How A Twitter Scrap, and Covid-19, Reveal a Disruption In Process

Disruption, by Tim Lewis 2009

When is innovation just another stab at the past, and when is it revolutionary? When it becomes a bit of a Twitter storm in a teacup, is possibly when.

Here’s an interesting case study in the offing: You might need to get your head around some unfamiliar terms, like bi-directional linking, breadcrumb navigation and transclusion. Or not.

My thoughts were nudged by a post at Amplenote, an online note-taking and note-sharing app that is worth a look. Like a lot of these players, they’ve been forced into offering features by the new kid on the block, namely Roam Research, which by taking the genre by the scruff of its neck turned itself into something that knowledge workers are getting excited about.

The post was written by Bill Harding, founder of Alloy, the company behind Amplenote. They’re old style, by internet terms and their own words, not relying on VC funding, freemium models etc. You can tell by the product that it’s neat, robust and reliable.

That’s mostly what people interested in this kind of tool are looking for. I’ve been a note taker and outliner since the early days, and I’ve tried pretty much everyone that’s out there. Folks know that I feel that despite some great stuff, computer software has let us down when it comes to making software that understands us, rather than the other way around. (Why Won’t Computers Do What We Want Them To?)

But it’s taken Covid-19 to make me realise this is changing. And apps like Amplenote — or ones more familiar to you, like Evernote, are getting caught up in it. Roam Research has given us a glimpse of what note-taking — the simple act of reading, hearing, thinking or seeing something, and storing that somewhere — is ripe for disruption, and he’s going for it. It’s early days, but lockdown may be the jolt that propels this genre into the mainstream, something no other note-taking app has managed to do. A day ago Conor White-Sullivan posted to Roam’s Reddit group that 10,000 new users signed up to the app over the weekend, causing upheaval for his servers and users and forcing him to suggest to those ‘super-concerned’ use a rival app “for a week or so”.

He must know that suggestion really isn’t an option for most of his disciples. Roam is attracting a lot of interest — and beyond the usual numbers of people who dabble in this kind of thing. Why? Well, I think there are number of reasons:

  • Roam works right out of the box. It’s all online, the (initial) interface is very simple, even prepopulating the page with blank, but dated entries, prompting you to just start writing.
  • It gets as complex as you want it to get. You could just use it as a journal, if you wanted, but that would be a waste. It goes deep, with features being added with little fanfare, including sliders, nodemaps, and stuff I haven’t gotten around to figuring out.
  • But the key to all the excitement, I believe, is a key formula, which I think is the basic currency of software success: you get more out of it than you put in. Put simply, this means, for example, that if you linked one page to another page, that second page would update itself so you can see that link. This is what they mean by bi-directional links, or backlinks. It might seem to be the most trivial and useless piece of data, but if you don’t know what pages are linking to the page you’re looking at, you simply won’t know what information you have that you’ve already decided is linked to this. Your effort in linking to that page is now automatically creating extra value without you having to do the extra work.
Bi-directional linking, in simple terms

If you’ve read this far you’ll probably get it. But if not, let me just go into more detail. Computers, and the software that run them, are useless tools if they don’t allow us to do more with the stuff we tell them than we are capable of. Enter numbers into a spreadsheet because you know the software can do a load of things with that data than you can. Let your Apple Watch collect data about your body because you know it’s going to do more with it that’s useful than you could with a paper and pen. But for the most part knowledge workers have not really had anything similar for textual data. Yes, AI can help to find patterns in large bundles of it, but the same applied to our knowledge — the stuff we decide is worth keeping from our readings, talks, viewing and thinking in a computer — has not been so useful. Mostly, it’s just about being able to retrieve stuff more easily, so we don’t need to remember it, or remember where we put it.

But this is 2020. And we’re still there?

And this is where we come back to Bill Harding. And his screed. His point is a fair one: that all this talk of bidirectional linking is deja vu for many of us, when in the post-dotcom bubble burst of the early 2000s Wikipedia’s surprising success prompting interest in the underlying technology (here’s a piece I wrote in 2004 (sic) for the Journal about the disruption Wikipedia caused).

In his blog post yesterday Bill writes:

To drink in the enthusiasm we’ve witnessed in some corners of Twitter, bidirectional linking will evolve what’s possible…for those who dedicate themselves to the pursuit of learning this enigmatic craft. As fate & capitalism would have it, an elite cadre has popped up to help enthusiasts learn how to benefit from bidirectional linking. By all accounts, those who successfully assimilate the ideas of these programs transform their lives for the better. It seems reasonable, and I believe these gentlemen are doing great work to which they are wholly devoted.

But how different are today’s opportunities than what came before? To technologists of a certain age, the groundswell for a better connected network of ideas hearkens back to the halcyon days of 2005, when wikis were The Next Big Thing. Back then, companies like Wetpaint raised $40m to help organize the world’s knowledge. “A lot of venture money is flowing into wiki products” said Techcrunch in 2006. Having ubiquitous, bidirectional linking with surrounding context info was creating transformative opportunities in companies where people knew how to build them.

But with a couple major exceptions, wikis fizzled out, never catching on for personal use. Having set up my share of wikis during the early 2000s, I can attest that it was “worse than WordPress”-level bad for Twiki and Mediawiki. Developers might struggle through it to better capture their personal ideas, but the benefits of bidirectional linking were largely relegated to business knowledge software.

These new startups reviving and refreshing the ideas from the wiki craze is a great outcome for productivity enthusiasts. Especially with the expert guidance of smart people like Tiago and Nat, there’s never been a better time to help the humble wiki live up to its nearly-forgotten first round of hype.

If you sniff a little snarkiness in the tone ‘elite cadre’, you might be right. After trying to lure Roam users away with an import tool and a pricing comparison, Amplenote’s twitter account said less than an hour before I wrote this, that it had been blocked by Roam’s:


It’s not really a battle of equals: Amplenote has 24 followers, Roam 16,000. And this is the thing. What we’re really seeing, I believe, is a new player come in and bring the necessary tweaks and rethink to an existing technology — in this case, personal databases — by taking the best bits from each, adding a few new ones, and stealing the show to create a following and a buzz. This is not to say Roam isn’t impressive: it is, and I have not found any other app to match it.

And that’s why Amplenote and others, Bear, TiddlyWiki, WorkFlowy, TheBrain, Dynalist etc, are all struggling to add similar features, thinking about adding them, or defending why they don’t have them. This is good, and classic Christensen disruption. It might not be Roam that ends up winning this, but they’ve shaken up the market.

But what market? Is there really one for this kind of thing? Back in the early 2000s I would have said yes, because the kinds of people interested in this kind of thing were the same kind of people who bothered to read a tech column in The Wall Street Journal. The internet was a means of connectivity, and its potential was seen in those terms — could I store my stuff in more than one place, was the common question. So it wasn’t surprising that, as Bill recounts, everyone thought that wikis (the ‘readwrite web’) were the way to go. But others saw it differently, and all the smart money ended up going to using the internet to create more passive experiences — user generated, yes, but simpler, shorter, and where possible multimedia. It was all about eyeballs, and so content as knowledge slipped into the background as Twitter (status), Facebook (sharing stuff) and Google (search) came to the fore.

I’m not saying that’s necessarily changed. But Covid-19 has helped crystallise something that was already happening, namely that smart people are exploring how to leverage their knowledge and knowledge of software to solve the unsolved problems of the past, or to reconsider tools that had been largely forgotten. Knowledge work was once an obscure term that is now on its way to describing pretty much all of us who are sat at a computer, and it’s this realisation that has made people like Conor, I imagine, realise there’s a market for tools that really address the problem of deriving more value from the cost of user input.

Bill’s error is a generational one: what was once ‘business knowledge’ is now something else entirely. Watch this video of Andy Matuschak, a software engineer who works at the Khan Academy, to see what this looks like (he’s using Bear, by the way, not Roam). It’s strangely captivating viewing, ASMR for the Knowledge Generation:

Andy Matuschak at work

The other mistake is to think of this as ‘productivity’. This is not about that. This is not just a better task manager. I believe we’ve moved on from that — or at least recognised its limits. Now the thinking is, as Tiago Forte, one of Bill’s ‘elite cadre’, has mentioned, about acquiring and processing knowledge in a way that our brain retains it. You can almost hear Andy’s brain whirring as he processes what he’s reading before he expresses it.

So where will all this go? I’m not sure. Roam is talking about charging $15 a month, which is why people like Bill still think they have a chance to grab some of this market. To me it’s a rising tide and I’m pleased to see there are boats paying attention. After 20 years of focus on either ‘Getting Things Done’ or on the cuteness/elegance of interface, we’re entering a much larger ocean, which has the potential to bring these cutters, sloops and yawls into the slipstream of the incumbent tankers. Whether they go under or catch the current is anyone’s guess. Evernote has, largely, failed to find a larger audience (for lots of reasons) but the timing might now be right, especially as knowledge workers find themselves with plenty of time, isolation, an internet connection, and an urge to learn.

Addendum: Conor points out in a tweeted response to this piece that he has “been working on this problem for the better part of a decade. Strong(ly) agree the changes in landscape are great for us, but we wandered the desert for years before this.”

Why Won’t Computers Do What We Want Them To?

Photo by Aubrey, 2014
Tottenham Court Road. Photo by Aubrey, 2014

Computers and the software that runs them have long denied us the basic right of dictating to them — not letters and grocery lists, but of what they should actually do for us – most importantly in the first step of thinking: the art of taking notes.

In the mid 80s I was studying history in London, and the first consumer PC came out: the Amstrad. I was immediately intrigued, though I’m no techie. I remember going into Dixon’s one rainy winter afternoon on Tottenham Court Road and explaining my problem to the salesman. It was simple, I thought: I am a collector of events, and I want a computer which will do exactly what I currently do, but store it so I don’t have to carry around this pile of paper. It was simple, I told him. And I explained how I took my history notes, involving two or three basic steps. He looked at me blankly and tried to change the subject. “It comes with a printer and three spare disks.” I bought it anyway. But oh, how naive was I.

Because the reality is that 35 years on — 35 years! — there is still no way to do this. No app allows you to draw lines on a page and then add pieces to it wherever you want. I should know, I’ve tried hundreds of them (and if anyone does read this, I will get responses like ‘Have you tried OneNote?’ or ‘Aeon Timeline allows you to do just that.’ Yes, and no it doesn’t. No app, in short, is smart enough to just ask you what you have in mind and just evolve into that, to help you shape the app in the way you want.

This is the fundamental failure of computers, and computer software. As a technology it’s failed to really find a place in our lives that we’re comfortable with, and that’s because it has demanded too much change in our behaviours. We are mostly compliant: back in the late 2000s executives at telcos were worried 3G was for nought, because people didn’t show any interest in using their phones for anything more than calls and SMS. It took Steve Jobs to change that, by building a consumer device we craved to hold. The rest came naturally, because of a great UI, but no one is claiming that the smartphone adapted to us; we adapted to it. That’s not to say it’s not useful, it’s just not useful in a way that we might have envisaged, if we ever sat down to think about it.

Indeed, the Apple revolution, which I would date from about 2008 cannot be detached from the broader mobile data revolution, which we’re just emerging from. This was a revolution in interfaces, but it wasn’t a revolution in terms of computing. We have become more productive, in narrow terms — we are online a lot more, we send more messages, we might even finish projects quicker — but no one is claiming that our computers mould themselves to our thinking. It’s apt that movies like Her try to explore what that might mean — that our computers learn our thinking and adapt themselves to it.

So back to me and my history problem. There of course are answers to it, but they all require us understanding the mind of the person or people who developed them. And I’m not ungrateful to these apps; they have long been welcome bedfellows. From TheBrain to Roam, MyInfo to Tinderbox, TiddlyWiki to DEVONthink, they have all rewarded the hours — days, weeks, even — I have invested in trying to understand them. But therein lies the problem. The only reward one can get is if one adapts one’s own mind to that of the creator’s vision, and, however amazing that vision is, this in itself is an admission of failure. I don’t want to have to report everything to someone else’s vision, I have one myself, but there’s no software on this earth in 35 years of looking that I can wrestle into submission to my simple vision.

This is not to say the apps in question are a failure. I love them dearly and still use many of them. I have used my pulpits to promote them, and have gotten to know some of the developers behind them. These people are geniuses, without exception, and it’s not their fault their tools cannot be more than interpretations of that genius. We just lack the tools to tell our computers what to do from scratch.

Such as

‘Take an A4 sheet of paper, turn it horizontally so it’s in landscape, and then draw three perpendicular lines equidistant apart. Allow the user to write anywhere between the lines, and interpret a three-line dash as the end of each nugget. Interpret the digits at the beginning of each nugget as a date, which can be as vague as a decade and as specific as a minute. Order each nugget chronologically, whichever line it sits between, relative to each other, with gaps between according to the dates. etc etc’.

If only.

I still don’t see why I can’t have that software. I don’t see why I couldn’t have it in 1985. I probably could get a developer to whip something up, but then that’s already demonstrated the failure I’m talking about. I want the computer to do it for me, and not being able to, to have to rely on someone else’s coding skills, or even my own, means it’s not doing that.

This feeds into a broader point. Tiago Forte, a young productivity guru, wrote an interesting thread about the serial failure of hypertext, which was a precursor (and loser) to the simpler Web, and the lessons we can draw from it. In the case he describes, Roam. The simple truth: taking notes is a niche area because it’s not taken seriously at any stage of the education process (my history chronology capture was shown to me by the late and excellent Ralph B. Smith, who understood the power of note taking; I can still remember him demonstrating the technique in our first class. It has stuck with me ever since.) Note-taking is the essence of understanding, retaining, collating, connecting and propounding. And yet it’s mostly done in dull notebooks, or monochrome apps, none of which really mould themselves to what we write, take pictures of, record or otherwise store. (And no, Clippy doesn’t count.)

Tiago may well be right: the trajectory of knowledge information management apps (and there you have it; already segmented into what sounds like the most boring cocktail party ever) is that they just aren’t sexy enough to break out of a niche. Evernote was closest, but it got dragged down in part by its dependence on a vocal core of users who pushed it one way and its desperate need to justify its valuation by trying to go value. Truth is, people don’t value collecting information, in part because it’s so easy to recall: even with my 60GB DEVONthink databases, I more often than not Google something because I know I can find the document more quickly that way than in my offline library.

But this doesn’t explain the pre-Google world. Why did we let software go in the wrong direction by not demanding it submit to our will, not the other way around? Well, the truth is probably that computers were basic things, oversized calculators and typewriters for the most part. Sure it helped us write snazzier-looking letters, but heaven forbid us doodling on them, or moving the address around beyond the margins.

We’re still hidebound by our computers, so much so that we don’t realise it. I am rebuilding my life around the new tools, like Roam, and old ones like Tinderbox — a wonderful piece of exotica that is massive for those of us who like to poke around in a piece of software, but which basically means poking around in the head of its developers — and I get a lot out of them. But I am keenly aware that I would rather be just telling a blank computer screen to “take an A4 sheet of paper…”

And perhaps, one day, I will.

How do subscriptions fare in a recession?

App Annie Report on Subscription Economy

Source: App Annie, State of Mobile 2020

The subscription model (‘subscription economy’ was a term apparently coined at least four years ago) is becoming de rigeur in many zones. App Annie’s recent State of Mobile report found that In App subscriptions contributed to 96% of spend in the top non-gaming apps. As an overall proportion of spend they rose from 18% in 2016 to 28% in 2019 (games, of course, still dominate.) It concluded in a recent post: “Clearly companies across industries need to not only be thinking about their mobile strategy, but also their subscription strategy, if they want to succeed in 2020.”

But is this a wise move?

The attention economy, as folk call it, depends on competing for a limited resource — our attention. But it will always be trumped by a resource that determines what can be done with that attention — money. If we have no job, then our attention tends to be focused elsewhere. If we have a job but not much money, or are afraid of losing that job, then our attention to other non-job issues is probably limited.

The other thing the attention economy relies on increasingly is the subscription model. Recurring fees are much more appealing to a company than a one-time cost, which is why everyone is heading that way. But the subscription model has an achilles heel: most services that used the subscription model in the old days were because of the way they were produced and delivered — electricity, water, telephone, gas, newspapers, cable. And most involved some lock-in: an annual or quarterly contract etc, which hid the overhead costs of connecting, delivering and disconnecting in the subscription. But to disrupt these entrenched subscription services OTT upstarts which didn’t have those costs like Netflix made it real easy to subscribe — and unsubscribe.

And here’s the rub. When subscription becomes a discretionary spend — something you can shed like a skin when the rain comes, then you find the weakness of the subscription model. This is why old guard subscription model players like the New York Times have transferred their approach to digital, knowing it’s better to alienate a few users by making unsubscribing disproportionately harder than subscribing, absorbing the hit of a few angry folk like me in order to keep the bulk of subscribers who couldn’t be bothered to jump through the hoops.

So when the Coronavirus Recession hits you, what are you going to shed? Discretionary spend is the first one to go, and that usual means monthly outgoings that just don’t seem to be as important as they were when you were coasting. Indeed, a lot subscription economy players, like Statista and others, only offer an annual subscription, although they price it per month to make it sound less. It’s cheaper, and more predictable, to charge per year.

I’m not convinced that software is a good candidate for subscription models. I understand its appeal, and I am as frustrated as them how the mobile appstore has reduced the amount that people are willing to pay for good software.

When Fantastical, a calendar on steroids for macOS and iOS from Flexibits, went from a one-time fee to a subscription model it split the community — especially those on iOS who suddenly had to pay 10 times what they were paying before. John Gruber argued $40 a year for a professional task app on all Mac platforms was a decent deal, arguing that those who don’t want to upgrade can still use the old version, and he’s probably right. But I haven’t upgraded and have instead shifted over to another calendar app, BusyCal, that is included in Setapp, another subscription model which bundles together multiple apps for $10 a month. In part that was because of the annoyance of finding certain features still available as menu items in Fantastical but blocked by popups:

Not the kind of productive experience I am looking for. Hobbling or crippling, as it’s sometimes called, is never a pretty look. You either have the functionality or you hide it.

A better route is to be flexible. Of course, there’s an upside to monthly subscriptions that are real easy to start and stop — when the sun shines, you can easily resubscribe. Indeed, the smartest subscription model in my book is the freemium one — where you can easily move between subscription levels depending on usage and how empty your pockets are. I recently canceled my paid Calendly subscription, downgrading to the free model and was told by a helpful customer service person that “you can certainly choose the monthly plan on your billing page and pay for only the months you need it for! That might work better for you.”

I would recommend any company moving to the subscription model to do this. Or to pursue the bundling model. Not to lock people in — where one subscription depends on another — but to make what might have been discretionary spend something that becomes necessary spend through a compelling use case. Setapp is that model (though sometimes I baulk and wonder if I’m paying over the odds). A lot of the apps I use on Setapp are ones that I would have not otherwise found — and I’m an inveterate hunter of new apps. By making the marginal cost of using them zero, I find they worm their way into my workflow. Setapp helps this by taking  an interesting route, in that its appstore-like mothership is so baked into macOS that searching for an app installed on my computer via Spotlight or Alfred will include in the results apps that haven’t been installed but are part of Setapp. So if I’m looking for a photo editor, or screenshot taker, or calendar app, on my Mac the results will include those in Setapp that I haven’t installed.

This shoehorns productivity into the subscription model. It’s helping to make Setapp more useful by introducing me to new apps it is has in its portfolio — thus making all the apps in Setapp more recession-proof because the more Setapp apps I use, the less likely I’m going to cancel the subscription overall. (Yes, those apps I don’t install or use won’t get a cut, or will get a smaller cut, but the overall rising tide will help keep all the boats afloat. Or in a tweak of the analogy: all the apps in the Setapp boat, amid the buffeting recessional sea, rely on the size of the boat to keep them all afloat. Only if the boat sinks will they sink).

Bundling makes a lot of sense in disparate fields — I’ve been advising media clients to seek out bundling options with other subscription model companies which previously might have been regarded as competitors. Bundling should not be the cable TV model of putting the good stuff and crap together and forcing subscribers to pay for both, but to try to anticipate — if your customer data is good enough you shouldn’t have to guess — what else of value is in your customer’s discretionary bucket, and try to move both yours and those into a necessary one. A tech news site coupling with a tech research service, say. 

In the meantime, expect a lot of subscription-based approaches to suffer in the recession. I expect by the end of it the subscription model won’t be so appealing, or will require more creative thought processes to evolve. The key is in not treating the consumer as either stupid (that we don’t realise $5 a month adds up over a year) or lazy (that we won’t do what is necessary to cancel a subscription if we have to), but to take the freemium model seriously: make it really easy to reduce our payment when we need to, and really easy to go back when we’re feeling flush again. Just don’t cripple the quality of the service you have committed to deliver, even if it’s free, by ads beseeching us to pony up or by drawing arbitrary and punitive lines which make the free version more irritating than alluring.

Then just wait out the storm, as are we all, and hopefully you’ll remain useful enough in the free version to stay on our radar when the sun returns. 

New investing app for millennials

A quite cute new app called Moneybox launched today in the UK allows millennials to save without thinking and invest in stocks, also without really thinking. 

The blurb: 

The Moneybox app, which launches today in the App Store, enables users to round up their everyday card purchases to the nearest pound and invest the spare change.

For example, when you buy a coffee for £1.80, the purchase will appear in the app and you can choose to ‘round up’ to the nearest pound. The additional 20 pence is set aside to invest across thousands of companies worldwide including Apple, Facebook, Netflix and Disney, via three tracker funds. In addition to round ups, the app also allows users to set up weekly deposits and make one-off payments into their Moneybox account.

To help users decide how they would like their money to be invested, Moneybox offers three ‘starting options’ – cautious, balanced and adventurous. Users can customise their investment choices using a simple slider interface.

Targeted at Millennials, the app aims to make it easier than ever for people to start saving and investing. By enabling users to sign up in minutes from their mobile phone and start investing with as little as £1, Moneybox hopes to open up investing to a new generation.

Yes, it’s kinda sad that you need to make it real simple, but I like the approach.  

Microsoft’s Naked PC problem

This is a piece that I wrote with Gerry Shih in Beijing about Microsoft’s challenges in emerging markets beyond the recent raids.

‘Naked PCs’ lay bare Microsoft’s emerging markets problem

BY JEREMY WAGSTAFF AND GERRY SHIH

Sun Aug 10, 2014 9:42pm EDT

(Reuters) – On a trip to Beijing a decade ago, Bill Gates was asked by a senior government official how much money Microsoft Corp made in China. The official asked the interpreter to double check Gates’ reply as he couldn’t believe the figure was so low.

It’s a problem that hasn’t gone away. Indeed, Microsoft’s current issues in China conceal a deeper problem for the U.S. software giant – despite the popularity of its Windows operating system and Office suite, few people in emerging markets are willing to pay for legitimate copies.

This not only costs Microsoft in lost revenue, but is also holding back the spread of its newest Windows 8 version – analysts say even buyers of pirate software prefer older versions. According to StatCounter, a website that tracks what software is loaded on Internet-connected computers, more than 90 percent of PCs in China – now the world’s biggest market – are running pre-8 versions of Windows.

Microsoft is trying to tackle this. This year it’s offering Windows 8 at a discount to PC manufacturers who install its Bing search engine as the default. And it’s giving away versions of Windows 8 for phones and some tablets.

But, as the industry shifts from desktop to mobile, the cloud and free or cheap software, China sums up both the old and new challenges Microsoft faces in making money in emerging markets – and, increasingly, in developed ones.

“The great danger for the company is that what has happened to them in emerging markets – basically no revenue from new PCs because of piracy – is not far off what’s happening everywhere,” said Ben Thompson, the Taiwan-based author of stratechery.com, a popular technology blog.

CORE COST

For sure, China is a major, and unique, headache for Microsoft. Many of the problems are tied to a broader push by the Chinese government to limit foreign firms’ dominance and encourage local technology firms to become viable competitors.

After years of healthy relations with Beijing, Microsoft last month was suddenly targeted by anti-monopoly regulators who raided its China offices as part of a price-fixing investigation.

But the spats mask the fact that Microsoft has never really cracked how to get people in emerging markets to pay for its software. The company rarely breaks out revenues by geography, but it has provided clues about the size of the problem.

In 2011, then CEO Steve Ballmer reportedly told employees that, because of piracy, Microsoft earned less revenue in China than in the Netherlands – with 1 percent of its population – even though China bought as many computers as the United States.

According to the BSA anti-piracy lobby group that Microsoft co-founded, emerging markets account for 56 percent of all PCs in use, and 73 percent of software piracy. Of the $77.8 billion revenue Microsoft generated in its 2013 financial year, China, Brazil and Russia each “exceeded” $1 billion, according to a Microsoft presentation. For comparison, Apple Inc generated $27 billion in Greater China, which includes Hong Kong and Taiwan, in its 2013 financial year.

For Microsoft, that’s a lot of lost revenue from the heart of its business. “Windows and Office are still very much the core of Microsoft,” says Sameer Singh, an India-based analyst.

The most recent breakdown by Microsoft of its results by product line – for the first quarter of fiscal 2014 – shows that 56 percent of its global revenue and 78 percent of operating profit came from Windows and Office.

Microsoft doesn’t just lose the revenue from pirate copies, it also loses access to customers who might buy other Microsoft products that work with or on top of Windows and Office.

Across most markets, Windows and Office account for more than half of revenues, says Andrew Pickup, Microsoft’s Asia PR chief. This, analysts say, is because many of Microsoft’s other products, such as Exchange and Windows servers, depend on customers already using Windows and Office.

“The Microsoft ecosystem is obviously pretty interconnected,” says Jan Dawson of U.S.-based Jackdaw Research. “So it makes sense that the proportion of revenue would be similar in emerging markets.”

NAKED PCS

Part of the intractability of piracy in emerging markets is that each part of the chain poses a problem.

For PC makers working on wafer-thin margins the operating system is one of the costliest parts of the machine, while mom-and-pop shops which form the bulk of retailers in such markets can’t afford to turn away price-sensitive customers who are comfortable buying pirate software.

The problem, therefore, starts with computer makers, Singh says, since “convincing them to ship every PC with Windows pre-installed is difficult.” Margins on PCs for a company like Lenovo Group Ltd are “near single digits,” says Bryan Wang, an analyst at Gartner.

The result is that up to 60 percent of PCs shipped in the emerging markets of Asia, says IDC research manager Handoko Andi, have no Windows operating system pre-installed – so-called ‘naked PCs’, which usually instead carry some free, open source operating system like Linux. That compares with about 25 percent in the region’s developed markets like Japan and Australia.

A quick scan of Taobao, the popular Chinese e-commerce site operated by Alibaba, shows a vast selection of PCs shipped with Linux rather than Windows. Once the machines hit the retailers, it’s hard to tell where legitimate software stops and piracy begins.

On a recent morning in Zhongguancun, a teeming electronics hub in north Beijing, shopkeepers offered to bundle what they said were legitimate versions of Windows with a new laptop, either for free or the equivalent of about $30.

Microsoft began lobbying Lenovo in 2004 to stop shipping naked PCs, but the Chinese firm countered that its margins were too low, a person familiar with the negotiations said. Two years later – just days before then-President Hu Jintao visited Gates’ U.S. home – China announced a new law requiring PCs to be shipped with operating systems. That merely dented piracy rates, which fell to 79 percent in 2009 from 92 percent in 2004, according to the BSA.

Lenovo said it reached an agreement with Microsoft in June of this year to ensure that Lenovo PCs sold in China would come pre-installed with a genuine Windows operating system.

“MOBILE ALSO-RAN”

Microsoft’s new approach is to push the price of Windows low enough to make it worth a PC maker’s while. The cost of a Windows license has fallen to below $50 from as high as $150, said IDC’s Andi, taking Microsoft down to “levels where they’ve never competed before.”

Microsoft’s Pickup said it was too early to gauge take-up.

In any case, making Windows cheaper for PCs is just part of a broader response to deeper shifts in the industry. The rise of mobile, tablets, cloud-based services and free operating systems has marginalized Microsoft and challenged its business model.

While Windows is on more than 90 percent of traditional computers – according to data compiled by analyst Ben Bajarin – that figure drops to below 14 percent once mobile devices such as phones and tablets are factored in, estimates Gartner.

More than half those devices run Google’s Android mobile OS, which is effectively free to handset and tablet makers. Apple, a key player in all types of devices, gives away upgrades to its operating systems for free.

Pickup says Microsoft has listened to phone makers’ complaints and relaxed what hardware they need to install the mobile version of Windows. It has also made the operating system free on any mobile device of 9 inches or less.

Taken together, the moves are “about bringing down the cost as more and more of the populations in these emerging markets are having their first computing experience,” Pickup said.

These are significant concessions, analysts say, but Microsoft will have to learn to be a bit player, where its software and services run on other people’s operating systems.

“The biggest threat to Microsoft,” Dawson said, “is the shift from a PC-based world where Microsoft dominated to a mobile world where Microsoft is an also-ran.”

(Additional reporting by Noel Randewich in SAN FRANCISCO and Bill Rigby in SEATTLE; Editing by Ian Geoghegan)

Taxi Dating Apps?

I’ve been meeting a better class of taxi driver lately. It’s been made possible by something called GrabTaxi, which I have begun to think of as a dating app for passengers and taxi drivers.

Of course, it’s not really, that would be weird. But it kind of is.

It’s just one of many apps and services across the world seeking to make the process of booking taxis easier. At one end of the scale there’s Uber, which aspires to allow anyone to be a taxi driver, matching car and driver with passenger. At the simpler end are apps like GrabTaxi, which offer taxi drivers another way to take bookings beyond their usual dispatcher.

Prospective passenger and cabbie install the app, and the app does the rest.

There’s a lot that’s interesting about all these apps, as they contribute to making what can be a very a frustrating experience more efficient. Eventually, it’s likely they’ll change what we think of as a taxi ride: imagine a world where every car could offer taxi-like services, driven either by their own or someone who rents them. Taxi companies and the authorities which regulate them look set for a bumpy ride.

But that’s not here yet, and anyway, I’m more interested in a different kind of benefit: providing a way for passengers and taxi drivers to have more say in who they share a car-ride with.

Think about it: it’s kind of weird that we place so much stock in safety on the roads but entrust our lives with strangers — either driving or sitting in the back. In some countries it’s like playing Russian roulette.

But even in supposedly safe places like Singapore it’s a bit of a raffle. As anywhere, Singapore cabbies are a motley bunch, ranging from those you’d happily take home for tea to those you wouldn’t, er, share a car with, let alone drive it. It’s not that they’re deliberately trying to kill you, but you sometimes get the feeling they’d rather you weren’t really there. Rides can vary from stony silence to being a captive audience for angry tales of woe or pet enthusiasms.

I just spent a good half an hour in one cab listening to the cabbie’s collection of CD sermons from a charismatic preacher called Justin. It was OK until he started extolling the virtues of the birch on one’s offspring, complete with sound effects. I made my apologies and alighted.

This is where apps like GrabTaxi come in. There’s something about downloading and installing an app that seems to appeal to a classier kind of cabbie: on each occasion I’ve had need of their services, each has been a joy, if a tad eccentric.

One young man we’ll call Dave took us the airport the other day in car decorated like his bedroom, or what I imagine it to look like, obviously we didn’t get invited back. It was black, like his Iron Maiden t-shirt, complete with laced black curtains that made it feel like a cross between a heavy metal shrine and a coffin. In a nice way. Dave himself was charming.

This is the thing, you see. The great thing about first adopters of technology is that they all have something in common — in this case a taxi app. I the passenger have something to break the ice with, while they — and I’m trying not to generalise here — presumably quite enjoy their job and want to do more of it. With some taxi drivers that is not always the case: many, when they’re not actually trying to kill you, will spend a lot of the ride complaining about pretty much everything: the government, the taxi company, other drivers, life in general.

Not so early adopters. They have a more positive outlook on life. Hence this sense that the usefulness of GrabTaxi is less about finding a taxi, than finding a taxi driver who can get me from A to B and not either kill me or make me want to kill myself before we get there.

Of course, all this is incidental to apps like GrabTaxi. Their goal is to match taxi and passenger based on availability, not on compatibility. But that’s where I think they’ve missed a trick. Add a few tweaks to their app and they could allow passengers to choose cabbies based on their likely conversation topics, attitudes to issues of the day, history of comments from other passengers, whether they help with pushchairs and shopping. And vice versa: passengers, too, could get rated by cabbies.

It might encourage both parties to put on a better show.

And who knows? A few of us might get invited home for tea.

This is a longer version of a piece I’m recording for the BBC World Service. I no longer upload the podcasts here because of time constraints, but they can usually be found from time to time at the tail-end of the Business Daily podcast available here. While I’m a staff correspondent at Reuters, this is not written for Reuters.

Software as Silo

Software is a funny thing. How important is it?

Apple has just announced it’s giving most of its away for free — effectively costing it some $900 million in the short term. Samsung has just convened its first developer conference in the hope of persuading more people to write software for its devices. Microsoft, known for its Office and Windows software, has just bought a phone manufacturer — Nokia — and promises a new raft of its lacklustre Surface tablets. Google, known for the money it makes off its software, has promised more Glasses, and owns a cellphone maker, Motorola. Amazon, which sells stuff, also makes tablets and e-readers, and is rumoured to be getting into a phone.

What companies are increasingly recognising is that software is everything but not on its own. To succeed in this new world of ubiquitous devices, you need to own as much as possible of what is loosely referred to as the ecosystem. That means hardware, software, and the services that make both hardware and software come to life.
Think a phone where you can take videos, edit them into a short movie at literally the push of a button, and then share them with friends with another push. Or a tablet that lets you and control see your company’s inventory or fleet of trucks in real time.

But this isn’t easy. It requires expertise in very different areas — areas that until recently were regarded as best considered separate industries. Focus on what you’re good at, the mantra used to be. Now, it’s more like: you’ve got to be good at all these things, or you’ll die. Think HTC, which makes great devices but hasn’t succeeded in building the software and services that makes those devices stand out.

Some companies can be good at all three, but it’s a fast-moving game. Think BlackBerry, which was good at both hardware, software and services for a while, with its email service, its own operating system and its keyboard-bound devices. But the world moved on, and BlackBerry didn’t move quickly enough.

So now it looks like Apple is heading the pack. But it too, is vulnerable. The world has been captivated by the phones and tablets it creates, but some detect a sense the company, without Steve Jobs, quite understanding where to go next. It’s likely to be an Apple TV, which should be interesting.

Samsung is late to the game, dangerously so. It dominates the world of phones, but has been slow to build software and services to bridge those devices to its other products — computers, TVs, fridges, etc. Only this week has it really embraced developers and tried to make it easy for them to do this. Samsung’s future hinges in being able to rid itself of its dependence on Google’s Android operating system — either by building an operating system of its own, or a suite of apps that run on top of it that make a Samsung device so much more valuable than one from LG, Sony, HTC or Huawei.

Then there’s Microsoft. By making its operating system and much of its software free, Apple has thrown down the gauntlet to its old rival. It’s not saying these products have no value: it’s saying that software is what makes hardware compelling, and so we’re effectively making the two one single product. For Microsoft, still largely a software player, that’s quite scary. No wonder the company is betting heavily on building its own hardware.

In some ways this is good for the consumer, in some ways not. On the one hand we’re already seeing the hardware basically controlling the software — automatically updating itself, optimizing itself for the user. On the other, the goal here is clear: bind the user to a single stack of hardware, software and services, increasingly isolated from each other. A Samsung phone may be a great device to control your TV with, layering little apps atop the screen, but don’t expect it to work with your LG smart TV. And don’t bother trying to use Apple’s AirDrop feature to send a file to your Samsung phone.

The bottom line is that these companies are being hugely innovative, moving the puck at impressive speed. But in their efforts to escape becoming commodities, they’re pushing us into silos. Nice silos, very nice silos, but silos that make me think more of the past than the future.

The rebirth of RSS?

This is a column written for the BBC World Service (here’s the show.). Views are my own, and do not represent those of my employer, Thomson Reuters. 

I’ve been wrong about a lot of things, but I’ve been particularly wrong about something called RSS. RSS is a simple standard, dreamed up during the halcyon days of the social web when there were enough interesting people writing blogs for it to become somewhat onerous to drop in, as it were, to see whether their website had been updated. In other words, there was a critical mass of bloggers to take blogging into the mainstream, but there was no easy way for the medium to scale from the point of view of readers. It was like everyone printing their own newsletter but asking interested readers to drop by their office every so often on the off-chance that a new edition had been published. 

So RSS, short for really simple syndication, was born. Essentially it wrapped up all the blog posts into a feed, a bit like a wire service, and pumped it out to anyone who wanted to subscribe. It worked brilliantly, but contained within in the seeds of its own — and, I would argue, social media’s — demise. 

The problem was this: As RSS became more popular more blogs used it. And websites. Reuters has a dozen or so; the BBC too. Soon every website was expected to have at least one RSS feed. Software called Readers became the main way to digest and manage all these feeds, and they worked well. So well  that Google got into the game, and soon dominated it. But adding feeds was still a tad awkward, but really RSS’ demise was, in my view, because of something else. 

As social media grew — I’m talking the early years here, when blogging was the preferred medium of expression, and when a certain civility held sway — it contained essential contradictions. Not everyone could be a creator, because then no one would have time to read what everyone else had written. A few kings and queens of social media emerged, and while a long thin tail remained, for the most part blogging simply grew to become like what old media was. Lots of “Talent”, lots of unrecognised talent.

In its place grew a different kind of content that could be more easily commercialised — the breadcrumbs of daily life, the links we share — which we now think of as Facebook, Twitter, Kakaotalk and WhatsApp. Content has become shorter,  and while some of those tools initially used the RSS standard to deliver it, for the most part each became a walled garden, largely fenced off from each other and driven by the value in the data that we shared, wittingly or unwittingly. 

So back to RSS. RSS is still with us, though Google is canning their service soon (eds: July 1). I am a tad upset, having predicted RSS would sweep the world. I was wrong in that, failing to take into account that content, like everything else, will tend to cater to shorter attention spans and the economics of the marketplace. But I do have hope that RSS won’t die off entirely. There are glitzy tablet apps for those who like their reading to come with big pictures and swooshy noises when you turn the digital page. A host of companies, including, ironically the once undisputed kings of the walled garden, AOL, are launching readers for Google refugees. 

I for one still need to fix some problems with my own RSS habits — the tendency to acquire new ones, the failure to read the ones I do subscribe to — but at least some people somewhere thinks there’s life in a daily diet of serious, lengthy reading without lots of eye candy. 

iPhatigue

This is the text of a BBC piece I wrote, based on our Reuters story of a week or so ago.  

The problem with smartphones is that they’re visible. We want them to be visible; we flaunt them. We put them on the table in restaurants, we fiddle with them if conversation lags; we not only need them, we need to be seen with them. 

Nothing encapsulates this ostentatiousness more than Apple’s iPhone. It has become not only the most popular smartphone on the planet, but it’s become the iconic accessory. But is it losing its lustre? 

At least in places like Singapore and Hong Kong, pockets where the iPhone was once king, I believe it is.

Driven by a combination of iPhone fatigue, a desire to be different and a plethora of competing devices, users are turning to other brands, notably those from Samsung.

According to one measure, a website gauges traffic collected across a network of 3 million websites, Apple’s share of mobile devices in Singapore fell from a peak of 72 percent in January last year to 50 percent last month, while Android devices rose from 20 percent to 43 percent.

This seems to be backed up by checking out commuters: Where a year ago iPhones swamped other devices on the subways of Hong Kong and Singapore they are now outnumbered by Samsung and HTC smartphones.

This is partly driven by iPhone’s success. For some, it is a matter of wanting to stand out from the iPhone-carrying crowd. Others find the higher-powered, bigger-screened Android devices better suited to their changing habits – watching video, writing Chinese characters – while the cost of switching devices is lower than they expected, given that most popular social and gaming apps are available for both platforms.

Of course this isn’t the end of Apple or the iPhone. The company could come out with a great iPhone 6 and I’m sure the fickle public would flock back. And Apple makes a lot more money from its devices than does Samsung, so don’t expect its CEO Tim Cook to be panhandling on your street corner any time soon. 

But there is something at play here. For one thing, Singapore and Hong Kong tend to be bellwethers of Southeast Asia, and to some extent India and parts of China — all big and important markets. 

Then there’s a longer term issue: it was usually assumed that, once converted to the iPhone, users would loyally stick with Apple. For one thing, the whole ecosystem thing — downloading apps, music, movies and syncing with other Apple devices — would lock folk in. For another, aren’t Apple users supposed to be blindly loyal to the brand? 

The apparent decline in iPhone users in Singapore and Hong Kong suggest that neither of these assumptions necessarily holds true for all those who buy Apple devices. This is hardly surprising, perhaps, given how many iPhone users there are out there.

But it might also suggest that smartphone users are much more inclined to jump from one brand to another, and from one operating system to another, than we thought. If so, that has implications,  not only for Apple, but for Samsung too, as it basks in its dominance of the Android-driven market.

Perhaps, just perhaps, all those hip Samsung users might soon decide the hip smartphone to show off is a device from a company we’d either written off, or one we haven’t even heard of.

We’re Not in the Business of Understanding our User

Za-tray2

A few years ago I wrote about sometimes your product is useful to people in ways you didn’t know—and that you’d be smart to recognise that and capitalize on itn (What Your Product Does You Might Not Know About, 2007).

One of the examples I cited was ZoneAlarm, a very popular firewall that was bought by Check Point. The point I made with their product was how useful the Windows system tray icon was in that it doubled as a network activity monitor. The logo, in short, would switch to a twin gauge when there was traffic. Really useful: it wasn’t directly related to the actual function of the firewall, but for most people that’s academic. If the firewall’s up and running and traffic is showing through it, everything must be good.

The dual-purpose icon was a confidence-boosting measure, a symbol that the purpose of the product—to keep the network safe—was actually being fulfilled.

Not any more. A message on the ZoneAlarm User Community forum indicates that as of March this year the icon will not double as a network monitor. In response to questions from users a moderator wrote:

Its not going to be fixed in fact its going to be removed from up comming [sic] ZA version 10
So this will be a non issue going forward.
ZoneAlarm is not in the buiness [sic] of showing internet activity.
Forum Moderator

So there you have it. A spellchecker-challenged moderator tells it as it is. Zone Alarm is now just another firewall, with nothing to differentiate it and nothing to offer the user who’s not sure whether everything is good in Internet-land. Somebody who didn’t understand the product and the user saved a few bucks by cutting the one feature that made a difference to the user.

Check Point hasn’t covered itself in glory, it has to be said. I reckon one can directly connect the fall in interest in their product with the purchase by Check Point of Zone Labs in December 2003 (for $200 million). Here’s what a graph of search volume looks like for zonealarm since the time of the purchase. Impressive, eh?

image

Of course, this also has something to do with the introduction of Windows’ own firewall, which came out with XP SP2 in, er, 2004. So good timing for Zone Labs but not so great for Check Point.

Which is why they should have figured out that the one thing that separated Zone Alarm from other firewalls was the dual purpose icon. So yes, you are in the business of showing Internet activity. Or were.

(PS Another gripe: I tried the Pro version on trial and found that as soon as the trial was over, the firewall closed down. It didn’t revert to the free version; it just left my computer unprotected. “Your computer is unprotected,” it said. Thanks a bunch!)