What I've learned over the last 6 months

With the news of the FCC ending net neutrality, I thought I'd republish something I wrote 4 years ago. 

Enjoy!


Its been a busy 6 months for Cloud computing and in the information business, most notably: Apple's  launch of their iPad and iPhone 4 (including 'Antenna-gate'; Google and Verizon's pitch on Net Neutrality rules; AT&T implementing 'usage-based' charges for data plans; major organizational changes at Thomson Reuters and their launch of Elektron and Eikon; Bloomberg pushing open systems and symbology; Microsoft launching Dallas and Azure; Clare Hart taking over at InfoGroup as they go private; and finally, IDC going private.  Normally, this would make a full year of news.  But what to make of it all?

Here is what I've learned from the first 6+ months of 2010:

1. Distribution Networks are the next battle ground.  While the platform wars are well underway, the more interesting (and possibly destructive battle) is upstream in the delivery of information.  With wireless providers looking to charge for usage over their networks, telcos divided on the Net Neutrality issue and cable providers looking outdated in their models, more and more the issue of bandwidth and guaranteed delivery will dominate the discussion. This means -
2. Google and Apple are becoming (or already are) media companies - and more.  Maybe not in the traditional sense but its happening.  With their approach to collection of content and push to own the distribution (and cut out infrastructure owners like cable, telcos and wireless firms), Google and Apple are by-passing traditional media companies like NBC and News Corp and leapfrogging Cablevision and AT&T.  As a result -
3. Content is (still) King.  Content providers can now selectively pick their distribution network like never before.  Freemium and Premium economic models are gaining prominence allowing the new media companies to garner revenue on both advertising and a toll for leveraging their distribution networks (Apple is the new model for this; cable and satellite, the old model).  Which translates to - 
4. Ecosystems are as or more important than the platform.  Whether its upstream information or downstream applications, the complete value chain offered by the platform mitigates the intrinsic value of the platform.  Why is RIM, the dominate player in the professional smart-phone, market worried?  They have a tenth of the ecosystem of Apple and a fifth of Google's.  As valuable the Blackberry has been for business, unless RIM can build a better ecosystem, they have a real long term issue.  In their favour is -
5. Apple doesn't care about businesses - or large ones anyway.  Apple refuses to go 'up-market' and address the real issues enterprise/large businesses have with Apple's security and 'openness'.  As a result, RIM (or maybe Microsoft or Google) can keep them out. Which is interesting since -
6. Open systems and platforms are in; closed ones are out.  News of Android-based smart-phones overtaking iOS based devices for number 3, (behind Blackberry and Symbian), helps close the deal here on the smart-phone market.  More generally, adoption of cloud platforms such as Salesforce.com, Azure and others are wide-spread among businesses of all sizes - and growing.  And finally - 
7. Social media and networks will be focal point of business for the next 5 years.  Firms are starting to realize nothing drives revenue like an engaged customer and yet few really have engaged customers themselves.  As firms realize these networks change the way they interact with customers from transactional to relationship-based, customers will become partners not dollar signs.

For information companies, the above present a problem.  Most have a closed, proprietary system; have poorly managed their distribution networks (outside of their closed networks); don't use social media/networks as a means to engage with customers; have put more focus on Apple platforms than others; and really haven't fostered the notion of an 'ecosystem' of partners, but a loose confederacy of frenemies.  Many will have to change their approach or will find further pressure on not only revenue growth but maintaining existing revenues.

Given the first part of 2010 and the changes, I can't wait for the rest of the decade to unfold.

As always, comments welcome.

Castles Under Siege

As my first post, I have been struggling with where to start. Over the past few weeks, there have been some interesting events inside - and outside - the industry which I believe will change the way information providers operate to remain successful.

Inside the industry, the biggest move arguably is the announcement of Bloomberg to not only allow freer use of their proprietary symbology by industry participants but also their agreement with the NYSE/Euronext for the exchange group to use the BSYM, effectively replacing the exchange's own ticker symbol for datafeeds. These moves put Bloomberg at the forefront for the effort standardize symbology that the industry has been requesting for decades. Could BSYM be that industry standard?

Staying with the Bloomberg theme, Google has hired ex-Bloomberg FX head, Philip Brittan to run their Google Finance franchise. This would seem to indicate Google's desire to revamp their finance portal and 'professionalize' the experience. As well, Bloomberg lured a former senior Product Manager from Google to the Bloomberg multimedia team to drive Bloomberg's web, TV and mobile properties.

Could a 'trade' of sorts occurred between these two firms? Who knows, but it does seem to foretell of a possible deal between Bloomberg and Google for Bloomberg news through Google. Earlier this year, Dow Jones entered into a limited exclusivity arrangement with Microsoft's Bing search engine. In this action, Dow Jones also 'decoupled' themselves from Google's search engines. A deal by Google for the same level of exclusivity with Bloomberg news makes a lot of sense for obvious reasons - especially if Google is redoing their finance page.

Dow Jones has been busy lately, not only tying into the Bing search engine but also securing a deal with Factset to deliver its DJ Investment Banking product through the Factset terminal. This deal makes sense too given after tying to push its own desktop properties, it appears Dow Jones is focusing on its core assets - news and information - and start using channels to generate revenue.

For Factset, they have had some success in the Investment Banking segment but nowhere near the same success they had in the Investment Management market. This deal with Dow Jones strengthens them against both Capital IQ and Thomson Reuters and could lead to strong growth. My sense is neither Factset nor Dow Jones are done and they will be active in the coming months. What's driving these actions I believe is the current siege on their fortified walled gardens from the trends in mobile computing and users wanting freer access to information.

Apple's iPhone and iPad successes are based on one simple fact - people want simple and easy way to access and use information that is important to them right now. The Apple app ecosystem (outside of the games) is a list of information providers that have used Apple's platform, interface and customer network to generate millions for themselves and Apple. Everything from wine ratings, to restaurant guides, to movie listings, to books and newspapers are all applications driven by information. Dow Jones and Bloomberg I believe clearly understand that putting their information behind high walls cuts them off from the far larger and potentially lucrative handset/mobile market. They seem to understand that the rules have changed. The see smaller information aggregators making headway into these markets at their expense. Through innovative partnerships, clear commercial strategy around free and premium, these two firms are adapting to the changes in user behaviours and are seizing the opportunities mobile computing offers them.

It remains to be seen if this will pan out in the longer term for these firm since there is a catch - a trojan horse if you will - in mobile computing. More on that my next post....