SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for July, 2008

Salesforces Switches to Dell/Linus. What’s Next, MySQL Over Oracle?

Posted by Bob Warfield on July 15, 2008

Salesforce will be unplugging the last of their Sun Solaris servers from their SaaS operations this week, according to TechCrunchIT.  That’s quite a big change for Salesforce, and a bit of a PR blow for Sun.  It reflects some important operational realities that the rest of the industry and corporate IT should be watching carefully.

First, vertical scaling is hard in the multicore crisis era.  When cpus no longer get twice as fast with every Moore Cycle, scaling is harder to come by and hardware gets commoditized.  Future scaling has to come from software architecture changes.  Horizontal Scaling, in other words, not Vertical Scaling.  The multicore crisis brings us to an era of many small computers rather than fewer more powerful computers, and its up to the software guys to figure that out.

Second, for a SaaS company, the cost of service delivery is an absolutely critical factor.  Once you have software that runs well and scales horizontally on cheap commodity hardware, you’ve created a huge cost advantage for yourself.  As we speak, the cost to deliver service for the various public SaaS companies is all over the map, but Salesforce has always had one of the lowest if not the lowest cost on the map.  This allows them to either show greater profitability or reinvest the savings in faster growth.

This brings me to my other point.  How long can it be before they investigate swapping out Oracle for MySQL?  As the TechCrunchIT article mentions, Salesforce started with Oracle but there’s been no mention recently about the current status.  It would be a logical further development in reducing costs if they had chosen to eliminate or were working on eliminating the cost of Oracle licenses.  For many SaaS vendors, this is a huge piece of their Cost of Services. 

Can you build industrial grade software without Oracle?  In a word, yes.  Many highly scalable web sites have done so and lived to tell the tale.  It’s more work, but once you’ve done the work the payoff can mean huge savings.  At a prior employer we were actually quite surprised to test several Open Source DB’s and learn their performance was actually not that far off of Oracle’s.  My current employer, Helpstream, has built everything on an Open Source stack and the benefits have been enormous.

How long will it be before we’re hearing that Salesforce has dropped Oracle too?  What’s your company doing to leverage commodity hardware and Open Source databases?

Related Articles

Fellow Enterprise Irregulars Dennis Howlett, Vinnie Mirchandani, and Thomas Foydel (who first raised the point about brand comfort) make some excellent points on this subject, particularly the issue of switching off Oracle.

One key point that I have personally heard before is that SaaS vendors like to offer customers the comfort of knowing the solution runs on Oracle versus Open Source.  It’s a more conservative stance that plays well in the Enterprise.  Brand matters.  Sun is working hard on the MySQL brand, but they certainly haven’t caught Oracle yet.  As Vinnie puts it, the question is, “whether SaaS vendors benefit from at least the perception that Oracle is more “bullet proof” or do SaaS customers just want results (high uptime, performance etc) and don’t really care what the underlying  technology is – especially if the economics are more attractive?”

Dennis adds some other unique thinking.  If Salesforce wants to be acquired by Oracle then it should stick with the Oracle stack.  The only thing I’d add there is it’s pretty easy to switch from MySQL back to Oracle and much harder to do the reverse.  I think they’d be fine in an acquisition if they were simple careful not to emphasize a switch to MySQL.  They did work reasonably hard to keep the Dell switch quiet, so they may already be on that path.

The second thought Dennis has is that licensing is very complex on these things.  Here again I have to agree.  Just dealing with the legals and other aspect of a relationship with a large Enterprise vendor/technology partner is expensive for a startup.

In both cases, Vinnie’s post title fits:  Does SaaS need Oracle more than Oracle needs SaaS?

Good insights, guys!

Posted in multicore, platforms, saas | 8 Comments »

iPhone Activation Servers Fail

Posted by Bob Warfield on July 11, 2008

It should have been predictable, I guess, but the iPhone activation servers have failed and I ran afoul of it this morning.  Before heading in to work I thought I’d just download the stuff and see if there wasn’t some interesting new app worth installing.  You can download the new iTunes, download the firmware to the phone, resync the data to the phone, and then BAM!  The phone can’t contact the activation servers to complete the process.

This leaves you with the phone in “emergency” mode where all it can do is dial out a number you specify.  No other access seems to work and the phone says “no service”.  AT&T is actually sending customers home with their new iPhones and telling them to activate via iTunes (which was originally not supposed to have been an option).  BTW, I don’t have a 3G, just the original flavor.  I’m in activation purgatory because you can still upgrade an old iPhone so it can run apps.

You’d think this would’ve occurred to them to beef things up, but whether or not it did things aren’t beefed up enough. 


Posted in apple, service | 1 Comment »

More Microhoo Jerking Around

Posted by Bob Warfield on July 8, 2008

What a soap opera.  Aren’t you getting tired of hearing about it?  And which is worse, the drama between the players themselves (counting Carl Icahn as a player), or all the hangers on and armchair quarterbacks?

Michael Arrington is mad.  Boy, do you remember those old TV commercials?

“Hi.  My name is Eddie Childs and I’m mad.”  (Amazingly, could find no links on the Internet–short memory!)

Michael thinks Microsoft is being a bad actor now for pulling its bid “just as Yahoo was about to accept.”

Come again?  Just about to accept?  How the heck could he possibly know whether they were just about to accept?  To most of the rest of us it looks like Jerry Yang sacrificed billions in shareholder value just to avoid it.  If Yahoo was all about accepting it, why then is there such a mass exodus on from the Big Purple ‘Hoo?  Clearly the internal Yahoo is not so confident about that acceptance. 

But I’m sure Michael, with all of his connections, feels like he has some kind of inside track because somebody told him something.  Maybe he is right.  Maybe Microsoft is playing nasty Machiavellian games to get the milk for free without paying for the cow. 

Now he just wants Microsoft to put up or shut up and quit trying to help Icahn take over the board.  Just one problem Michael, from their perspective they already did that dance and Yahoo drank every bottle of poison in site just to make sure they were completely unpalatable.  Microsoft wants to make sure they’re dealing with a group that actually does want to sell, as the current group has made it painfully expensively clear to everyone they did not.

Obviously not everyone takes this completely seriously.  I got a real chuckle out of Larry Dignan’s list of 10 things Arrington can do in protest.  Larry is pointing out in a humorous way that the actual power Techcrunch has to stand in the way of what’s happening (“I won’t stand by quietly while Microsoft destroys what’s left of Yahoo just because it can.”) is pretty limited.  Are these guys serious or just trying to get attention? 

Heck, I’m not even sure if I’m serious, but let’s face it:  None of us has much control over what’s going to happen.  It isn’t even clear the players themselves are in control.  They’re bouncing around the ring grunting and struggling like 3 Sumo wrestlers, each trying to gain a decisive hold on the others.  Watch the spectacle if you must, but please, don’t try to step into the ring.  It just eggs the Sumos on.

Posted in business, strategy | 1 Comment »

Is Less Always More? (Simplify More, It’s Better)

Posted by Bob Warfield on July 7, 2008

The blogosphere is such an interesting place.  Read one article and it casts you out into several others, each of which in turn may lead you to new treasures.  Fred Wilson’s “Thinking About Groups” took me on such a journey.  He is writing about whether the world needs any new products for the groups sector (e.g. Yahoo or Google Groups et al), but at a higher level, he’s endorsing the idea that Less is More.

I’m a major consumer of Groups for all my special interests, so I read on with interest.  I’m not going to dwell too much on groups other than to say I think Fred reached a conclusion I want to analyze carefully.  He references Charlie O’Donnell’s excellent post on groups for some insights on the current Groups state-of-the-art.  Charlie’s view is that every group wants to be different, so there can be no single piece of software that is all things to all groups.  Customization features prominently in Charlie’s dicussion, whether that be the look and feel (e.g. the branding) of the group or how it chooses to communicate and what tools are available within the group. 

Charlie makes a lot of sense to me.  Most groups are too vanilla, especially the Yahoo/Google style.  You have to strain to get the essential goodness and uniqueness of the group out of the bland presentation.  Many people opt to participate with such groups entirely via email because going there in person doesn’t yield that much better an experience.

Fred then quotes another post, Stan Schroeder’s “Why Less is More and How to Unlock the Web.”  This post starts from a strong manifesto:

Features, I’ve recently come to realize, can be obstacles. Problems. The more powerful an application is, the more specialized it is, and thus with increased power its intended audience shrinks, and ironically, it becomes more, not less, vulnerable to competition.

Like any good VC, Fred Wilson wants to sift the world for patterns: common threads that can be teased out of the matrix to provide a keener understand of how the world really works.  Schroeder’s view that the things that start from less win seems like one of those threads, so a quick combination with Charlie’s minimalist list of group features as being the simplest group product possible and that becomes Fred’s proposal for the best way to attack that market.  It’s certainly not a bad start, and yet the world hasn’t really played out that way most of the time, so it bears further scrutiny.  The “less is more” mantra often doesn’t win.  It isn’t quite how the computer world works.  Lord knows we have wanted it to be, but it just isn’t. 

We need to be really careful not to mistake the apparent simplicity of less for real simplicity that can lead to a paradigm shift.  Look at the history of software.  There have been endless attempts by the minimalist to topple the complex.  Minimalist word processors.  Minimalist spreadsheets.  Minimalist databases.  Even whole Minimalist Companies like Software Publishing with their PFS series for those who still remember that.  Visicalc was less than Lotus 1-2-3 which in turn was less than Excel.  All the lesser products lost to products with greater functionality.  It was just a cycle thing–the later products were still uncovering features that 80% of the audience cared enough to switch for.  Before you hang your hat totally on minimalism, make sure you understand how that 80/20 rule stacks up for your domain.

Schroeder hangs his thesis on examples like Twitter.  Why do people stubbornly stick to Twitter when it goes down so often and there are other more powerful sevices?  He bases his theory on the idea that it is because Twitter is nothing but a super-simple API, and hence a platform.  But he misses some very important steps when making that leap.  First, it may be that Twitter has every feature a micro-blogging product needs to be successful with 80% of the audience and no new features (not even working more often!) suffice to persuade that audience to switch. 

Second, application preceeds platform as people like Geoffrey Moore are fond of telling us.  Twitter was a great application before it was a platform.  It built it’s following as an application, not a platform.  This may be just another way of saying it covered the 80/20 functionality side well enough before it became a platform.

Third, Twitter is by its nature prone to network effects.  That’s a built in defense mechanism for the first mover in a space if they can get big fast enough because it creates enormous lock in.  Why would I leave Twitter when I have no way to reconstruct the network I’m involved in there?  Could I even do it if I wanted to?  Can I face starting over?  It’s not a matter of less being more, it’s a matter of more (in this case more network) being a lot more.

While I think capturing the 80/20 feature race was important for Twitter, at best I may agree with Schroeder when network effects are this strong that they trump that feature race.  In that case, it’s important to jump in and start swimming as soon as possible so as to build a bigger network faster.  Just remember that if every category was overridden by network effects above all else there would be no fast follower strategy.  No Facebooks, because the MySpaces would have done it all.  There are worlds where network effects trump all.  Twitter may be one, and eBay has certainly been another, but not all worlds function that way.  In fact very few worlds really have significant network lock-in.

It is a mistake to conflate “less” with the only reason for success.  One of my favorite UI design quotes is Alan Kay’s, “Simple things should be simple and hard things should be possible.”  Start from there and you can go a long ways to understanding simple.  Being the first on the block to raise the level of what is simple to do in your software is a tremendous advantage.  It means you can deliver more to people who can only deal with less.  If the more you deliver matters to enough of the market, and network effects don’t create too much switching costs, you will win over less.

In many ways the evolution of Web 2.0 has been exactly this story of making “more” simpler.  How else can we view Social Networks, Blogs, Twitter, and yes, Groups?  Aren’t they just successive iterations on how an individual or a group can have a web site that is tailored for what they want to get out of it very very simply?  In particular, isn’t it about dynamic web sites that change in some way and have behavior rather than just the old static HTML?  What these new sites have done is to make various previously difficult things simple, and in some cases, they’ve made hard things possible, though we aren’t very far along with that yet on the Web.

The process of making new things simple to win a market is a story that Apple understands extremely well, given their overwhelming focus on the user experience.  There’s nothing really very simple or very “less is more”, about the iPhone, for example.  Yet it gloriously made a bunch of clunky stuff simple and a lot of hard stuff possible. 

Talented UI designers understand these principles.  They know how to order the user interface to keep the simple at the forefront and to avoid confusing with the hard while still retaining the ability to do the hard.  It’s called successive disclosure.  But, to be successful in this way, you have to be absolutely rigorous about UI.  It’s why Apple seems so fascist much of the time.  UI can’t just grow organically or that complexity will seep out and poison the UI.  Companies that understand this have a huge advantage over those that don’t. 

By the way, for yet another take on groups, take a look at Bigtent.  They’ve made some things that were previously hard on Yahoo or Google Groups Simple.  It’s working well for them!   At Helpstream, we’re working hard to simplify customer service, and that’s working well for us too.  The biggest challenge with simple is that it creeps up on you.  It looks so simple until you’re done doing what used to be hard and suddenly realize you’re now ahead.

Posted in saas | Leave a Comment »

Waiting in Line for an iPhone is Glorious

Posted by Bob Warfield on July 5, 2008

Scoble says waiting in line for an iPhone is glorious, even if it is idiotic.  He says it’s idiotic because you won’t see the same cool people in line this time around (after all it’s just an iteration), the TV crews won’t show up (Scoble really is a ham, isn’t he?) and there will be no supply shortage, so there is no advantage to waiting in line.  I notice Scoble didn’t actually say whether he would be waiting in line this time. 

I don’t think it’s idiotic at all, even if what Scoble says is the case.  I don’t plan to wait in line, but I do know people that will.  They do it for the experience of it all.  The memories.  The visceral thrill.  Because it is glorious.

That’s what it’s all about, and that’s what Apple is so awesome at creating.  I’m so tired of the articles about what Apple might do without Steve Jobs.  I hope he’s healthy.  Certainly the experience of having had pancreatic cancer would make one take serious steps towards healthiness even if that meant a caloric restriction diet.

Why do I hate the articles so much?  It’s visceral, it’s the same as waiting in line.  It means we might not have many more chances to wait in that line.  That bothers me on a deep level. 

Maybe I’d better go find a place in line.

Posted in Marketing, strategy | 1 Comment »

Anderson/Elberse Long Tail Debate Reveals a Lot of Internet Subtleties

Posted by Bob Warfield on July 3, 2008

Anita Elberse recently published an article in the Harvard Business Review that has been widely reported to prove that the Long Tail theory of Chris Anderson is wrong.  That’s generated quite a bit of activity in the blogosphere, as the Long Tail idea is cherished as one of the key tenets of the latest vision of how the Internet changes the economy and business thinking.  I’ve a list of the more interesting contributions on this topic under “Related Articles” below, but I want to spend most of my ink here unravelling some subtleties that make real analysis hard.

First, let’s describe WIred editor Chris Anderson’s theory, which he espouses in both an article and a book.  It is basically a theory of selling that suggests that in the Internet era, selling fewer copies to more people is a new strategy that can be successfully pursued.  In the past, all the interesting business was around a few hits, and many businesses focused entirely on producing the next hit.  The group of persons that buy the hard-to-find or “non-hit” items is the customer demographic called the Long Tail.  Given a large enough availability of choice, a large population of customers, efficient search engines, and negligible stocking and distribution costs, it becomes possible to profitably target the long tail in Chris Anderson’s view.

Elberse did some research around these ideas by studying data from Rhapsody, Australian Netflix equivalent Quickflix, and Nielsen.  The study was all about music and film offerings, and so was heavily media influenced.  Essentially she says that all the good news remains concentrated in the “head” and not the “tail”.  Specifically, 32% of all plays were for the top 1% of goods, and 78% were for the top 10%.  In addition, consumers were much more likely to rate the blockbusters in the head as good.  Lastly, she presents evidence that the Long Tail is largely the domain of heavy consumers, and so big new audiences are not being created there.

It seems that Elberse is saying that consumers are not finding “hidden gems” out in the long tail, and in fact that they’re not even venturing into the tail that much.  She gives compelling evidence that the activity in the head is even more frenetic.

What’s really happening here?  Is the Long Tail dead?  Did it ever have a chance?

Here’s my problem: we’re measuring somethng that affects the measurement. 

Suppose there is a Long Tail.  It certainly is much easier to find and purchase obscure products.  Now let’s suppose that some of those products are actually pretty good.  It’s also much easier to get that word out as we blog and post to our social networks.  The Internet is, after all, an Influence Multiplier.  Of course when we find something obscure, we probably will only write about it if we like it.  It isn’t the product, but the maker or reseller we write about if we’re unhappy most of the time.  Unhappiness is evidently a much more personal thing that somebody must be held accountable for.  Lastly the folks that are the early adopters, in other words, the heavy consumers of new Long Tailish things, are also hugely amplified by the Internet and the rule of 10’s.

What does all that do for Elberse’s results?  Well, it means that anything good out on the Long Tail will quickly be elevated to the head if it has any broad appeal at all because of the way the Internet works. It will only be those products of an extremely limited appeal that don’t make that jump.  Suddenly, a perfectly legitimate Long Tail buying process has resulted in the “discovery” of a blockbuster and in the process has obfuscated the fact that it started out in the Long Tail.

There is, in fact, quite a lot of evidence that this is exactly what’s happening in Elberse’s results. 

First, consider what sort of material Elberse has studied: music and films.  These are pretty broad appeal items with the exception of some fringe categories.  It’s well understood that Indie artists make some good stuff, but also that they just can’t get the air time to be noticed.  In fact, as Chris Anderson notes in his rebuttal:

But there is a subtle difference in the way we define the Long Tail, especially in the definitions of “head” and “tail”, that leads to very different results.

The best example of this is in what she describes as a growing “concentration” of sales around a relatively small number of blockbuster titles. In the Rhapsody data, she finds, the top 10% of titles (out of more than a million in that data sample) accounted for 78% of all plays, and the top 1% account for 32% of all plays. That sounds pretty concentrated around the head, until you reflect, as she notes, that “one percent of a million is still 10,000–[…]equal to the entire music inventory of a typical Wal-Mart store.”

This is a good moment to remind everyone of the normal definition of “head” and “tail” in entertainment markets such as music. “Head” is the selection available in the largest bricks-and-mortar retailer in the market (that would be Wal-Mart in this case). “Tail” is everything else, most of which is only available online, where there is unlimited shelf space.

So in the data she cites, the head of the online music market represents 32% of the all plays, and the tail represents 68%. That’s certainly no challenge to the Long Tail theory; indeed, it’s even more tail-heavy than the data I cited in my book (probably because I used a more generous estimate of 50,000 tracks for Wal-Mart’s inventory).

She then looks at Quickflix data. Here the top 10% of DVDs accounts for 48% of all rentals, and the top 1% accounts for 18%. “The concentration [of sales around the blockbusters] is not as strong as Rhapsody, but it’s still substantial,” she writes.

But here, too, the use of percentages misleads. Quickflix had 18,000 titles at the time of the research, compared to the average Blockbuster’s 3,000 titles–there’s only a factor of six between their inventories, as opposed to a factor of 100 in the Wal-Mart/Rhapsody comparison. If you look at her chart, you’ll see that the top 3,000 titles (ie, the amount equal to Blockbuster’s inventory, or the “head”) accounts for 70% of rentals and the “tail” accounts for just 30%, making it more concentrated on the head than Rhapsody, not less. (BTW, I calculated almost exactly the same split for Netflix in the book.)

My point is not to suggest that Elberse is wrong and that I’m right, it’s only to point out that different definitions of what the Long Tail is, from “head” to “tail”, will generate wildly different results.

The money quote for me is when Anderson invokes the bricks and mortar definition of “head” versus “tail”.  He’s pointing out in black and white that there is an obvious part of Elberse’s “head” that consists strictly of items only available by the Internet.  These (and probably others because bricks and mortar will pick up the title too if the item appears on their radar) are precisely the items I’m suggested could be dredged out of the Long Tail.

Elberse’s rebuttal to Anderson’s rebuttal is weak.  She spends a lot of time basically arguing she doesn’t want to talk about the notion what “head” and “tail” are, and just wants to stick to abstract proportions.  But in so doing, she completely misses Anderson’s and my point:

It isn’t that the Long Tail is dead at all, but rather that it is so powerful that the “head” can be wagged by the “tail.”

Related Articles

TechCrunch’s Erick Schonfeld writes that Elberse has “poked holes in the long tail theory”, but that to say there is no money in the Long Tail is nonsense.  He raises the interesting notion that it may take a special kind of business to fully take advantage of the long tail, and cites Google AdSense as one such.  My takeaway is that this is another flavor of suggesting the Long Tail players have to cast an exceptionally broad net to filter enough gold out of the Long Tail river.

Lee Gomes comes out strongly in favor of Elberse’s view that the Long Tail is not a viable strategy.

Posted in business, Marketing, strategy, Web 2.0 | 1 Comment »

Generous Air Time for SmoothSpan

Posted by Bob Warfield on July 3, 2008

Special thanks go to Larry Dignan, for hosting a guest blog article, “Ode to Spreadsheets“.  Thanks Larry!

And also to Louis Gray for naming SmoothSpan as an “Obscure Blog that Sparkles.”  I appreciate the recognition Louis, and I’ve been enjoying your work for quite some time.  Thanks!

Posted in saas | Leave a Comment »

The Rule of 10’s Makes the Internet an Early Adopter Amplifier

Posted by Bob Warfield on July 1, 2008

There is a rule of 10’s at work with participation on the Internet.  If we have a community of 100, it works like this:

1 user creates new content:  A blog post or a Wiki page, for example.

10x that, or 10 users, interact with the content:  They leave a comment, for example, or edit the Wiki page.

100x that, or 100 users, read the content.

The moral of that story is that very few of the participants actually produce all the value.  About 10% in fact, and of those, only 10% (or 1%) total, are creating the fabric on which we all depend.  The content, in other words.

Don Dodge calls this the Social Pyramid.  I’ve seen it written about in many other places and even derived the numbers for myself from data on communities I’m attached to.

Interesting stuff, but what’s my point?

Flash forward to Louis Gray’s post about the rapid adoption of FriendFeed in his readership.  Apparently, it’s reached a point where 78% of his comments come via FriendFeed.  At the same time, we read Scoble is declaring blogging comments dead for similar reasons.  (Hmmm, don’t see a way to Trackback for Scoble, that has other interesting ramifications, but it’s off topic.)

I’m struck by the relationship of the rapid uptake of FriendFeed and the Social Pyramid.  I have to conclude that not only are the very few, the 10%, doing all the work, but that they are also Early Adopters.  How else to explain that uptake for Louis? 

For the marketing savvy out there, that would tend to imply that you need to invest in the new new things like Twitter and FriendFeed well before they become mainstream if you want to reap the benefits of lots of buzz on the Internet.  For others, it is interesting just how much the Internet empowers the Early Adopter crowd.  Part of it stems from the fact that they seem to be the one most willing to vote.

Posted in Marketing, Web 2.0 | 5 Comments »

Big News: Flash No Longer Invisible to Search

Posted by Bob Warfield on July 1, 2008

Adobe has worked with Google and Yahoo to make it possible for the search engines to read text inside SWF files.  That’s big news.  It significantly lowers the friction around Flash and extends the reach of the search engines into new territory.

As Larry Dignan points out, Flash is already on 98% of Internet connected computers, but they needed to keep pouring on the innovations to deflect Microsoft’s up and comer Silverlight.

Until now, most RIAs have required developers to generate two sets of pages.  The first are the ones actually used.  The second are static HTML pages that are indexable by search engines.  Some tricky moves makes this all transparent to end users and search engines alike, but it is still a tremendous amount of work.  Now Adobe has made this easy for Flash/Flex/AIR.  There isn’t really anyone to make it easy for AJAX.  Presumably Microsoft will see this and have to dive  into the same functionality for Silverlight.  And Apple, which appears to want to develop their own wheel here (what else is new?) will also have to consider it, although they’re pretty far back in the pack.

I think Flash is awesome, and my biggest gripe has been this issue (for which there are laborious work arounds) and the fact that you can’t get Flash on the iPhone.  One down.  One to go.  Apple, are you listening?

Related Articles

There’s been some skepticism, so Ryan Stewart delves into what the new support lets search engine spiders do.  It’s cool!

Posted in saas | Leave a Comment »

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