04/12/12
The Platform
The purchase of Instagram by Facebook is no less than an attempt to redefine the landscape of our industry: today, you are either an app, a service or a platform.
For instance, RIM will become an "app". No disrespect, it can be a formidable app, opening the doors to the Enterprise to an Apple or a Google, but the window of opportunity for RIM to be a platform is gone. In this new world, search is an app which sets the search context with a high degree of precision (yelp, UrbanSpoon...), ads is a service and the Worn out WWW amounts to the Yellow Pages (paper HTML edition).
Facebook just told us: "not so fast", you are missing the social component. Content is now produced, delivered and accessed in a completely different way: we have entered the social:// era and left http:// behind. The circle is the new DNS. In this new world, Facebook is not an app, it buys apps. In our industry it is, position or be positioned. With close to a billion users, Facebook is a platform, or at least, soon to be. Make no mistake, the clueless statement of Facebook's IPO filing where Zuckerberg states that he doesn't need any money nor does he know what to do with it, including spending $1B for Instagram is just smoking mirrors.
At this point, you probably understand that Microsoft and Android ecosystems are not "platform oriented": hardware vendors and ISVs are too loosely coupled to deliver products that customers want to buy. That model is gone. The musical chair game has started.
So, where does it leave us? well, we have 3 and 1/2 incumbents to the platform game.
- (good old) Microsoft/Facebook
- (fearless) Google
- (mighty) Apple/Twitter
... and maybe (always smiling) Amazon. The problem with Amazon is that they'll have to choose between being a commerce platform (and compete with WalMart) or an industry platform and play with the big boyz. I don't think these two things work well together and eventually Amazon will return to its commerce roots mainly because of the lack of social capability. Amazon is a formidable company, but they are too late to the game, they have no money in the bank to acquire what they need to compete and they are burdened by a big legacy business, deeply rooted into the Web. As (Microsoft), Google and Apple know, there are only so many social networks that can fuel a healthy platform. Most likely Amazon will become a substrate to support services with AWS, and of course, an "app", the kindle, assuming the platform guys leave these holes open (far from a given).
Yet, Amazon was a decisive factor in establishing the architecture of the platform. It reinforced the power of the vertical integration pioneered by Apple. If you come with a great device or set of devices, and an app store, customers will line up. Something that Google is still struggling to emulate with an open ecosystem, and I am not even talking about Microsoft. In other words, it is not the number of devices you sell that counts, it is the the numbers of end-users actively using the platform to buy digital goods, interact, store their stuff... If you doubt it, just ask Nokia ...
If the social integration is pretty much a given, the game gets really interesting when it comes to the vertical integration. As we have seen with Apple, customers don't see "choice" (or price) as a competitive advantage. People want simple product lines with products they can actually use, with clear and real innovation at each cycle, built by thoughtful product teams: selling incremental junk is no longer an option (as HP painfully learned). And yes, TV or Game consoles will be engulfed in the platform. How could the platform guys leave them on the table? Any device that can run an app will be vertically integrated in the platform (or replaced by one).
My best guess is that:
- MS/FB will partner strongly with or even acquire Nokia and HP.
- Google/Motorola will swallow HTC and/or LG, possibly bring Dell in its ecosystem
- Apple ... huh ... will buy Twitter, and RIM for its Enterprise App
Samsung could team up with Amazon, but most likely it will become the component provider of the platform guys. SONY's, Nintendo's and HP's troubles simply show that there is no more room for Independent Hardware Vendors: you are either a (vertically integrated) platform or you supply the platform with components, no, not even devices (I mean other than speakers and power adapters). The touch points to consumers are going to be completely locked down, not one will be left open.
Even Telco providers will be suppliers to the platform guys, with the Skype/Hangout/Facetime apps being the new face of telephony.
The interesting thing here is that unless social networks are just a fad, MS/FB is the most likely winner of that game. There is a large probability that MS/FB/NOK/HP could take on 80% of a vertically integrated, consumer oriented market. Even Ballmer could pull that off and retire on a real visionary success. Google will lose that game (this is not an engineers game, let alone using corny "Web" paradigms and UX, in any case they will take the decision to move to a vertically integrated model too late without any muscle behind it). Apple will take on a 20% "think different" crowd. Apple is not aggressive enough to win that game, they'll look back to their $100 B in the bank and ask themselves, if they could have used it more "wisely".
Facebook spent a billion, not to buy Instagram but to hold our industry by the balls. With its IPO behind, it will call the shots for years. And yes ... Zuckerberg is next CEO of "The Platform".
Fascinating times ... it's a shame that Steve is no longer with us.
Update:
06/18/2012: Microsoft announces the "Surface"
06/26/2012: Google kindly announces the 7" Nexus Tablet and the Nexus q
07/04/2012: Google Jelly Bean is a game changer. Google seems to finally get it, UX is key to win this game. I may be wrong after all, Microsoft may never be able to catch up. If Microsoft continues to mess up on the Mobile OS side over the next 6 months, there will be no Microsoft in the Mobile space moving forward.
07/06/2012: Amazon is planning to launch its own smartphone.
07/16/2012: Google (Motorola) is launching the Atrix HD.
07/20/2012: Microsoft reports a big jump in Skype usage, up 50%
07/23/2012: Amazon plans 6 new Kindle variants.
07/26/2012: Facebook works with HTC on its own smartphone
07/28/2012: Microsoft is in trouble, that may well be the statement that signals the decline of the company: Microsoft CEO Steve Ballmer has sought to downplay the notion of Surface competing with partners, recently calling the device “just a design point.
7/31/2012: Details on Microsoft's plans to move to a vertically integrated model
8/20/2012: It looks like Microsoft does not aim at partnering / merging with Facebook, they sold 20% of their stake right after the IPO, that's kind of a shame, without even the shadow of a social network, they will have a hard time getting there. Unless their secret weapon is to make Yammer a general purpose social network.
8/22/2012: "The Platform" is on Amazon's Navigation Bar: App Store, Storage, ... Critically missing is the social network component.
9/06/2012: Amazon unvails the new Kindle, "People don’t want gadgets anymore, says Jeff Bezos, they want services that improve over time. Kindle Fire is a service. It greets you by name. Comes out of box with content preloaded, makes recommendations."
9/06/2012: Mobile gamers outnumber the console core.
9/12/2012: Zuckerberg "Facebook's Mobile opportunity is much bigger than what people think", "Everyone is now "underestimating" Facebook" (I am not ...)
10/02/2012: Windows Mobile market share continues falling
10/02/2012: 1st Apple-approved iOS game controller makes its debut
10/04/2012: Facebook Tops a Billion Users
10/09/2012: Ballmer to Microsoft shareholders: 'a fundamental shift [is] underway in our business' In his annual letter, CEO Steve Ballmer says Microsoft's future is a tight combination of hardware and software
10/12/2012: For the first time this month people searched less than last year. Our interpretation is that people now search more in context, using dedicated apps on their mobile device. This is particularly disruptive because that is the kind of search that has the most impact on commerce and advertising.
10/22/2012 Subliminal message from Zuckerberg: I would have worked at Microsoft if facebook had failed
10/25/2012 Ballmer: Microsoft has more hardware to come.
10/30/2012 Google’s New Nexus Commercial Puts Focus On The Platform, Not The Hardware
11/2/2012: Microsoft is testing its own smartphone
11/5/2012: Microsoft retires messenger, migrates users to skype
11/6/2012: Verizon shuts down its App Store
11/9/2012: Video game retail sales fall 25 percent year-on-year in 11th straight month of decline
12/01/2012: There is a possibility today that Microsoft won't be platform player.
01/15/2013: Facebook announces Search and close partnership with Bing.
01/22/2013: Microsoft talks about investing 3B in Dell
02/14/2013: HP to adopt Android
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