this year. The Angry Birds game is perfect in its simplicity. The simple game has an underlying story that can be extrapolated into books, cartoons, merchandise, etc. Absolutely beautiful!
My question is what is the future of Rovio? Is this it? Will Angry Birds carry to be the next Pokemon? Or will Rovio become the next Zynga, with an expanded products portfolio, cookie cuttering the success they have had with the birds? I personally think both are worthy goals.
So for either strategy what would be the exit? If Angry Birds are built into a Pokemon, will they be sold to a Disney and made into a theme park attraction? If Rovio is built into a Zynga, will they go public in a big way… in 2013? Peter Vesterbacka from Rovio said, “Disney is worth $60 billion… that is our goal, and there is no reason we couldn’t build a company that size.” Wow… how do you build a 60 billion dollar valuation with through a game fan base? “We will be the first entertainment brand with a billion fans,” he told T&T magazine. So, a billion fans… ARPU…. ok, I’ll bite. Facebook has 800 million members. Their app doesn’t cost anything and is available for virtually any device known to man. “That target sounds like a lot, but we are growing faster than Facebook…’, says Peter. I wont argue with the growth speed, but I might argue with the theoretical market saturation point. Groupon grew faster than anything before and they have hit their glass roof. Pokemon has been hit with Digimon, Bakugan, Beyblade, Yugioh, Skyliners, etc. Even Star Wars is now in on the card collecting action. Don’t think that Angry Birds has blocked the critter catapult gaming market. Just as a few examples… Battlewagon, Crush The Castle, Siege Mover, Sand Castle, Ninja Dogs, Sieger, etc. Granted that all of the above have no character story to expand upon, but my point is that it would not take much to come up with something similar.
So where is the big differentiator? I think its Peter and the team… the company’s greatest assets. They have played the marketing/sales game very well. I have always been a big critic of Finnish marketing acumen, but you could write a book on Angry Birds and that would be the new benchmark globally. Hitting one billion fans doesn’t happen over night and requires years of commitment and continuous innovation… plus luck. Let’s hope the team at Rovio have the stamina for the long haul and don’t get lazy with their newly EARNED wealth.
Noise About RIM
Posted: December 21, 2011 Filed under: Strategies, Technology, Trends | Tags: RIM Leave a comment »What’s up? RIM has come down from its glory days to costing next to nothing. Device innovation has stifled. The BlackBerry Enterprise Server (BES) is the piece that is still worth something and the client base it has in the prosumer market.
There were rumors about Amazon making a bid for RIM. A logical paring, as RIM doesn’t have a cloud and Amazon does. Amazon could also vitalize RIMs consumer business. Then again the leap from where RIM is today to being competitive makes me wonder.
The other option is a Microsoft/Nokia purchase. It would take a player out of the game. Windows Phone 8 interface to BES would be competitive. The BES user base would give Microsoft’s phone business an additional prosumer boost.Throw BES on Azure. So what is in it for Nokia? Unless Nokia was the buyer and would add BES to its Windows Phone differentiators. BES would give Nokia a much needed boost in the North American market.
It boils down to RIM’s owners understanding that the music has stopped and they need to make some decisions. Whatever happens the fact remains that alone RIM is dead.
Apple’s Cloud Strategy Starting to Find Shape
Posted: December 19, 2011 Filed under: Strategies, Technology, Trends | Tags: apple Leave a comment »I’ve written many times that Apple’s iCloud today is really just a virtual repository for media. Apple products of different form factors access content universally, but we’ve not seen any real cloud applications that would have cross functional work flow and/or data sharing/refinement. We are not seeing the partner pool tap into Apple’s core services.
Apple today has over 500,000 partner applications available. Again, I would not call it a ecosystem, since in the classical sense of ecosystem, the members of that ecosystem interact with each other in some way. Currently that interaction is limited to media sharing. Apple’s core services are weak and not open to partners to integrate with and add value to. The core pillars of any ecosystem are unified communications, search, maps and productivity tools. The more the alpha vendor opens their APIs for partners to build on, the stronger the ecosystem will be.
Siri is a bright spark in Apple’s core services toolkit and there are rumors that Apple will offer an API down the road, but not today. Siri clearly differentiates Apple in the search space. Maps & Compass is really Google Maps and provides little differentiation from an ecosystem stand point. iChat, iMessage, iMail, etc. are behind the curve and offer little ecosystem value. iWorks is so far behind competition that it too offers nothing for partners.
Apple will likely come out with an innovate iTV concept. The TV sets will be way more expensive than other solutions and I predict will have a hard time competing with lower cost sets coupled with advanced gaming/media consoles. The Apple product family is purely geared around media consumption and that is where it is likely to stay.
State of the Economy: December 2011
Posted: December 9, 2011 Filed under: General, Trends | Tags: Economy, EU Leave a comment »Its been a while since I wrote on the economy. From where I sit the US economy has stabilized and are growing in strength. Consumer confidence and spending is back. Large corporations are still making good profits. The only big minus, is congressional inability to decide on anything at all. I don’t see congress being able to get anything meaningful done before the nation votes either for a new President or gives the current President’s policies a vote of approval. Until then we could just send congress home to their states and save tax payers money.
EU had a major economic conference last night and it was a total disaster. In my opinion EU was destroyed for good when Germany, France and Italy retained a veto, while scrapping the need for full consent of all members of emergency fund decisions, ending any equality between member states. Imagine the United States with California, Texas and New York having a veto in congress. I think we would start to hear about secession plans very quickly. The fact that the UK was totally isolated from the EU also doesn’t speak well for the future of the union. Imagine having Florida sidelined from the union.
What I think will happen is that we will see the monetary union first down sized to fiscally healthy members. Without monetary union the economic differences between nations in the political union will grow out of control, which will force the better performing nations to limit free movement of labor across boarders. Then goes Schengen. Once we dismantle Schengen, the union is gone. With time we will only have a union between France, Germany and Italy, with a handful of smaller countries, as second class citizens.
Going back to the US, the reason why the United States is starting to rebound is due to the unprecedented level of monetary intervention by the Federal Reserve. Yes, there will be commissions and blaming, because the trillions of dollars spent and the national debt are hard for the nations collective psyche to accept, but the fact is that without bold decisive action we would be facing the same crisis as Europe. The difference being that the EU doesn’t have the collective will to take unprecedented action and thus will ultimately fail. Could the monetary intervention have been handled differently… absolutely. And that is why congress will be having hearings for years. In a society with this degree of political power wielded by special interest groups, you will always see in any big policy change morally questionable transfer of wealth. We need to remember that all sectors of American industry operate under the economic principle of maximizing share holder value. The current execution of that principle is short term and we need to get back to a long term mindset, but that change in mindset will take a generation. Universities need to be teaching economics students about long term shareholder value creation and grinding it into their thinking. We balk at C-level greed, but as a nation of shareholders that is what we’ve asked of them, what we incentivize them on and how we have our universities educate them.
Like with everything else, the future is in our youth. We need to instill healthy principles of frugality, equality, hard work and ethics in to our youth, so when they grow to lead our nation they will make better decisions than we have.
The Cloud Evolution and Hardware Manufacturers
Posted: December 5, 2011 Filed under: Strategies, Technology, Trends | Tags: cloud, television 1 Comment »Just this past weekend I had a discussion about how the cloud would impact cable/wireless operators and TV screen manufacturers. I believe that what happened in the smart phone space will happen with regards to TV manufacturers. Cable will ultimately loose their content business to Microsoft, Amazon, Apple and Google. Cable will be reduced to selling bandwidth and consumers will buy content (music, movies, games and applications) through media centers and gaming consoles. The TV manufacturers are trying to take a piece of the pie, by locking down internet access on the devices and only allowing access to certain services, like Netflix, with whom they have an ‘arrangement’.
How many of you buy content from your wireless carrier? How many of you rely on HTC, Samsung or LG for your content? What sets Microsoft, Amazon, Apple and Google apart is that a) they have software companies at heart, b) they have core applications of their own and c) they have existing content partner ecosystems. What further sets Microsoft apart from Apple is that Microsoft is backed up by their own cloud. Cloud is important in this equation, since it allows all form factors to access, share and contribute to common content. In the future we will see more integration between cloud services, which will ultimately set clouds apart.
Pure hardware manufactures lack the pedigree, cloud and partner ecosystem to benefit from content sales. Unless they forge alliances and share. I recently purchased a application for my Windows Phone and billing is through my wireless carrier. This is an example of a symbiotic relationship between carrier and content vendor. If I was at Vizio, Sony, Panasonic, Samsung, etc. I’d form a software services group, who would be tasked with developing a portfolio of cloud based services for optimizing the TV viewing experience and expanding on that experience. TV manufacturers are the ultimate experts on viewing experiences. I’d sell those services through existing cloud ecosystems and their home media center and gaming consoles. I would allow those applications to function on any manufacturers television, but with premium features only supported by my devices.
This same model applies to Nokia and its role in the Microsoft ecosystem. For higher ARPU Nokia needs to be in the services and content business, but that should happen through the existing market places and communities. Nokia can differentiate especially through geo location based services. Those services should run on every Windows Phone device, but premium features only on Nokia devices.
If we all agree that cloud is all about ecosystem and we all agree that the future is in cloud based services and content distribution, then television manufacturers need to figure out quickly what their cloud ecosystem strategy is and how they intend to play.
Cloud Services Ecosystem
Posted: November 30, 2011 Filed under: Strategies, Technology, Trends | Tags: Azure, cloud Leave a comment »I’ve been contemplating the roles and responsibilities in a PaaS cloud ecosystem. Who are the players? Every PaaS cloud has an alpha vendor, which is the owner of the cloud. With Azure its Microsoft. Oracle, IBM, SalesForce, Intuit, etc. are alphas in their own cloud ecosystems. An alpha’s role is to provide the infrastructure and the platform. Additionally the alpha provides core building blocks (services) for the partner ecosystem to use and add value to. It is the alpha’s role and responsibility to provide these core elements since they have deeper pockets than their ecosystem partners. Also in a PaaS ecosystem the alpha vendor has an interest in promoting it’s own services.
So what does this logically mean? PaaS ecosystems are not ideal for partners that are looking to promote services that compete with the alpha vendors core services. Vendor ecosystem’s have never been ideal for competing offerings, but this is especially true in the cloud. Cloud is all about ecosystem! Its about services and data integration. It’s about joining forces (P2P) to create greater value for the end users. Integrating two competing CRMs doesn’t increase ecosystem value. Integrating a social networking tool to the alpha vendor’s CRM service adds to ecosystem value.
As ISVs (Independent ‘Service’ Vendors) plan their product strategy, the number one question they should ask themselves is, how does my solution add value to the ecosystem at large. In the cloud the saying that ‘one plus one equal three’ is true for workflow integrated data sharing services. For standalone services one only equals one. On a side note, this is a great point of difference between Apple’s and Microsoft’s cloud ecosystems, since Apple’s 350k plus apps are all standalone.
Talking of valuations, investors should be looking to assess ecosystem value, because ecosystem value translates into valuation. Integration makes services meaningful in a greater context and it makes for stickiness. Stickiness is great for reoccurring revenues. Forecast able reoccurring revenues mean bigger multipliers.
Lets also add a layer of omega partners under the alpha vendor. Nokia would be an omega in Microsoft’s ecosystem. An omega has deep enough pockets and user base to produce core components. The chasm between an average partner and an omega is huge. Omega is the globally managed depth (strategic) partner. Intuit is also an omega partner in the Azure ecosystem. Omega partners can also have their own sub-ecosystems, but should be vary of separating themselves too much from the larger ecosystem, so as not to limit integration and data sharing at large.
Where I see the partner ecosystem exploding is in small one person operations that create micro services with specific functionality allowing others to incorporate those into their workflows. Market places will have services component libraries and licensing models will vary.
Cloud is all about the ecosystem
Posted: November 18, 2011 Filed under: Strategies, Technology, Trends | Tags: Azure, ecosystem Leave a comment »In my last 5 or so blogs I used the ‘cloud is all about the ecosystem’. I wanted use this opportunity to highlight/consolidate what I mean by that.
I’ve used the above image in a past blog, but it really tells the whole story and puts it into a competitive setting.
Cloud computing is enabling a generational leap from applications to services. This is a fundamental evolutionary change. If we take stand alone applications, like iPhone apps, and we pool 350,000 of them into a marketplace, it doesn’t make them an ecosystem. The concept of an ecosystem carries the notion that members of the ecosystem interact with other elements around them; look it up on Wikipedia. In the case of the Apple partner portfolio, the hundreds of thousands of applications do not interact with each other at all. iCloud is not really a cloud at all, but a virtual media storage. Accessing media from a virtual storage is not really the ecosystem interaction that I am talking about. The 350,000 applications currently available do not reside in the cloud. They are client based and this is a fundamental point! The Azure ecosystem in this sense is much further ahead than Apple and is continuously gaining distance. Apple is still at the starting line figuring out which running shoes to put on. The same applies to Google’s Android application portfolio. My point is that it doesn’t make a difference whether Apple and Android have 1 or a million applications more, when those applications are quickly becoming architecturally outdated.
In a true cloud, services (not applications) reside in the cloud itself. Being on the the same platform (PaaS) and on the same database (DaaS), these services have exponential potential for integration and data sharing. When services have workflow integration and share dynamic data, not just accessing static media, constantly cultivating the value of that data, we have something revolutionary. Now to be honest, current Azure services have very minimal integration and data sharing… drives me nuts! They are predominantly legacy business models on a new platform with multi-tenancy upgrades. Change takes time and I believe that those services, and future services to be added, will be more data centric.
True cloud services are form factor independent. This means that you need a unified OS portfolio, like Windows 8, that will enable the same services to run on all form factors. Apple partners have to deal with iOS and Mac. Google partners have to deal with Android and Chrome. Microsoft could have come out with a slate OS years ago, but long term vision won and I personally believe that Microsoft will be better of for it over the next decade.
I’ve stated before that true cloud transformation will be driven by mobile and consumer services. I recently read that xbox is investing in cloud based gaming. Microsoft is by far the market leader in console gaming. When that market segment moves onto Azure, Microsoft will be unquestionably the dominant cloud in the sky! I’ve also not lost hope with Zune. xbox will dominate gaming across form factors and device types, and it will revitalize Zune for audio and visual media… single source convenience.
I’ve not commented on Nokia’s role in Microsoft’s cloud revolution. Nokia plays a major role accelerating Windows Phone penetration. Nokia also has a considerable play in driving the first wave of true cloud services for consumers and enterprise. A phone is not the device, but what the user can do with it. Nokia needs to embrace the Azure ecosystem and its market places. Nokia is so large that I fear it will try to create it’s own ecosystem (OVI or equivalent) within the Azure ecosystem. This would be strategically a very bad move. Nokia has bet on Microsoft and should embrace that bet now in its entirety. Through services, Nokia will have ecosystem stickiness and ownership without raising artificial barriers to integration.
Azure Marketplace Analysis
Posted: November 16, 2011 Filed under: Strategies, Technology, Trends | Tags: azure marketplace 2 Comments »I took some time to categorize and analyze all current 536 services available on the Azure Marketplace. I used simple categories:
- ERP (ERP and all enterprise resource management derivatives)
- CRM
- Financial (Accounting, Billing/Invoicing and claims management)
- Social/Gaming/Consumer
- Tools (development platforms, workflow, monitoring, SDKs, etc.)
- Mobile (server backend solutions to mobile services)
- Document Management
- Data (data storage and recovery services)
- Security (cyber security, physical security and risk management)
- eCommerce
- Collaboration
- Communications (VOIP, video streaming, etc.)
- CMS (web content management platforms)
- BI (analytics, reporting/dashboards and data visualization)
- Project Management
As I had suspected (based on skimming through the list and gut feel) 37% of the total population of 536 services promoted were ERP/CRM/Financial solutions. All were niche and/or vertical plays with minimal or no integration with Microsoft Dynamics or Office. Cloud is all about ecosystem and ecosystem is all about integration and data sharing. These niche players really need to think hard about their road map and what their value to the ecosystem is on the long run.
The other interesting find was that 11% of the total population is development tools and supporting services, also known as Azure building blocks. This number is disproportioned to the size of the total population and really reflects a) the massive change that is happening in the partner community and b) the lack of basic ‘plumbing’ in the platform itself. The positive in this is that there is a variety of development, billing, monitoring and optimization platforms to choose from.
Web services in general are 13% of the total population and they are supported by content management systems, which are 3% of the total population.
I recently spoke to a gentleman from Parallels and he said that according to their research SaaS PBX/VOIP are the most in demand by end customers. This is a huge partner ecosystem opportunity, as only 2% of the currently available services address that market. I’ve also been talking to CXOs of storage and recovery services vendors. That segment also offers a huge opportunity with 2% of current population.
Mobile service backend hosting is at 4%. I personally believe that with the launch of Windows 8 we will see a cloud explosion and the innovation will be driven bottom up from smart phones to slates and then PCs. Windows 8 beta will probably come out next fall and general availability by the end of the year. The time to start innovating the next generation of cloud based integrated and data sharing mobile services is here and now!
State of the Azure Ecosystem
Posted: November 9, 2011 Filed under: Strategies, Technology, Trends | Tags: Azure, cloud ecosystem value pyramid Leave a comment »I’ve been studying the Azure ecosystem for three years now. During that time I’ve had the pleasure to talk to hundreds of ISVs and to hear their views on cloud computing and the direction they are moving in. The ecosystem evolves in twelve month cycles. If you research the ecosystem within a single cycle you are not seeing the change and trending that is happening.
When I started three years ago most ISV CXOs thought that cloud computing was just a more advanced virtual hosting. IaaS came before PaaS and IaaS is really an advanced virtual hosting environment… not really a cloud according my definition of a cloud ecosystem. In the second year ISV CXOs understood the difference between IaaS and PaaS. The discussions were no longer focused on technology, but more geared towards how their businesses would be impacted in the transition from perpetual to subscription licensing. Ultimately any major change is a business decision, not a technical decision. As I reach out to ISVs today, I am seeing a clear split between private cloud and public cloud implementations. The business transition to subscription based models is happening now. Again private cloud in my opinion is not cloud at all, but just more advanced virtual hosting. Those that have adopted a private cloud model are typically larger ISVs with sizeable existing install bases. For them rewriting their code base to support multi-tenancy is a sizeable investment. When you add on the perceived better security and up time of private clouds, it will be 2-3 more years until investments in multitenant architectures will be made in this segment.
Most start ups develop native Azure from the start. For them it is a logical option. I ask those companies what their ‘cloud’ play is and I get blank stares. How do you differentiate from private ‘cloud’ competitors? They are subscription based too. Are you really so much cheaper? Is your deploy ability really so much better and more global? Cloud is all about ecosystem and ecosystem in this sense is all about services and data integration.
Above is a cloud ecosystem value illustration. In 2011 we’ve seen the Azure market place grow considerably. If you scroll through the hundreds of cloud applications featured, you will notice that approximately 60% are niche ERP, CRM, Accounting, etc. derivatives. These niche applications sit in their own silos and have very few integration point with the Dynamics product family and/or core services, such as Bing search/maps, Lync, Office, Exchange, etc. This is exactly what happened within the early days of the social media revolution. Most B2B uses of social media are based on traditional marketing models and not fully embracing the potential of the new services platforms.
I believe that 2012-2013 will be an explosion for pure cloud. With the launch of Windows 8 we will have improved integration and flow between device form factors. The Data Centric Integrated Services Provisioning will grow from consumer services.The classic example of this is searching for a restaurant on Bing, selecting on Bing Maps and reserving a table in a separate third party application. To the user the experience was seamless and the user had no idea that they were actually flowing through multiple integrated services. Their need to eat was shared and that data was cultivated from a need to a table reservation in the cloud. Now superimpose this vision on an ecosystem of cloud based services in supply chain, sales or enterprise resource management. That is the transformational power of cloud!
The integrated services revolution is coming and it will change the competitive landscape entirely. The Apple ecosystem is application centric without a true cloud foundation and no hope of catching up. iCloud is not a cloud… it is a virtual server that siloed apps access to retrieve and store media. iPhone 5 will be the crescendo, after which we will have to wait for a long while. Analysts are already writing that Mango has caught up with iOS. Google could claim a true cloud foundation, but without a unified OS data centric services integration is half hearted at best. HP, Dell, IBM, SAP, Oracle, etc. are all racing to buy cloud IP, but they too lack a universal unified OS with a global ecosystem of services partners.
Nokia Lumia
Posted: October 26, 2011 Filed under: Trends | Tags: lumia, nokia, windows phone Leave a comment »Nokia finally launched its Windows Phone and named it Lumia. Definitely a Finnish phone. In Finnish ‘lumi’ is the word for snow. It’s appropriate that the phone is launched at the same time that first snow is hitting northern Finland. I guess you could also draw an association to illumination and how the phone comes to life in the users hand. Of course ‘lumia’ has a meaning in Spanish, but I doubt that it was the intent of Nokia marcom wizards.
The phone is on par with THC offerings and the thin polycarbonate shell makes it sweet phone to handle. Amoled screen is top of the line.
So what differentiates Windows Phone from the iPhone and Android. At the Nokia release event the head of the Windows Phone division from Microsoft stated that it is the seamless flow from service to service and integration of all communication streams. In my opinion those are just examples of what is cloud. Seamless flow through applications is part of the service orientation of the cloud. Integration of communication streams is an example of data sharing between services through the cloud.
Adding SkyDrive quota to device is a nice play against iCloud, but in my opinion ‘me too’ and unimaginative. SkyDrive and iCloud are just virtual storage space. The media isn’t linked or modified to increase its value to the user.
iPhone 5 will be the crescendo of the iPhone saga. Application ecosystems are no match for service ecosystems and Apple doesn’t have the pedigree or cloud investment to keep pace with Microsoft. Google is better situated to compete, but in my personal opinion lacks vision. Google is riding the app ecosystem wave and is missing the train on evolving to a service ecosystem.
