Archive for June, 2010

2 Minute Review of the Barnes and Noble Nook
June 28, 2010

So I wandered in to Barnes and Noble on Saturday as I do on most weekends.  They had some good stuff on sale and I treated myself to paperbacks of “Built to Last” by Jim Collins, “The People’s History of the United States” by Howard Zinn, and “Dirt” (a biography of Motley Crue).  Should make for some good summer reading.

Anyway, I had posted last week about how other “tablet” manufacturers could beat the iPad.  In short, my thought was to be a lot less expensive and slightly less feature rich.  So while at B&N I played with a Nook for a few minutes.  Here are my impressions….

1. It’s REALLY slow.  Like, so slow I found myself having a hard time trying to examine the features because I didn’t have the patience to wait for them to load.  In an age where cell phones have 1G processors, the Nook’s Arm processor is criminally underpowered.  Going from one menu screen to the next has a noticeable delay.  I’m sure turning pages is fine, but the rest of the experience was as slow as a glacier.

2. The display is excellent.  E-Ink makes a great product and its on full display in the Nook.  However, the shifting from one screen or page to another is a little bizarre as the display looks like a damaged Etch-a-Sketch for a few moments before loading your next image.  Once again, I’m sure its fine for books and newspaper reading but its a little “off” for everything else.

3. The navigation is interesting.  The nook has a small area at the bottom of the device that is about 1.5″ x 4″.  This area is a touchscreen and allows you to navigate through features and surf the web and find books, etc.  It’s actually fairly clever except for the fact that, owing to the processor, its painfully slow trying to get anything done.

4. Web Browsing – the integration of a browser is actually pretty cool.  Since the machine does’t have a full touch-screen and the touch-pad area is limited in size, the Nook devs have made the browser feature as easy to use as it could be.  Once you launch a web page, the touchpad becomes a “frame” for the full page which is displayed on the main screen.  Using the touchpad, you can navigate around the page and do most everything you could do on a regular browser short of video, flash, etc.  I wouldn’t suggest the browser for Facebook or updating your blog, but if you’re on the beach reading a book and need to check your email real quick, it would work great……except that it’s REALLY slow.  Even moving the frame around to examine other parts of a web page is slow and does not move smoothly.

5. Reading and books – excellent experience on par with the Kindle.  The screen is about the size of a paperback and the E-Ink display makes reading simple.  Plus, the E-ink works great in bright light, which is a big deal if you’re going to sit at a park or on a beach and read.  PLus you can mess with the font size, so the reading is great.

This device clearly isn’t aimed at the same audience as the iPad, nor should it be.  I’d call the Nook a great e-Reader with some other features baked in that are convenient but far from necessary considering what the device is SUPPOSED to be used for.  And frankly, I can’t imagine that the target audience of bookies is going to obsess about the processor speed like a gadget nerd (me) would.  Frankly, it’s a great e-Reader at a very appealing price point.  It doesn’t do games or videos or pictures, which is fine.   I haven’t played with a new Kindle yet but these two devices seem a little different, although I’m not sure how to explain it.  The Nook seems to be positioned as a much simpler, much more basic device – “an electronic paperback of whatever you want to read”.  The Kindle is doing video now and a variety of other things.  It will be interesting to see what the sales-future holds for both.

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Microsoft has an opportunity
June 27, 2010

Microsoft should buy Rim. The blackberry messenger platform, the true push email patent, and the installed base of business customers are worth a lot more then they would cost.  rim is a bargain with the stock at $70.  Right now it is trading under $60.   Balmer won’t do it. But he should.

The New Economy is….
June 25, 2010

Its typical to talk about the “hot” space in startups being “social networking.”  Its been that way for years.  No offense to Green Energy and BioTech, but the barrier to entry for launching a software app is so low that much of the VC money is going to continue pouring in to places where small amounts of cash can lead to big amounts of cash (as opposed to big amounts leading to slightly bigger amounts in the Green and Bio sectors).

But the “social networking” thing is just a facade to the true driver out there:  coupons.  Social networks have long struggled to find ways to make money.  They can sell real things (music, etc.) but that is a marginal idea since people can buy those things other places.  They can sell fake things, which Zynga and others are doing in games, but that doesn’t really reach everyone.  They can plaster ads all over the site or application (puke).  Or they can integrate coupons in to the equation.  BING.  O.

FourSquare isn’t getting attention because of scavenger hunts.  Its getting attention because its a real-time portal for where people are at, which means its a real time portal for the most direct advertising possible:  “Hey buddy, you’re going to be passing our coffee shop in about 25 feet….we’re the one on the left with a bear above the door….why not stop in and get a cup of coffee for $1 off the normal price….”  Yelp is sort of coming up on the same strategy/idea.  And Groupon has the best execution of it yet.  Find what people already like or are interested in RIGHT NOW AT THIS VERY MOMENT THAT and offer to make it easy for them to spend money RIGHT NOW AT THIS VERY MOMENT.  If I offer you 20% off at a bistro in Chicago, you might not care.  If I offer it to you via SMS or email right as you’re coming out of the Art Institute and it’s 12:15pm and you’re looking for lunch….well that’s a different story.

I, for one, love the idea of real time and location based coupons.  I think it makes advertising more effective for businesses and it makes commerce more affordable for consumers.  What’s not to like?

The Long Tail of making money
June 24, 2010

As recently as 4 years ago, if you were a software developer or a website owner, your options for making money were pretty limited:  you could either build a full size, full system based piece of software (think Anti-Virus protection or word processing software, etc.) or you could build a website and slap advertisements on it.

The advent of the smartphone, particularly the iPhone and Android, have made it possible for hobbyist and part time software engineers (in addition to full time folks) to quickly sell their wares and make real money.  Instead of earning a dollar a day through Adwords clicks on a blog, a person with even a moderate amount of skill can make 10 dollars a day selling his iPhone app.  Maybe its not much money, but the time and cost of developing an iPhone/Android application is substantially less then developing a browser-based or system-based application.  As a result, the sales price is lower.  And lower prices = more impulse buys.  Combine that with the fact that both Apples App Store and Android’s Market are easily accessible and searchable from the device themselves and a person could make a nice chunk of change developing lightweight, useful, and simple applications.

Here’s the math:  let’s say you can develop an iPhone application in one month that will sell for .99.  Let’s say the app will sell 10 times per day, earning you a modest $10 (rounding up) per day once it is released in to the wild.  ANd let’s presume that maintaining the application will be easy and essentially require no more then 10 hours a year of coding to keep current.  And let’s also presume that you build and release one app per month for a year.

Month 1:  $0 dollars, 0 apps, 1 app in development.

Month 2:  1 app released earning $300/month (roughly $10 a day), 1 app in development.

Month 3: 2 apps released each earning $300/month, 1 app in development.

So on and so forth til after one year, you have 12 applications earning you $300 each, or $3600 a month.  Multiplied by an entire year and you’ve created $43,200 of income for yourself, which is basically the same thing as the USA’s median household income in 2004.

Are those numbers attainable?  Conservative?  Aggressive?  I have no idea.  I imagine any app that would sell 10x in a day would just as easily sell 100x in a day if it caught on but who knows.  At the same time, its possible that a lot of apps never sell more then a few dozen copies to friends and colleagues simply because no one knows they exits.

Regardless of the math, the point is that the “Long Tail” of old (lots of blogs with low readership) has been replaced by the “Long Tail” of new, which is LOTS of people, companies, partnerships, hobbyists, and amateurs delivering workable applications (instead of static content) and making a buck.

Interesting times ahead.

Commercial or Consumer?
June 22, 2010

Ben Horowitz offered an interesting metric about how many customers you need to have a software application that is “wildly” successful.  Ready?

1,000 enterprise/business customers

or

50,000,000 consumers.

I think these numbers make a ton of sense.   Of course there are exceptions – if your software is expensive then 50,000,000 users may be out of the realm of possibility.  And if your software has residual fees, subscription fees, or service costs attached, then you certainly can get away with having only a handful of customers.

But for the purposes of “one time buy” I think Ben’s numbers are a nice benchmark for “HOLY COW LOOK WHAT WE’VE DONE!” success.   However, I wish a distinction had been made between customer and user.  I imagine there are only a handful of software shipments that have ever sold 50 million units (MS Office and what else?)  But there are a number of communities that have 50 Million users.  LinkedIn has 70Million.  Facebook just crossed 500 million.  So it stands to reason that having 50 million installations would create enough opportunities that, yeah, you’re successful if you have that many people using your wares.

Anyway, I’d long wondered what kind of scale VCs and developers looked for when evaluating projects.  How much market needed to exist to really get people’s blood moving.  Not saying the numbers above are the end all, but its good to have some rough idea.

How to beat the iPad
June 22, 2010

If you have’t toyed around with an iPad yet, you should.  Its a great device and the possibilities for it – both now and in the future – are substantial.  You can read books or magazines, listen to music, surf the web, fiddle with pictures, play NBA Live, etc.  Its a pretty cool device.

In typical non-APple fashion, everyone else seems to be falling over themselves to come up with products positioned against the iPAd in some vague hope of penetrating the tablet market.  Dell, HP, Lenovo, Asus, and scores of others are demo’ing tablet/pad ideas for launch later this year or early 2011.  They’re rolling out versions of Linux, Android, Chrome, and Windows 7 in the hope that being second (or third or fourth) to the party won’t matter and fans will flock to the devices.

This of course, is stupid.  Everyone not-Apple needs to cede the high ground (re: “expensive”) and focus on two key components:

1. Make it so inexpensive that it’s disposable. The price drops for the Nook and Kindle yesterday are very telling.  The key to taking marketshare from Apple is in pricing.  Instead of trying to make a similar product to the iPad, why not make a product that costs 30-50% as much but offers 80% of the functionality?  For example, why not take a Kindle (now under $200), add a GPS sensor ($25) and let it dual boot to either the current software or to Android.  At that point the device can do a lot of what the iPad can do.  The screen isn’t as big and isn’t as sharp, it will probably stink for watching videos and viewing pictures, and it won’t be as fast as the iPad.  Who cares?  For $200, they’d sell TONS of these devices since most folks don’t need the robust functionality of the iPad.  Make a device that checks email, surfs the web, and offers e-Reader functionality and you’ve covered 95% of what people NEED a tablet for.  Then allow the natural progression of software and hardware determine what features to add in future iterations.  In other words, make the tablet experience similar to a netbook experience (and similar to a netbook price) and see what happens.  I’m excited about the Dell Streak and the Looking Glass, but I can’t see any way that the UI and user experience will be significantly different from – and better then – the iPad for them to win much market share.  Go after the low priced, low-featured side of things; there is a reason Ford sells more cars then Mercedes every year – not everyone needs, wants, nor can afford a Mercedes.

2. Attack the enterprise space HARD. Electronic Medical Records, On-site project management for construction, whatever.  Build some great, secure applications that fit the needs of professionals.  Let Apple worry about people getting on Twitter or checking facebook updates.  You could sell a tablet/pad a thousand at a time if you made it an integral part of a specific commercial space.  How many employees are at each hospital?  Each convention center?  Each job-site?  Each casino?

As a note, I think the next few months are going to be interesting if for no other reason then to see if the Kindle, Nook, and Kobo (Borders version) can keep flying off the shelves.  The reality is that the devices continue making money through consumables (Books) long after they’ve been paid for.   I think that sometime in the next 2 years you’ll see a Kindle/Nook/etc. competitor that it near a $0 pricepoint; there is simply too much money to be made in owning the mindshare of people that buy 10-20 books each year.