Transparency and the Poison Apple

I have been an Apple fan, user and developer pretty much continuously since I was 9 years old and learned my first programming language (Basic) on my father’s Apple II. So its going on 30 years now. Apple’s product and innovation have, if anything, only gotten better over the years and are well documented, so no need to rehash it all here.

But it recently struck me in discussions with various folks that there is one key lesson Apple can’t or won’t learn. It affects many technology companies that grew up in the 80s or 90s, especially a group of companies i know well, enterprise software vendors. The problem is transparency.

One of the most misunderstood changes as a result of the move towards Software as a Service (SaaS) and the dreaded “Web 2.0″ is this embracing of transparency. And it covers a lot of ground. Apple (and really here we mean Steve Jobs) is hard-wired not to release information.

Some of this is tied to not wanting to let a competitor get early information on your Next Great Widget, so they can’t steal your thunder, or indeed your entire idea, and become massively successful with an inferior version of your product (Jobs has some experience of this problem you might recall). In Apple’s case at least it is also driven by wanting to maximize the publicity surrounding a product launch.

The problem is, once it is in your DNA it is very difficult to switch it off when it is either unnecessary or unwise. Apple has been hit by both of these scenarios recently. The “unwise” side relates to how they handled Steve Jobs illness (hint: badly).

The “unnecessary” angle comes with how they handle bugs in their products. Rather than acknowledge a problem and give an ETA for a fix, they say nothing. Nada. Zip. This infuriates otherwise loyal customers. All in all though, its hard to argue with success or, to look at it another way, Apple gets away with it (to date) because, well, they’re Apple.

Turning to enterprise software companies though, a big change is coming and very few are well positioned to handle it. Transparency once again is the issue. Pricing transparency in this case.

One of the open secrets about enterprise software is that although there is officially a “list price”, pretty much nobody pays it. Vendors know this and customers know this. Pricing is essentially based on the vendor figuring out how much budget the customer has and charging that. Customers try to do the opposite by negotiating the price down. Vendors almost always win. But things are changing…

If you look at almost any web-based service (especially those that would have been a software purchase 10 years earlier such as email services, accounting systems and such) a key feature is total transparency in pricing. Not only are the prices listed for all to see, they have two other key characteristics:

  • They are pay-as-you-go (monthly, based on usage)
  • There are no contracts

Think how different it is to an enterprise vendor to move from charging a customer several million dollars in advance for a multi-year contract versus utility pricing, per month, based on usage where you can (in theory) change vendors at any time.

Salesforce.com have of course been pushing this model for years so it is not like it is new. But today most web users (at least some of whom are involved in corporate purchasing decisions) have experienced pricing transparency in consumer services they use. Just like Amazon and Google raised the bar for any web-based product in terms of ease of use, the impact of these Web 2.0 services is about to be felt big time by enterprise software vendors.

The biggest challenge they have is that moving to a utility revenue model means taking an awfully big short-term hit in revenue to transition to a subscription model. And if you think the revenue hit is bad, the cash flow one is significantly worse. That’s why I think most enterprise vendors, especially the small to medium sized ones, will not successfully make the transition and will ultimately see their business go downhill over the next 5 years. Incumbents will find it very hard to compete with start-ups who adopt the new revenue model from Day One and have no historical revenues (or short term public market focus) to haunt them.

Some will try to appear to be true SaaS businesses, for example by offering a hosted version of their product. But the real sign of a true SaaS business is utility pricing. Anything else is just marketing.

And it is a shame, because there are some really innovative folks in many of these companies who could create great products in this brave new world. They are in one sense victims of their own success. And if they don’t embrace the shift that is taking place they will be consigned to the same technological graveyard that holds so many former great companies. Unless they happen to be run by Steve Jobs.

Gonna Be Some Changes Made

I cannot recall ever seeing such a universal chorus of “good riddance” to the end of a year as I have seen with the closing of 2008. Hardly surprising I suppose given the apparent near collapse of the global economy (the jury is still out on that one) and the shock factor of plummeting house prices, spiraling unemployment and general gloom.

I am more upbeat than ever though. I think 2009 is going to be an exciting year full of opportunity, at least in the world of technology start-ups. Even leaving aside the obvious global scale of this downturn, on the tech start-up side it is quite different to the down cycles we have seen in the last 20 years. Investment has largely dried up but it has never been cheaper nor have better tools been available to start a new web company than they are today. I am convinced many of the next wave of great startups will be born during this downturn.

To be sure, many folks will attempt a start-up during this period with neither the passion nor the fundamental skills to make it work, and for them it will probably not be the wild but fulfilling ride it is for many (even those who fail.)

A great way to test whether you are ready for this or not is to read the recent article “Why your web startup will fail“. If you read it and find yourself sobbing softly to yourself or getting up and wanting to run out of the room, stick with the day job.

If, on the other hand, your response is “Bring it on!”, then go for it. Whether you succeed or not, you were born to be an entrepreneur and will never be truly happy doing anything else.

For me, 2009 will see a new start-up we have been working on for most of 2008 finally get its public unveiling. It is the most exciting idea I have been involved with in a long time. Perhaps ever. It will be great to finally be able to talk about it and share it with the world. That’s what start-ups are all about.

Bring it on!

The Dark Knight Returns

I’m trying to return to writing blog posts and as part of that had considered splitting myself in two. Two blogs that is.

The original plan was this:

"Anything related to my professional life (such as it is) will continue to be on blurgl blog. Things related to anything else will appear here [on TellyAddict, my personal blog]. I try (steady, I said try!) to write useful posts on SaaS, Web 2.0, software development, business models and such over on blurgl blog. Here I have no such constraints and posts are likely to cover the gamut from movies and TV to airplanes to even the occasional news on family and friends. Absolutely guaranteed only to waste you time and probably not of any real interest to anyone, even me. You have been warned."

But an interesting thing happened on the way to the blog…

First, I published the above on my TellyAddict personal blog and then.. promptly did nothing more about it.

But secondly, and more importantly, I have been thinking more about the personal/professional life split and how in this day and age of Facebook, Twitter and LinkedIn, the line is going so far beyond blurry that it is barely recognizable.

These days quick thoughts that pop into my head are as likely to end up on Twitter or Facebook as on a personal blog. So I’ve abandoned that idea. Anything long enough to be a blog post will appear here and anything too short ends up on Twitter (where you can follow me should you so choose.) Apologies in advance if you find it annoying to filter out the non-business stuff but given that my audience consists of like 3 people, I’ll call you each to apologize personally.

So as my first post back on Telly Addict, I have to talk about The Dark Knight. As you probably know, it has been breaking a lot of records and generally printing money for Warner Brothers.

I knew this movie must be doing well when I tried to go and see it with a friend a week after it opened and had to wait in line for over 2 hours to get into a later show than planned, which was itself then also sold out. Its a long time since I remember having to stand in line after having bought the tickets just to get a good seat.

That being said… totally worth it. Feels a little long towards the end because there is a lot of story but it is everything you have heard: well acted, well written, well directed. Not too much unnecessary exposition, in other words treating the audience as if they have a brain.

I went into the movie knowing the Harvey Dent backstory (as many probably did) yet director/writer Christopher Nolan and fellow screenwriter (and brother) Jonathan Nolan still manage to pack a few smart surprises into the story. All in all a satisfying romp. If it is true that this is the second movie in a trilogy I can’t wait for the final installment.

(Anyone taking bets on the pressure they will come under to make a fourth part? I didn’t think so.)

And to keep this post bang up to date, it turns out The Dark Knight is the best selling movie of all of 2008 on iTunes, even though it hasn’t been released yet. Like I said, printing money for WB.

All Grown Up

Much has been written about the Facebook Generation, most of it quite negative. They represent a tempting target for those of us of older generations (even if not by much). I can’t help but feel that this is often a 21st century reinterpretation of the age old “back in my day things were different” scenario (cue a Monthy Python sketch or two…)

Despite never buying into that cliche (I’ve been a believer in the digital native versus digital immigrant distinction for about 10 years), I did not honestly expect to find much new material in Don Tapscott’s new book Grown Up Digital.

But I was wrong.

Often technology business books (is that a Dewey Decimal classification? Probably not.) are written, perhaps understandably, for a decidedly non-technical audience. While not quite leading to a dumbing down of the subject, a lot of basic material is covered that is really of no interest to anyone who knows the area even a little.

A key case in point is Chris Anderson’s The Long Tail, a book based on a Wired article by the same author. While I love the concept and enjoyed the article, the book was ultimately disappointing because after the first two chapters, at least for me, the remainder of the book was just a rehashing of the same basic premise. It might have been more valuable to someone who had very little experience of the Web as it exists today, but for me, not so much.

Anyway, despite the fact that I am submerged in Twitter, Facebook and the rest of Web 2.0, I am really enjoying Tapscott’s new book. I am only a few chapters in so it may ultimately lack the payoff, as in the case of The Long Tail, but so far I am finding 3 things about it I really like:

  • A lot of little examples I had not heard of that are good additional anecdotal evidence (such as the Indian multi-player dance game – who knew!)
  • A lot of data from a big study on patterns of usage – especially of interest is the data from outside the United States.
  • A good high level weaving together of what the trends mean.

Its the overall coherent picture that Tapscott paints that for me is making it a worthwhile read. I have not seen it done as comprehensively and with the hard data to back it up as he manages here.

If your business (current or planned) is going to employ, sell to or otherwise interact with anyone under 30, then I recommend this book as a must read. Especially if you yourself are not under 30.

Learning Impact 2008

I was asked a few months ago to be a judge at this years Learning Impact 2008 Awards sponsored by the IMS Global Learning Consortium.

The event highlights educational and corporate institutions who leverage technology in innovative ways to enhance learning. I’m looking forward to seeing the finalists and honored to have been asked to participate.

The awards run as part of the Learning Impact conference and I thought I would include some information on it in case you, dear reader, or one of your colleagues might be interested in attending.

As you may know, IMS (together with its member organizations) creates many of the critical learning standards used in learning technology and a number of them also get rolled up into SCORM.

Here is some info and a link to the site:

The IMS Global Learning Consortium’s Learning Impact Conference and Summit on Global Learning Industry Challenges is rapidly approaching. Check out the agenda and I’m sure you will agree that it is the best conference on academic, educational and learning technology specifically for executive tech leaders who want to know who is leading the industry, where its going, and why.

Tracks cover the latest in learning systems, tools, digital content, web 2.0 for learning, learner information and analytics, accessibility, inclusive design, and personalized learning in the higher education, K-12 schools, and corporate education segments. The Summit on Global Learning Industry Challenges features keynotes and executive panel sessions on key industry challenges with a global perspective.

The hotel cutoff date is April 10.

The Learning Impact conference is also probably the single best way to understand the full scope of IMS GLC activities in supporting the global learning and educational technology industry.

Personalization, Perception & Procrastination

While the cool kids like Facebook, MySpace and YouTube get most of the attention when we think of how the Web has changed over the last few years, I was reminded this week of what is in many ways a more important but much more subtle change that has emerged in the form of personalization.

It is subtle in the sense that it has become so mainstream that you often don’t notice it, but when it is missing you certainly do. Almost single-handedly Amazon is probably most responsible for this shift in how we interact with web sites. Anyone who has made a purchase on Amazon has had the experience of the site not only remembering your credit card and shipping details but even making recommendations on other purchases. One of the interesting aspects of this is that while the recommendations clearly have a selfish purchase (to get you to buy more stuff), I find their recommendations often highly relevant and have made purchases I would not have otherwise.

This notion of marketing actually being useful to the consumer is something we would have laughed only recently, writing it off as something marketing types in power suits thought was a good idea after their third Martini. Yet it is becoming more common on the Web. How often have you searched for something on Google and found yourself clicking on the ads instead of other links. Indeed I often find the ads more relevant than the search results. Not always to be sure, but often.

This is all well and good but the subject of this post is how all this personalization has shifted user expectations. Due to services like Amazon, Google and others, users of a service now expect it to tailor itself to them. This might be as simple as remembering your login details for a few weeks in the form of a cookie (assuming its not a site that needs high degrees of security such as a financial site of course) or noticing what features you use and adopting the interface to those usage patterns.

Sadly many sites seem not to be learning these lessons and are probably losing customers left, right and center without even realizing it. I frequently encounter a new site where the buying process is just tedious.

Examples include:

  • Requiring me to go through a laborious registration process to set up an account to buy an item that costs less than $10 from a site I will probably have no need to visit again.
  • Showing an items availability as “Please call”. Call?! If I wanted to talk to a real human being I wouldn’t spend 12 hours a day in a dark room staring at a computer screen now would I? Think people.

The really silly thing is that building things the right way is not hard. All you have to do is look at how Amazon does it and unless you can come up with a really strong reason for not doing it the way they do, you’re done. (Except customer service. Amazon’s customer service pretty much sucks if you have the unfortunate need to actually contact them about something.)

It struck me this week that this shift in expectations is also transferring to the real world, at least for me. My local pubic radio station has been running a fund drive all this week. Now I am well known among family and friends as a great procrastinator. Why put off until tomorrow what you can put off until next week? (David Allen would be rolling in his grave. If he were dead. Which he is not.)

Anyhoo, in an unusual mix of caffeine withdrawal and Catholic guilt, I actually made a donation on Monday, the first day of the fund drive. I then found myself getting increasingly annoyed as the week wore on and I had to continue to listen to all the pleas for money. For hours. Every day. What are you people thinking? Don’t you know I have already paid? Oh, that’s right. They have no idea. Or at least no ability to easily connect the fact that I am the guy who made the contribution and certainly no technology to allow me to get back to regularly scheduled programming.

This is a huge challenge for big media companies. It is one thing for users to be interested in getting access to their favorite programming over the Web or on mobile devices. It is a whole other deal if in addition to that they begin to get annoyed with the old ways of doing things. Hulu is great and all guys, but don’t pat yourselves too hard on the back – you’ve got a long way to go.

If media companies continue to take baby steps and attempt to delay the gut wrenching change it will bring to how they generate revenue, they will end up, like the music industry, curled up in a little ball by the side of the road, drinking too much and mumbling lines from On The Waterfront.

And it didn’t have to be that way.

As Simple As Possible but No Simpler

ReadWriteWeb has a short but great post discussing some key trends on how to build clean, simple interfaces for web applications. I am particularly a fan of the concept of gradual engagement that is discussed.

Make it drop-dead simple for people to try your application and only force them through a sign-up process once they have had a chance to dip their toe in the water and begun to see the value your application brings to them. And even then, keep it as short as possible. You don’t need their life story and they sure don’t want to have to tell you.

Finding Hard Data on e-Learning Effectiveness

Colleague Pierre Khawand was recently rounding up links to hard data on e-Learning effectiveness and I contributed a few based on my own past experiences with LMS and LCMS deployments. Pierre has now summarized his findings in a blog post and its well worth a read.

Getting hard numbers on e-Learning effectiveness is notoriously difficult and often case study presentations at conferences are the only ones you can find but no one really collects and publishes these numbers in one place. Partly this is a result of companies being a little hesitant to release this data (though in practice it tends to have a positive impact, regardless of what the numbers themselves show.)

It is also partly due to the somewhat bizarre issue that companies seem to not be too interested in seeing data on e-Learning effectiveness. Some believe it is inherently difficult to interpret the numbers (partially true no doubt) and some are perhaps concerned that negative results will impact their ability to get projects funded. This is unfortunate as any numbers I have ever seen show how powerful e-Learning can be and negative numbers tend to highlight bad practices rather than condemn the entire field of e-Learning.

Focus Is About Saying No

Two Apple posts in a row is really starting to risk blowing a hole in my objectivity but I couldn’t allow this one to slip by. In a current interview in Fortune, Steve Jobs has plenty of interesting things to say but by far the best comment for my money is his view on focus. Apple and Jobs are well known for their laser-like focus and here is what it means to El Jobso:

“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.”

What The Apple Store Can Teach Us

I have been thinking about writing about Apple Stores for a while now. I think there is so much to learn about how to interact with your customers and what it means to market to them in the age of the Web. I have resisted because I am, as many people know, a self-described unabashed Apple bigot and therefore people might on occasion, and perhaps with some justification, question the objectivity of my views.

The main point I was interested in writing about is the general buzz (and buying as far as I can tell) that seems to be going on at any Apple Store I have been in. Although most people cannot articulate it, there is general agreement that the experience in an Apple Store is both very positive and quite unlike any technology or gadget store they have ever been in. There are great lessons in how to really focus on customers, treat them as intelligent rather than stupid and still makes gobs of money doing it. (Apple Stores sell everything at full retail prices and, much to my amazement, people pay it even though they could go home and buy it from Amazon cheaper with no tax and free shipping.)

Today (via Gruber) I came across this great two part article by a non-techie of his experiences in an Apple Store. It indirectly covers pretty much everything I wanted to say.

Secondly the ferocious reaction to it by (one assumes based on the content) PC fan boys is hilarious and also answers the fundamental question of why Dell and everyone else don’t just copy the Apple formula (Its not like its a secret.)

Answer: Its simply not in their DNA. They think providing something that is technically or functionally equivalent is all you need to do. They don’t understand how their customers think or pretty much anything to do with the concept of customer experience. Sure is fun to read though.