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Category Archives: Technology Policies

It’s About the Developers, Stupid!

Last week’s continued equity market shakeups were made even more volatile by a few headscratchers:  Google purchasing Motorola Mobility for USD$12.5 billion (nearly $735 thousand per issued patent held by the company), and HP musing about spinning off its PC manufacturing business and potentially buying Autonomy to become a software and consulting house, an apparent IBM redux.  Endless articles and commentaries are focusing on Google’s purchase of MMI, but the more interesting story to me is HP, and how their shift in business model is less about focusing on higher margin lines of business, but rather admitting failure in their purchase of Palm, and more generally, in building sustainable developer ecosystems.

When big companies spend big money on massive acquisitions, they take on huge amounts of explicit, intrinsic, and opportunity risk that only a carefully designed strategy will vindicate.  When the stakeholders discuss only the balance sheet terms of deals they agree to, without really understanding the cultures of the external environments they depend upon, there’s a lot of unmitigated risk, and ultimately, a lot of avoidable waste.  Arguably, Palm faltered and became an acquisition target for HP not because they had a inferior product or platform, but because they failed to nurture a strong developer ecosystem after Jeff Hawkins and Donna Dubinsky left to form Handspring.  When iterations of the Palm OS failed to deliver critical platform feature requests to keep the offering competitive, Palm addressed the problem by releasing webOS, years later, and with a cavalier attitude that they could build a new developer community around the offering without needing to mend their fences with their long-time supporters.

We know what happened there – Palm stumbled, and HP picked up a compelling technology offering in webOS.  But HP made the same competitive mistake as Palm – it failed to foster a developer community to propel WebOS forward as the mobile operating system oligarchy was taking shape.  It, like Nokia with Symbian, did not appreciate the role of a thriving developer ecosystem in building a mobile brand, nor did they continue to continuously invest into it. Great technologies attract bright developers, who in turn make direct contributions to the ecosystem in the forms of apps, frameworks, and cloud services, and indirect contributions by recommending technologies to ‘the suits’ who invest resources in leveraging them for their own ends.  This generates a current of innovation that can become self-sustaining, and this fills out direct to consumer ‘app stores’ with features that intrigue consumers who make the ultimate platform selection through their purchases.  Let’s face it, when you walk into a brick and mortar mobile phone store, you’re not confronted by displays that put “smart phones” on one wall, “camera phones” on another, with old-style candy bar phones somewhere in the back – that was so four years ago!  Consumers today are targeted with marketing to compel them to choose an ecosystem — Android vs. iOS vs. Windows Mobile 7.  The hardware is become less relevant as a purchasing decision, because there’s few physical differentiators other than form factor (which Apple continues to win, hands-down).

Microsoft has understood this concept extremely well for decades, and they embrace their strategy by focusing on delivering excellent tool chains for developing applications that function on platforms (operating systems) they sell.  Despite Steve Ballmer’s fanatical espoused enthusiasm on the matter, the company actually does make good on their word on investing in developers who invest in their technology.  They virtually give away expensive integrated development environments to secondary and post-secondary schools and create extensive supportive curriculum, documentation, and living communities that attract bright people and encourage other young minds seeking to connect with the brightest of their peers working on their technology.

Microsoft’s not alone in this strategy, but they’re notable for how well they execute it.  Apple is one of the only notable exceptions to this process: attracting developers by rapidly building amazing market share.  Apple is a force to be reckoned with, for sure, but at the end of the day, “suits” decide to support iOS because of it’s market share, not because their technologists and in-house developers extol the “amazing development experience” of iOS.  Nokia tried this and failed.  RIM is failing despite having a great market share position, at one time, for a mixture of technology capability and community support reasons.

The lesson here, though, isn’t restricted to the multinational, large-cap platform developers — even small, agile start-ups must quickly understand the importance and formulate strategies for building synergies to succeed.  Whether they’re implemented through open source software, direct-to-the-community adoption initiatives, or strategic partnerships between peer companies, small businesses depend upon the rich technological feedback for continous improvement they cannot generate internally due to constrained early-stage resources.

HP, though, doesn’t understand or doesn’t appreciate the “how” of building a real, working platform ecosystem is critical not only for innovative start-ups, but also for large-cap software firms.  And though HP may be throwing in the towel for mobile devices, this is a lesson critically important for any software company no matter what their distribution channel is: mobile, tablet, desktop, or enterprise servers.  The fact HP doesn’t get it or is too encumbered to act on it, is the biggest threat to HP spinning off their low-margin, but reliable revenue generating manufacturing segment and plugging ahead.

Ballmer should do his good deed for 2011 and ring them up with a tip: It’s all about the developers, stupid!

 
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Posted by on August 21, 2011 in Technology Policies

 

Will State Treasuries Get Wise to Geolocation?

Slowly, mobile users are becoming increasingly complacent with giving up the last remaining visages of privacy when it comes to using a mobile web browser or using mobile native apps to do the most rudimentary tasks.  Just five years ago, imagine the adoption rate an application would have that required your exact geographic location and the rights to read the names and phone numbers of your entire digital Rolodex to let you read the front page headlines of news.  It would fester in digital obsolescence through right-out rejection!  Today, it’s a different ballgame.

There’s some interesting changes I can foresee that will come out of these shifting norms that have nothing to do with the overblogged concepts of targeted advertising or the erosion of our privacy.  There’s an awesome company called Square has a nifty credit card reader that plugs directly into the audio port of a mobile device to create instant point of sale devices with a lot of flexibility and little capital investment.  Even this can’t be called new  by today’s blogosphere standards, but something that caught my attention in beta testing this service was its requirement to continuously track your fine GPS location as an anti-fraud measure.  Pretty sensical, but also, pretty telling of things to come.

Anyone’s whose been following the tech world recalls the recent tiffs between Amazon and various states, most recently of those being California, that have tried to get a slice of the revenue generated by sales addressed to their state.  Large corporations can keep playing evasive maneuvers with state legislatures, and small business brick-and-mortar retailers as well as state coffers continue to feel the squeeze as shoppers become continuously comfortable and familiar with making large ticket purchases online, both to comparison shop, but also, quite obviously, to avoid paying state and local sales taxes.  A looming federal debt crisis that is decades away from a meaningful resolution means less distributions to states, leaving each to pick up a larger share of the tab for basic services, infrastructure improvements, and some types of entitlements.  States have reacted two-fold: to try to squeeze the large online retailers with legislation, and secondly, to require state taxpayers to volunteer their “fair share” by paying use tax.

Who accurately reports their online sales for the last tax year for the purposes of paying use tax?   Anyone that knows me is well aware of my almost maniacal love for and usage of budgeting tools that allow me to easily pull up a report of every online purchase I’ve made in a given time period in a matter if seconds.  But many people who owe hundreds in state use taxes file their returns the same as my parents, who purchase nothing online, and report zero in this box.

It would be relatively trivial from a technology perspective, but predictably forthcoming from a policy perspective, that this free ride is about to end.  One-third of smartphone owners have made a mobile online purchase from their phone, and a full 20% use their device as a fully-fledged mobile wallet.  47% of smartphone owners and 56% of tablet owners plan to purchase more products on their respective devices in the future.  With the skyrocketing adoption of mobile as a valid, trusted payments platform, it won’t be long before a majority of physical goods transactions are made with these devices.  In the name of “safer, more secure transactions”, consumers will likely be prompted to, and likely won’t think twice about, revealing their location from which they make that purchase.

No matter how much we might muse to the contrary, legislators, nor their more technically savvy aides, aren’t oblivious to the coming opportunity this shift will provide:  Imagine a requirement that any purchase made would log the location of the purchaser at the time the transaction was made, and charge online sales tax based on that location.  Since most mobile users spend their lives in their home location, this would keep a high percentage of taxes collected in this manner in the municipalities that provide services to the end consumer, reclaiming unreported taxable sales in a manner consistent with the collections prior to this massive behavioral shift.  It also levels the playing field for small retailers, who have to collect the same rates on their purchases.

It’s an intriguing scenario, and one not far from reality.  It may be this, and only this, that creates a consumer backlash against the complacent acceptance of leaking geolocation for anything other than maps or yellow page-type applications.  It may create scenarios where people travel to an adjoining town which creates a digital “tax haven” by instituting free municipal WiFi and low tax rates to drive a new form of digital tax haven tourism.

In any case, it’s definitely something to think about.

 

Sony’s Poor Behavior: What does this say about learning in America?

Ask any technical recruiter, or any quickly-growing technology business, what the number one challenge in the external environment is to growth, and the answer might surprise you.  In a resurgence reminiscent of the late 90’s in Silicon Valley in social media and associated technologies that connect people, ideas, and cash, there’s no lack of innovation, imagination, or good business ideas out there.  With investment tax credits and freely-flowing capital fueled by low interest rates and desperate federal, state, and local attempts to ignite the engines of industry and the economy, lack of funding or tightness of credit isn’t the challenge it was two years ago.  Rather, the lack of sufficiently knowledgeable and adequately trained professionals in highly technical fields is the biggest roadblock to the economic expansion of the services industry.

The cost of labor of highly skilled software engineers is increasingly well above the rate of inflation, having increased over 25% in the past 8 years.  (Just check out the term “computer systems software engineers median annual salary” on WolframAlpha.)  Simply supply and demand sets the price points for wages in local markets, and this trend broadly realized over the entire world has to make one wonder:  Where is the supply of new talent, and why is it not keeping pace with the growth demands of various technology-dependent industry sectors?  I postulate there is a widening knowledge gap analogous to the wealth gap in America, driven by the policy, legal, education and cultural environments.

Specifically, legislation built to protect corporate innovations, including software algorithm patents, anti-copyright mechanisms, and the Digital Millennium Copyright Act are two-edged swords that stifle learning by today’s technically-inclined youth by positioning technologies in untouchable black boxes.  Consider for a moment a future electrical engineer in the 1950’s and what his potential contributions to his field would be if he couldn’t dismantle a radio and learn how its components work.  What if programming languages were restricted from college classes to only corporations who could afford extortionate fees to access and learn technologies; would the networking revolution of the 1980’s and 1990’s have ever occurred?  If young men couldn’t open the hoods of their cars without going to jail, would have have any more automotive innovation, even mechanics?  While corporations must be able to earn protected profits to cover their costs of research and development, those same innovations must be allowed to be embraced and extended not only in the broader macro-economy, but also understood, adopted, and applied by the upcoming generation in higher education.

The higher education system itself, however, has been unable to keep pace with the imparting of technical knowledge specifically in business applications, leading to B-schools churning out freshly minted grads that understand some of the ideas behind requirements analysis and abstract system design, but who lack technical depth that cannot be dismissed by specialization difference, but is required in today’s world where technology permeates every level of business, industry, and life.  These b-school graduates then go out into the world, often with a deficient understanding of the application of technology required to manage technical resources or properly apply them to real-world processes.  I believe this falls squarely in the fault of the lack of cross-disciplinary study plans that integrate related topics within a college, but fails to address the widening rift between engineers who are able to understand the inner workings of the technology, and the business majors who receive only a brush of experience with key concepts.

As one university dean explained to me when I inquired why MIS majors were only required to take a single, general-purpose programming class without any exposure to reporting or datawarehousing concepts, upon which degreed candidates will be expended to understand in their first professional job, the answer was startling.  That PhD replied, “We teach people to build businesses and manage technical talent.  They don’t need to understand how the technical work is done.”  Wrong.  Dead wrong.  Long past are the days when engineers can be enlisted for one-off projects and dismissed when their work is done.  In today’s world, businesses that don’t integrate automation, networking, communication, and social media technologies are being quickly replaced by more savvy, and often foreign entities, that understand the importance of every corporate level, from the board room to the mail room, embracing a cross-functional understanding of technology application.

Restricting knowledge transfer is a sure-fire way to ensure you’ll never be able to procure enough of it.  A great case in point of such ignorance and short-sightedness can be found in the Sony vs. George Hotz drama currently unfolding in technical circles.  A young man, Hotz, dared to open his PS3 and learn how it works.  Pages and pages of TOS’s, AUP’s, and EULA’s explicitly forbid him from doing so, and now in retribution for sharing what he learned about what’s inside the $600 black box he purchased, one of the largest companies in the world is actively suing him, and those he spoke to, to keep what they learned to themselves by applying the DMCA against them.

The mass media has long abused and contorted the term “hacking” to apply to virtually any illegal, unethical, or criminal element that remotely involves technology.  First and foremost, hacking in its true sense, is learning what’s not obvious.  If we have effectively criminalized this learning process both legally and culturally, we can sit back and watch our economic output dwindle as other cultures and nations which either through their abandonment of intellectual property protections or permissive discovery and learning culture prepare a more capable generation of tinkerers, whom individually and in greater numbers will show us up.  Sony’s behavior in attempting to sue young men attempting to learn how they do what they do is driven by the assumption that knowledge can be owned, controlled, and metered.  While Sony may be able to apply punitive measures against a handful of the curious, the attempt to do so is not only futile (anyone remember what Napster did to the music recording industry?), but it creates a climate of fear and draconian policies that trickle down to further squelch off those who want to learn from being able to do so, both systematically by instilling a fear to do so will incur corporate wrath, or by discouraging institutions capable of imparting that knowledge from doing so as they attempt to shape ethical norms.

A society that fundamentally believes that some knowledge should not be learned nor shared is doomed to pay its dues to societies that value knowledge creation, knowledge transfer, and raising future generations with the desire and ability to become as competent as their forbearers and extend the reaches of their contributions.