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Archive for February 21st, 2008

Microsoft’s New Openness Is About Making It Easier For You To Do What They Want You To Do

Posted by Bob Warfield on February 21, 2008

Om Malik says Microsoft’s newfound openness is all about not having the EU try to shut down their proposed Yahoo acquisition.  As he says, “Microsoft is worried, scratch that, very worried about developers leaving them in the cold.”

Let’s look at the announcement’s major components:

Ensuring open connections to Microsoft’s high-volume products.

Microsoft is going to publish documentation for all API’s and communications protocols for its high volume products.  Originally, these API’s were regarded as trade secrets, and if you could gain access to them at all, it was only via negotiating a deal with Microsoft.

Translation:  We found that giving our own developers proprietary advantages wasn’t nearly as helpful as making sure outside developers tie back to our products.  Remember that this announcement only matters if you plan to add further support for Microsoft products.  This is exactly what Microsoft wants you to do to help cement the market position for these products.  In addition, you do all the work.  By the way, some of this is covered by Microsoft patents.  In their announcment, Microsoft says they will license those patents at “low royalty rates.”  So you may have to pay for the privilege of modifying your products to help Microsoft further improve their market position.

If you are an Open Source developer, Microsoft will further agree not to sue you if you support the protocols and help them advance Microsoft dominance.  However, they only promise to do this for developer and non-commercial distributions.  If you actually have the temerity to want to make a living doing what you do, you will have to negotiate further with Microsoft.  Remember, this is the King’s forest, and all of the game in the forest belongs to the King.

Documenting How Microsoft Supports Industry Standards and Extensions.

Whenever Microsoft uses an industry standard, it will document how it supports the standard including Microsoft extensions to the standard that affect interoperability with other standards.  These actions will allow third-party developers implementing standards to understand how a standard is used in a Microsoft product.  Microsoft will make available patent licenses on reasonable terms.

Translation:  All your standards are belong to Microsoft.  We may use them, as we see fit, and we may even deviate signficantly from them while still claiming to be using the standard.  If you want to survive, you’d better implement our deviant behaviours when you use the standard too.  This is called “embrace and extend” and is how Microsoft has taken many balls away from the other kids on the playground.  And BTW, we may patent your standard and make you pay us to use it. 

Enhancing Office 2007 to provide greater flexibility of document formats.

To promote user choice of document formats, Microsoft will design new API’s for the Word, Excel, and PowerPoint applications to enable developers to plug in additional document formats and to enable users to set these formats as their default for saving documents.

Translation:  Your pitiful rebel alliance will get no further.  We want you to invest in writing the file translators for your formats to make it easier for us to take back what is rightfully ours.  No matter what you think you may have invented, if it ain’t in Office, it ain’t relevant.

Launching the Open Souce Interoperability Initiative

Microsoft will provide resources, facilities, and events, including labs, plug fests, technical content, and opportunities for ongoing cooperative development.

Translation:  Hey, bring your code.  We want to check it out.  We want to hire you, and if not, we want to indoctrinate you to our way of thinking.

Expanding industry outreach and dialogue.

An ongoing dialogue with customers, developers and open source communities will be created through an online Interoperability Forum.

Translation:  Your suggestions will be duly noted, harvested, and the remainder will be filed as appropriate.  Thank you for your support.

Is this really groundbreaking?

I don’t know about you, but I did not find this announcement to be especially groundbreaking.  Microsoft wants to make it easier for you to do what they have always wanted you to do:  totally embrace their technologies and quit wasting so much time making them chase you outside their sphere of competence.  I can’t blame them for trying, and no doubt some of this will be helpful to others. 

Erick Schonfeld at Techcrunch says, “Redmond has finally decided to stop trying to fight open-source software.”  I cannot find much of a hint in Microsoft’s annoucement that this is the case.  Schonfeld bases this premise on the idea they won’t sue the Open Sourcers for infringement on Microsoft’s protocols.  Wow, the lawsuit game sure worked well for SCO.  I’m not sure Microsoft was eager to follow that route nor does the weasel language about “developer and non-commercial” use leave me with any great confidence they won’t just turn around and sue anyway.  Erick’s article included a poll that indicated (at least when I took it) that the majority who answered the poll remain deeply suspicious of Microsoft.

I’m not surprised.  They’re not doing anyone any favors.  Most importantly, they still have the mindset that the only ones going to make money from the Microsoft ecosphere are Microsoft.  Until they get past that, things are unchanged.  Microsoft still has a significant rift with the web.

Posted in strategy | 1 Comment »

Two Strikes Against Yahoo vs Google

Posted by Bob Warfield on February 21, 2008

I am convinced that advertising is not well understood, else why would so much of it be wasted?  As John Wanamaker mused as early as the 1800’s:

Half the money I spend on advertising is wasted; the trouble is I don’t know which half.

So it is with Yahoo vs Google.  Microsoft is working hard to spend an incredible fortune to acquire Yahoo.  Yahoo is working hard to stay independent.  Meanwhile, Google has built was is perhaps the greatest advertising engine ever seen.  Why?  What makes Google so much better?  Isn’t Microsoft’s idea that it can capture 30% of the search world and thence take Google on more even terms a good one?

There are two critical advantages that Google has.  First, it’s all about searach.  Search is so far the most valuable advertising property there is.  It’s all about location, or in this case, timing.  Search let’s users tell us what they’re looking for, and based on that advertising can be served up.  It is a uniquely 2 way process that doesn’t exist with simple banner ads.  Give someone targeted advertising at the point in time where they are actually looking for what you advertise and you dramatically increase the likelihood the advertising will matter.  This is rare, hard fought, and extremely strategic ground.  If someone ever figures out a similar way to tell when users are mentally prepared to recieve advertising, we will see another Google scale company built around the idea (provided they execute and can protect the idea, of course).  Meanwhile, Google has an almost overwhelming lead.  Yahoo brings a fair bit of search business to the Microsoft empire, but an awful lot of their traffic is not search related.  It comes, for example, from their portal and other properties. 

What would it take to beat Google at its own game?  It’s very hard to impossible.  First you have to invent a search algorithm that is enough better than Google’s so that people will switch.  Next, you must protect the algorithm in some way so that Google can’t just copy it.  Patents are the obvious answer, but they can be a two edged sword.  To acquire a patent, you must be willing to tell the world what you’ve done.  In so doing, you may give them an insight that leads to an alternative solution that does not infringe but that works every bit as well.  My best guess is that to beat Google will require specialization.  It will be possible to build specialized kinds of search for niche domains that function a lot better because the semantics of the domain are built into the search algorithms.  If you’re lucky, you get left alone long enough to get big enough to be interesting.  But it won’t be easy.

There’s a second strike against Yahoo aside from the fact they don’t have a better search mouse trap.  Recent information on their demographics is not encouraging.  Heather Hopkins at Hitwise has an article that indicates Google has locked up the more well-heeled crowd.  Here is a chart depicting who favors which services:


Google’s power alley is the lower right quadrant, and Yahoo’s is the top left.  Google gets Affluent Suburbia, Small-town Contentment, and Upsacle America almost to itself.  BTW, the circles are larger so these are bigger audiences with Google too.  Yahoo is stong with Struggling Societies, Urban Essence, Blue-collar Backbone, Remote America, and Aging Contemporaries.  Which seems more likely to have a lot of purchasing power worth targeting with advertising?

Posted in Marketing, strategy | 1 Comment »

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