Monthly Archives

January 2009

Some Friday fun – the old ones are the best ones

By | Business models | 9 Comments

Owners of capital will stimulate the working class to bjy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The upaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism.

Karl Marx, 1867

Developers are getting behind the iPhone

By | Mobile | 7 Comments

Below is a list of the weeks best-selling books from Nielsen.  Note that the best-seller is about iPhone developement. It is rare for books as technical as this to outsell books with much broader appeal and hence this is a lead indicator that developer interest in the iPhone platform is mushrooming.  Most of the other titles on the list are about mass market apps and operating systems.

This comes in the same week as rumours that the iPhone is going to be increasingly focused on gaming and talk of a $19.99 premium section in the iPhone Appstore for games.  Maybe that is why developers are getting excited.

Publishers reduce inventory to push up CPMs

By | Advertising | 3 Comments

From Techcrunch and referring to the US:

During 2008, comScore estimates that 4.5 trillion display ads were served in the U.S. alone. That comes out to more than 2,000 Internet ads per month per person. And, believe it or not, the number of ads served up actually declined a little during the year as publishers tried to push up CPMs (the amount they can charge per thousand ad impressions) by reducing inventory.

Role of the chairman in tech startups

By | Startup general interest | 2 Comments

My friend Ed French has posted today on the role of chairmen in pre-revenue tech companies.  There is a lot of good stuff there, although for me the way the highlights in his post works implies an emphasis on the CEO succession that over-states the case.

In addition to true startups I think his thoughts are applicable to many post revenue companies, with a turnover of up to say $10m.

I like the post for the following reasons:

  • It conveys the scope of the work that needs to be done – chairman of a small business is a time consuming job
  • It makes it clear that the traditional distinction between Non-executive Chairman and Executive Chairman are getting blurred (have started using the term Semi-executive)
  • It stresses that the Chairman needs to be involved in strategy – which in turn implies that sector expertise is important

Absent from Ed’s post is any mention of “introducing the company to potential partners and customers”.  I think that is important as well, but it is often held out as the be-all and end-all, which it isn’t.  In fact one of the reasons I like Ed’s post is the way it de-emphasises that side of the role. 

Over time I have found that having the right chairman really propels a business forward, but it is help with strategy, fundraising and teambuilding rather than introductions that really make the difference.

The recession is kinder to some than others

By | Business models, Google, IBM, Yahoo! | 7 Comments

We are in the midst of earnings season right now and different companies are faring very differently:

  • Google revenues were up 18% – as I wrote last week
  • Yahoo! yesterday reported revenues down just 1%
  • Sun Microsystems also reported yesterday with revenues down 10.9% on the year ago period
  • IBM reported last week with gross revenues down 6% on the year ago period (apparently only 1% if you take out currency fluctuations).  But that overall performance masked double digit declines in their hardware business and good performance in services and software.

The overall position is, I think, that it is better to be in the web than in software, and better to be in software than in hardware.  This is because the lowest layers of the stack are commoditised already, software is starting to get there and web based services have yet to really begin that painful process.

My guess is that they will though – and then the attention will move somewhere else – e.g. shared data services.

I have focused on revenues in people’s results as a proxy for overall market size, which I think is the best single indicator.  Profitability is important too though, is more influenced by company specific factors.

The Twitter tsunami

By | Facebook, Twitter | 13 Comments

We all know and sense that Twitter is doing really well at the moment (and rumours of a forthcoming $20m VC round help) – but when I read Mike’s post from last Thursday on the subject I was surprised at just how close to the mainstream this is.

First the chart – their UK growth is phenomenal, and puts the popularity of Twitter in the UK ahead of Twitter in the US (291st most popular site compared with 350th, as measured by Hitwise).

And, for those that need reminding, the vast majority of Twitter use comes via 3rd party clients that don’t get captured in these numbers.

Some of the other things that caught my eye:

  • In the UK they had a ten fold increase in traffic over the last twelve months
  • Celebs are starting to come to Twitter in good numbers: Stephen Fry, John Cleese, Jonathan Ross and Philip Schofield are all there.  (Update: As is Russel Brand whose two updates have got him 7,224 followers)
  • The amount of traffic Twitter sends to other websites has increased 30-fold in the last twelve months

This is real momentum. 

Tamlyn put it this way in the comments:

It’s reached that level of awareness Facebook had two years ago: nearly everyone has heard of it but few have checked it out and nobody really understands what it does or why they would want it.

I don’t remember who, but someone said earlier this week that Twitter will be the Facebook of 2009.  It is starting to look that way (business model challenges included…).

Cheap laptops will drive growth of web and cloud

By | Business models, IBM, Microsoft | 20 Comments

The NY Times has a great article today about the impact of $200 laptops on the IT industry.

The first, and most obvious point is that they are bad news for desktop software companies like Microsoft.  These laptops achieve their pricepoint by running open source software and cutting down on local processing power.  And MSFT is already feeling the heat – they recently had their first big work force reduction and sales of Windows fell for the first time in history in Q42008.

High end chip companies are also feeling the pain, with Intel’s revenue down 23% last quarter, the steepest decline since 1985.

We are witnessing the commoditisation of much of traditional IT.

But as I’ve said before, this is a cycle.  In the words of the NYT:

This has happened before. The dot-com bust earlier in the decade dragged down high-fliers like Sun Microsystems and America Online but set the stage for a new generation of Web powerhouses like Google and other innovative Internet software companies like Salesforce.com, founded on disrupting the status quo.

The recession of the early 1990s sent I.B.M., then the dominant force in technology, into a five-year tailspin. But it also propelled Microsoft and Compaq, later acquired by Hewlett-Packard, and Dell to the forefront of computing.

As I’ve been writing about a bit recently, one area that I think has potential is shared data services.  As the cost of computing comes down, so more people will use it, but they will be using hosted apps leading to the creation of lots of data that is ripe for sharing and a source of huge potential value creation.

Google results

By | Google | 10 Comments

Earlier this week the Wall Street Journal reported on predictions that the search market would decline 8% year on year.  They also said that we would no for sure when Google reported its results yesterday.

Well, the news is that the picture is actually quite rosy, with Google beating the streets expectations and posting 18% year on year growth.  Given their dominant position in search I think it is safe to assume that there was at least some growth in the overall market.

VentureBeat reported on Google’s results here, and their report included this chart.


There were a couple of other interesting titbits.  Firstly, revenues in the UK declined, which I guess puts our position as Google’s favourite international market at some risk.  This chart is from PaidContent.

And secondly Google wrote down $1bn in goodwill, which as GigaOM points out makes them Good at Search, Bad at Investments.  Actually, to be fair, whilst I am still to be convinced that Google is good at investments a lot of companies are writing down goodwill on deals made when times were a little headier so this news is not terribly exceptional. 

Twitter lays the foundation for it’s revenue model

By | Blogging, Business models | 17 Comments

To much dismay amongst the digerati Twitter yesterday announced a limit of 20,000 calls per hour to their API for whitelisted apps.

My guess is that Nick Halstead has it right when he says this is about them setting themselves up to charge apps that want to go over that limit:

To me twitter needs to put in place a charged API – and before you all start screaming ‘NOOOO!’ think how else this can ever work, the fact is everyone is concerned about twitters long term survival – it does need a revenue model and it being based upon it being a central hub of micro-messaging that is reliable and scalable (which I think they are now starting to prove) is the most natural solution.

And because Twitter has opted for a totally distributed where they don’t force people back to their site the whole time charging for their API is about the only good revenue option I can think of.  And remember that this distributed model is generally regarded as one of their strengths.

However this argument isn’t clear cut – Louis Gray sees things a little differently:

Twitter’s move, at its heart, looks to be one to protect themselves. As API Lead Alex Payne wrote yesterday, “This is essentially a preventative measure to ensure that no one API client, even a whitelisted account or IP, can consume an inordinate amount of our resoures.” (sic)

And further:

But there didn’t seem to be any options for services …. to get a work-around.  There was not an option to pay to get increased access capabilities, or even tips on how to optimize code so that it takes less effort to achieve the same result.

If Nick is right in thinking this is a step on the way to charging for volume access to the Twiter API, and I think he is, it would seem to make sense to me for them to be clear about that.  The uncertainty they have created at present will be a disincentive for developers to put time into working on Twitter based apps.

It is worth noting that so far the whole ecosystem of apps that has sprung up around Twitter has been a free party funded by Twitter’s VCs.  At some point that had to stop – Twitter itself has to make money and so do any of the Twitter based apps that have ambitions of being more than a passing fancy.

I’m sure things will get clearer over the coming days.