Earlier this year, I wrote about a WSJ article that covered the revenue model known as freemium which is a combination of free and premium. The idea is that you release a free version of your offering in order to capture a larger market share and depend on some segment of your market upgrading to a paid version.
I just read a NY Times article that used their coverage of a start-up that makes a product called Evernote to weigh in on the freemium topic.
I knew about Evernote back when it was just a freeware windows application that you could use to capture notes of various media types in one place that was searchable. Their biggest competition at that time was Microsoft's OneNote product which is now bundled with MS-Office and, frankly, I've never seen anyone use it.
Now, the windows app communicates with a centralized network which acts as a repository that you can access from multiple computers or share with others for the purposes of collaboration.
May I digress for a couple of paragraphs? A large part of my training as an engineer was in the black art of categorization. You learn to categorize things. You learn to categorize everything. The predilection to DnD is a natural one because engineers learn how to transform stuff. For example, software engineers learn how to transform specifications into working software. Transformations of that order are fancy sequences of simpler transformations. A simple transformation consists of the thing or things to be transformed (the operands) and the process by which the transformation is to be guided (the operator). The role of the engineer is to figure out that sequence of transformations and also which process to apply for each simple transformation. In engineer speak, this is called "finding the right tool for the job."
Because engineers are trained to categorize, they want a large toolbox with a wide variety of tools by which they can use to transform things. It gives them more choice, more freedom. Those who never received training on how to categorize see this as a liability instead of a benefit. They want only one choice of tool. They want a tool that does it all.
That is why I don't use Evernote. It is a single container by which you are supposed to put everything into. I doesn't appeal to me but I recognize that it does appeal to a very large number of people. How do you feel about it? Would you rather just open a document because you want to access it or would you like to choose which tool to open a document in because different tools have different specialties and you wish to pick the tool that is most conducive to the job at hand?
Anyway, back to freemium. What's really interesting about this NY Times article is that they put some numbers to the Evernote's take on the model. They currently have a half million active users. If you stay with the service for a year, then there's a four percent chance that you will subscribe at $5 per month. They claimed that they earned $79,000 in July which, according to their other figures, means that three percent of the total active user base subscribes. They project that this subscription rate could climb to as high as 22% which would yield a little over a half million on revenue per month.
They also claim that this will scale. They won't have to staff up further as more people subscribe. They claim that their current costs is nine cents per user per month and project a break-even date of January 2011.
Whether or not you believe these numbers, the freemium model is compelling and is most probably worth some exploration and consideration. I use it in my business where access to Code Roller (the community edition of a software development project life cycle management solution) is free for all (including my competition) but you have to pay if you want my company to develop the actual software being described by your project.
What is your take on the freemium revenue model? Is it an exciting way to gain market share or do the challenges of monetization and fear of commoditization of your product or service give you pause?
Showing posts with label NY Times. Show all posts
Showing posts with label NY Times. Show all posts
Sunday, August 30, 2009
Sunday, July 26, 2009
The Browser Wars Circa 2009
If you have any understanding of computer technology and you haven't been in a coma for the past twelve years, then you already know that there has been a very significant trend in software application development from windows based applications to web applications.
The drivers for this trend aren't very hard to comprehend. A traditional windows application incurs a lot more development costs in terms of installation and testing on the various different types of client computers (i.e. PCs) than the same app delivered as HTML over the web. While there have been impressive advancements in reducing windows application testing and deployment over the years, there is still a higher TCO for windows apps than for web apps.
Not that web apps will completely take over windows apps. Some areas, such as graphics manipulation, VoIP, and video capture, will most probably always be in the province of windows apps. At a minimum, you will always need a web browser running on the client machine as a windows app in order to get access to the web apps. Without the web browser, the web apps are useless.
This is nothing new to the major technology vendors. As competitors over gaining IT market share, they have known this for quite some time. Own the web browser and you own the web. That is why Microsoft aggressively went after Netscape back in the mid 90s. Netscape was the corporation that formed around the original inventors of the web browser. This competition between Netscape and Microsoft eventually led to Netscape being acquired by AOL in 1998. Round one of the browser wars goes to Microsoft.
But the founders of Netscape were not willing to give up so easily. Even as the company was being sold, they created a non-profit foundation devoted to the proposition that innovation on the Internet would thrive only if there was available a web browser that was not so directly controlled by any single vendor. This Mozilla Foundation eventually spun off a for profit subsidiary in order to gain the revenue needed to continue to provide a quality web browser.
This "phoenix from the ashes" strategy worked well. While continued development of Microsoft's web browser languished, the Mozilla browser (called Firefox) continued to enhance and innovate on the web browsing experience. Mozilla was able to do this because they used the open source model to keep their development costs low. Recently, there has been much speculation about the mass migration of web browsing from Microsoft's Internet Explorer web browser to Firefox. Round two of the browser wars goes to Mozilla.
What about the other players in this war? Well, Apple has always had a place on the battlefield with their Safari browser. They don't have much in the way of market share, however. There's a few other minor players but their low market share numbers make it such that they are really not worth mentioning here. What is newsworthy is when Google announced their entry into this war with their web browser named Chrome. For one thing, a lot of the revenue for Mozilla comes from Google. The concern is that revenue stream will dry up now that Google and Mozilla are direct competitors.
Google Chrome currently doesn't have a lot of market share yet so why the concern about Chrome? Google is a big company with deep pockets. This coup has been tried before by another big company with deep pockets, Microsoft. Google is ratcheting up their marketing machine over Chrome.
There are also some noticeable difference between what Google has done with Chrome and what Microsoft did with Internet Explorer. The biggest difference is that Chrome is based on open source.
Recently, the NY Times published a story on the latest turn of events in the web browser wars. The war is very lukewarm now. Not a hot war at all. Google will continue to fund Mozilla, at least until 2011. Google's funding accounts for over three fourths of Mozilla's revenues. Mozilla recently moved their physical office away from the main Google campus.
Why do you care? If you are a software vendor or IT shop that makes and publishes web applications, then you want to make sure your applications run smoothly in the most popular web browsers. If your web applications suddenly stop working, then you have a serious problem.
That is why industry watchers keep up with the web browser wars. They don't want to be caught by surprise by the threat of a web browser upgrade or patch that was purposely designed to destroy the competition.
The drivers for this trend aren't very hard to comprehend. A traditional windows application incurs a lot more development costs in terms of installation and testing on the various different types of client computers (i.e. PCs) than the same app delivered as HTML over the web. While there have been impressive advancements in reducing windows application testing and deployment over the years, there is still a higher TCO for windows apps than for web apps.
Not that web apps will completely take over windows apps. Some areas, such as graphics manipulation, VoIP, and video capture, will most probably always be in the province of windows apps. At a minimum, you will always need a web browser running on the client machine as a windows app in order to get access to the web apps. Without the web browser, the web apps are useless.
This is nothing new to the major technology vendors. As competitors over gaining IT market share, they have known this for quite some time. Own the web browser and you own the web. That is why Microsoft aggressively went after Netscape back in the mid 90s. Netscape was the corporation that formed around the original inventors of the web browser. This competition between Netscape and Microsoft eventually led to Netscape being acquired by AOL in 1998. Round one of the browser wars goes to Microsoft.
But the founders of Netscape were not willing to give up so easily. Even as the company was being sold, they created a non-profit foundation devoted to the proposition that innovation on the Internet would thrive only if there was available a web browser that was not so directly controlled by any single vendor. This Mozilla Foundation eventually spun off a for profit subsidiary in order to gain the revenue needed to continue to provide a quality web browser.
This "phoenix from the ashes" strategy worked well. While continued development of Microsoft's web browser languished, the Mozilla browser (called Firefox) continued to enhance and innovate on the web browsing experience. Mozilla was able to do this because they used the open source model to keep their development costs low. Recently, there has been much speculation about the mass migration of web browsing from Microsoft's Internet Explorer web browser to Firefox. Round two of the browser wars goes to Mozilla.
What about the other players in this war? Well, Apple has always had a place on the battlefield with their Safari browser. They don't have much in the way of market share, however. There's a few other minor players but their low market share numbers make it such that they are really not worth mentioning here. What is newsworthy is when Google announced their entry into this war with their web browser named Chrome. For one thing, a lot of the revenue for Mozilla comes from Google. The concern is that revenue stream will dry up now that Google and Mozilla are direct competitors.
Google Chrome currently doesn't have a lot of market share yet so why the concern about Chrome? Google is a big company with deep pockets. This coup has been tried before by another big company with deep pockets, Microsoft. Google is ratcheting up their marketing machine over Chrome.
There are also some noticeable difference between what Google has done with Chrome and what Microsoft did with Internet Explorer. The biggest difference is that Chrome is based on open source.
Recently, the NY Times published a story on the latest turn of events in the web browser wars. The war is very lukewarm now. Not a hot war at all. Google will continue to fund Mozilla, at least until 2011. Google's funding accounts for over three fourths of Mozilla's revenues. Mozilla recently moved their physical office away from the main Google campus.
Why do you care? If you are a software vendor or IT shop that makes and publishes web applications, then you want to make sure your applications run smoothly in the most popular web browsers. If your web applications suddenly stop working, then you have a serious problem.
That is why industry watchers keep up with the web browser wars. They don't want to be caught by surprise by the threat of a web browser upgrade or patch that was purposely designed to destroy the competition.
Sunday, May 3, 2009
Living in the Facebook Downline
Just ran across this NY Times article on an emerging trend in social networks where Facebook and Twitter are openly and actively encouraging third parties to consume their services and re-purpose their content. The article then covers several startups who are feeding off of this social knowledge ecosystem.
With regards to this ecosystem, what I have seen in the wild are three patterns. A lot of UGC sites now permit you to post non-anonymously via some kind of federated login system. The second pattern is publishing content in multiple places such as micro-blogs on both facebook and twitter. The third pattern is profile synchronization across multiple social networking sites.
With federated login (sometimes called single sign on), you don't have to register at every site that requires registration. Instead, you can participate on a site as a registered user by logging in to an already existing account that you have. Under the covers the system, where you have an account, shares some knowledge about you with the system you are trying to use. Both Microsoft and Sun Microsystems tried their hand at federated login over a decade ago. Both failed miserably. Today's big players at single sign on are Google, Yahoo, and Facebook. Google and Yahoo use the OpenID technology to carry this off while Facebook uses its own Facebook Connect technology.
In the second pattern, you post some content and the system provides a way for you to immediately promote your content on the various popular social networking sites. Originally, this was called Viral Marketing where the system would volunteer to spam your friends if you would let it access the address book or contact lists from your main-stream email accounts. In this iteration, you are presented with options to send facebook notifications or tweets.
The need for the third pattern has risen only very recently as people start spending a lot of time updating their profiles on all of the social networking sites that they use. This trend is still fairly recent but two examples that come to mind are Disqus and Gravatar.
As to the startups referenced in the original NY Times article mentioned in paragraph one here, I would be a little nervous in investing in these companies. After all, they use the facebook and twitter back-ends as their main entre whereas these other companies see it more as the icing on the cake. I mean, what are they going to do if Facebook ever decides to shut down their free API?
With regards to this ecosystem, what I have seen in the wild are three patterns. A lot of UGC sites now permit you to post non-anonymously via some kind of federated login system. The second pattern is publishing content in multiple places such as micro-blogs on both facebook and twitter. The third pattern is profile synchronization across multiple social networking sites.
With federated login (sometimes called single sign on), you don't have to register at every site that requires registration. Instead, you can participate on a site as a registered user by logging in to an already existing account that you have. Under the covers the system, where you have an account, shares some knowledge about you with the system you are trying to use. Both Microsoft and Sun Microsystems tried their hand at federated login over a decade ago. Both failed miserably. Today's big players at single sign on are Google, Yahoo, and Facebook. Google and Yahoo use the OpenID technology to carry this off while Facebook uses its own Facebook Connect technology.
In the second pattern, you post some content and the system provides a way for you to immediately promote your content on the various popular social networking sites. Originally, this was called Viral Marketing where the system would volunteer to spam your friends if you would let it access the address book or contact lists from your main-stream email accounts. In this iteration, you are presented with options to send facebook notifications or tweets.
The need for the third pattern has risen only very recently as people start spending a lot of time updating their profiles on all of the social networking sites that they use. This trend is still fairly recent but two examples that come to mind are Disqus and Gravatar.
As to the startups referenced in the original NY Times article mentioned in paragraph one here, I would be a little nervous in investing in these companies. After all, they use the facebook and twitter back-ends as their main entre whereas these other companies see it more as the icing on the cake. I mean, what are they going to do if Facebook ever decides to shut down their free API?
Monday, September 8, 2008
Ambient Intimacy is the New Collective Intelligence
I ran across this puff piece in the Sunday, September 7 edition of the NY Times promoting Facebook and Twitter. It really helped me improve my understanding of the micro-blogging, social networking revolution.
Like many people born before the age of the personal computer, I was having a hard time understanding why the new prosumer generation have no problem uploading every single intimate detail of their lives into these social networking sites. Apparently, mankind had evolved past whatever needs that the first, third, forth, fifth, ninth, and fourteenth amendments to the Constitution were trying to protect.
Well, I was wrong again. It was while attending the Start Conference that I learned that Twitter's main audience was closer to my age than my children's.
The NY Times article called it ambient intimacy and featured quotes, both expert and anecdotal, linking this phenomena to another upwardly trending phenomena known as collective intelligence.
Having lots of low commitment, casual acquaintances is important for your social development. But there is an upper limit on just how many of these relationships you can have by shear virtue of the fact that there are only so many hours in a day and you have to spend time traveling to each of these contacts and arranging a common time for both parties to meet. That was before the web which reduced the personal costs of time and distance to near nothing. Now, with social networking web applications such as Facebook and Twitter, you can maintain a much larger number of casual acquaintances than before. I have seen the future of human evolution and it is virtual.
Prosumers do use facebook in lieu of personal contact, especially if there is conflict to avoid. Gone forever is the "Dear John" letter. You are much more likely to know that you have been ditched by your girl/boyfriend by seeing pictures of them dating their new paramour in their facebook photo album.
That NY Times article also brought up the notion that these web apps solved a basic human need that was not getting met in urban environments. "This is the ultimate effect of the new awareness: It brings back the dynamics of small-town life, where everybody knows your business."
Like many people born before the age of the personal computer, I was having a hard time understanding why the new prosumer generation have no problem uploading every single intimate detail of their lives into these social networking sites. Apparently, mankind had evolved past whatever needs that the first, third, forth, fifth, ninth, and fourteenth amendments to the Constitution were trying to protect.
Well, I was wrong again. It was while attending the Start Conference that I learned that Twitter's main audience was closer to my age than my children's.
The NY Times article called it ambient intimacy and featured quotes, both expert and anecdotal, linking this phenomena to another upwardly trending phenomena known as collective intelligence.
Having lots of low commitment, casual acquaintances is important for your social development. But there is an upper limit on just how many of these relationships you can have by shear virtue of the fact that there are only so many hours in a day and you have to spend time traveling to each of these contacts and arranging a common time for both parties to meet. That was before the web which reduced the personal costs of time and distance to near nothing. Now, with social networking web applications such as Facebook and Twitter, you can maintain a much larger number of casual acquaintances than before. I have seen the future of human evolution and it is virtual.
Prosumers do use facebook in lieu of personal contact, especially if there is conflict to avoid. Gone forever is the "Dear John" letter. You are much more likely to know that you have been ditched by your girl/boyfriend by seeing pictures of them dating their new paramour in their facebook photo album.
That NY Times article also brought up the notion that these web apps solved a basic human need that was not getting met in urban environments. "This is the ultimate effect of the new awareness: It brings back the dynamics of small-town life, where everybody knows your business."
Sunday, June 29, 2008
The Rewrite Game
While drinking my morning cappuccino, I ran across this opinion piece on page 4 of the business section in the Sunday edition of the New York Times. Basically, the author is asking Microsoft to rewrite their operating system completely from scratch instead of continuing to enhance it as they have done for decades. He uses Apple as an example of this. They did a complete rewrite of their operating system when they moved from version 9.8 to 10. This is not the first time that an Apple advocate has publicly called on Microsoft to rewrite their operating system.
Why is this noteworthy? Anyone who has written software for public consumption will eventually be faced with the very hard question of whether or not it is time to rewrite. As you enhance or fix software, every change makes the software a little bit more brittle. Over time, this raises the cost of maintaining software. This is really not that much different from the car buying decision. You buy a new car and for years it just runs and all you have to do is normal maintenance stuff like oil and tire changes. As the car gets older, it starts to break down more and more. Eventually, you realize that you are paying more in repair bills than what a car note would be.
Why hasn't Microsoft rewritten their operating system? Because it is too expensive. It has been theorized that Vista has over fifty million lines of code. Think about that number for a minute. You would have to have already celebrated your 95th birthday in order to have lived that many minutes. It takes a lot more than a minute to write a line of code, especially when you are talking about operating system code. Time, mind, and money spent to rewrite what they already have is time, mind, and money not spent on entering all these markets that Microsoft so ambitiously wants to enter in. Google would like nothing more than for Microsoft to rewrite their operating system.
How did Apple do it? They didn't worry about backwards compatibility. If you bought a software product for Macintosh version 9.8, then it would not work on OS X. You would have to make another software purchase just to get the same functionality on the new operating system. Apparently, IPod hugging kids with strange facial hair are more willing to part with their hard earned cash than those pudgy business suit types who just might take their unhappiness to a more litigious level.
Why does backwards compatibility make the rewrite so much more expensive? Well, for one thing, Apple didn't really rewrite OS X from scratch. They took their work on Next Gen and BSD and started from that. Microsoft doesn't have that luxury.
Will Microsoft ever rewrite their operating system? Who can ever say? They do rewrite parts of it from time to time. Also, they really have two operating systems now, one for servers and the other for workstations. Nobody, that I know of, ever really complains about the server OS which I believe to be more strategic for the company over the long haul. It's probably easier and more in line with their long term objectives to relinquish the workstation market to the Apples and the Linuxes of the world than to rewrite Vista.
Why is this noteworthy? Anyone who has written software for public consumption will eventually be faced with the very hard question of whether or not it is time to rewrite. As you enhance or fix software, every change makes the software a little bit more brittle. Over time, this raises the cost of maintaining software. This is really not that much different from the car buying decision. You buy a new car and for years it just runs and all you have to do is normal maintenance stuff like oil and tire changes. As the car gets older, it starts to break down more and more. Eventually, you realize that you are paying more in repair bills than what a car note would be.
Why hasn't Microsoft rewritten their operating system? Because it is too expensive. It has been theorized that Vista has over fifty million lines of code. Think about that number for a minute. You would have to have already celebrated your 95th birthday in order to have lived that many minutes. It takes a lot more than a minute to write a line of code, especially when you are talking about operating system code. Time, mind, and money spent to rewrite what they already have is time, mind, and money not spent on entering all these markets that Microsoft so ambitiously wants to enter in. Google would like nothing more than for Microsoft to rewrite their operating system.
How did Apple do it? They didn't worry about backwards compatibility. If you bought a software product for Macintosh version 9.8, then it would not work on OS X. You would have to make another software purchase just to get the same functionality on the new operating system. Apparently, IPod hugging kids with strange facial hair are more willing to part with their hard earned cash than those pudgy business suit types who just might take their unhappiness to a more litigious level.
Why does backwards compatibility make the rewrite so much more expensive? Well, for one thing, Apple didn't really rewrite OS X from scratch. They took their work on Next Gen and BSD and started from that. Microsoft doesn't have that luxury.
Will Microsoft ever rewrite their operating system? Who can ever say? They do rewrite parts of it from time to time. Also, they really have two operating systems now, one for servers and the other for workstations. Nobody, that I know of, ever really complains about the server OS which I believe to be more strategic for the company over the long haul. It's probably easier and more in line with their long term objectives to relinquish the workstation market to the Apples and the Linuxes of the world than to rewrite Vista.
Wednesday, June 18, 2008
Bucky Fuller Revisited
I ran across an article in last Sunday's New York Times about everyones favorite cold war era stalwart visionary inventor, engineer, author, and architect Richard Buckminster Fuller.
Like almost any modern example of good journalism, the New York Times article references a recent event and presents a mild expose. The recent event is an upcoming exhibit (June 26, 2008 through September 21, 2008) of his work at the Whitney Museum of American Art. The expose is a debunking of his "suicide story" in which he claims that, after dropping out of college, failing at business, and becoming a heavy drinker, he seriously considered suicide. Just as he is on the precipice of that dark commitment, he receives an epiphany which causes him to devote his life to the betterment of mankind as a sort of cosmic experiment. Based on research at Stanford University and an upcoming book called "Reassessing R. Buckminster Fuller," the New York Times counter-claims this famous suicide story to be a myth created by Bucky himself. This research does assert that he did have a nervous breakdown after an extra-marital affair, with a women half his age, fell apart.
Sunday, April 6, 2008
Blogging Considered Harmful
As a blogger, I feel compelled to blog about this NY Times front page article on the health perils of blogging. Apparently, some high profile bloggers have recently suffered heart attacks. Without benefit of any kind of scientific or statistical research, the piece attempts to paint a world where bloggers and smokers share the same fate.
I blog as a hobby and not for pay so I am not exactly an expert on this subject. One of the reasons why I do not attempt to blog for pay is precisely what the article addresses. There is little to no money in it. To make a living off of it does require long hours.
It's not unlike the economics of food production. The person who picks the crop and the person who rings up the purchase makes the least amount of money. It's the people in between who stand to earn (or lose) the most for their bottom line. The blogger is like that person working in the fields. It's the content aggregator or publisher who stands to make (or lose) the most amount of cash in that world.
There is a book entitled Wikinomics that I consider as the sequel to The Cluetrain Manifesto. I'm sure that you have heard the phrase "content is king." These books make the case that the new content that is king is user supplied. This world is not about the cult of personality which is why blogging alone is a very hard way to get rich.
I blog as a hobby and not for pay so I am not exactly an expert on this subject. One of the reasons why I do not attempt to blog for pay is precisely what the article addresses. There is little to no money in it. To make a living off of it does require long hours.
It's not unlike the economics of food production. The person who picks the crop and the person who rings up the purchase makes the least amount of money. It's the people in between who stand to earn (or lose) the most for their bottom line. The blogger is like that person working in the fields. It's the content aggregator or publisher who stands to make (or lose) the most amount of cash in that world.
There is a book entitled Wikinomics that I consider as the sequel to The Cluetrain Manifesto. I'm sure that you have heard the phrase "content is king." These books make the case that the new content that is king is user supplied. This world is not about the cult of personality which is why blogging alone is a very hard way to get rich.
Sunday, October 28, 2007
The Rise of Open Source Software
The Open Source Software movement has been gaining so much momentum within the Information Technology community recently that it is almost impossible to ignore. Technology players like IBM and Google have contributed to open source. Even Microsoft, whose CEO displays open hostility towards OSS, have contributed. Now media companies such as Yahoo and the New York Times have contributed to OSS.
CTOs and other key decision players in any company's IT department no longer consider OSS as an "if" but rather as a "when." It's not so much a decision as to whether or not to embrace OSS but rather to decide what their OSS strategy is and the timeline for executing on that strategy. It is also very likely that OSS is already being used within their organization.
Why is it that OSS is so compelling? It has a large community supporting it and the price/performance ratio can't be beat. I have blogged on this subject in more detail elsewhere.
CTOs and other key decision players in any company's IT department no longer consider OSS as an "if" but rather as a "when." It's not so much a decision as to whether or not to embrace OSS but rather to decide what their OSS strategy is and the timeline for executing on that strategy. It is also very likely that OSS is already being used within their organization.
Why is it that OSS is so compelling? It has a large community supporting it and the price/performance ratio can't be beat. I have blogged on this subject in more detail elsewhere.
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