Tag Archives: technology

Enabling Technological Convergences

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In my last post I discussed technological convergences. I didn’t really discuss anything ground breaking or earth shattering. We all know these things happen. Even if we never really make a note of it. What’s a more interesting question though is why do some companies, like Apple and Blackberry, succeed and others like Microsoft and Rio (early MP3 maker) fail, either in creating technologies that converge or create technologies that then fail.

One of the first reasons is the culture of the company. To create a totally different product that will shake the core business firms may have to do something called “corporate venturing.” This is where a company decides they are going to take people that normally work on the major product and put them into a different area and seclude them and allow them to create a new product. Whatever sort of leadership structure develops, develops. It really doesn’t matter if this matches the rest of the firm. Essentially, these people are put into a position where they are starting a new company. Apple famously did this with the original Macintosh program. It was called a skunk works area. Of course recombining the two portions of a company creates huge problems, but good management can figure out how to deal with this.

Another piece required for a firm to successfully move into a new product space is the ability to identify the market need. This one is pretty obvious, but it still needs mentioning. In many cases it’s really obvious that there’s a product space and that some one should fill it. When companies don’t move into it there must be some sort of reason.

One of those reasons comes down to firm capabilities. Every firm has something at its core that it’s best at. I would argue that Microsoft is best at taking advantage of a virtual monopoly of a platform and moving into new directions within that platform. Internet Explorer and the Office Suite are the best example of this. Microsoft has also tried to do this with servers and other peripheries. Which is why Microsoft has had difficulty moving into other platform positions. They have failed (or mixed results at best) over and over again with phone OSes because it doesn’t rely on their dominate platform.

Another company that is an R&D powerhouse in energy but has failed at anything outside of their major focus is Shell. As a major energy company you’d expect Shell to be moving into other types of energy production to make massive amounts of money in the transition from fossil fuels to renewables. You’d actually be right. They have tired and failed. Aside from having a failed solar industry Shell has a moderately successful Wind program. Between the two it actually makes sense why solar failed and wind is doing well.

First, wind is closer to extracting material from the ground than making energy from the sun is. Now hang on, I know, but Shell has to maintain offshore oil rigs in tough conditions. Understanding how to build a wind farm out in the ocean has some similarities. Shell doesn’t actually make the windmills themselves, they buy the windmills and put them together to harvest energy. Shell was trying to make solar panels. Intel would be a significantly better solar panel producer than Shell. Why? Because solar panels are semiconductors. You make them with similar machines the technologies are adjacent to each other.

What’s technological adjacency? It’s whenever you are able to use your current skills and apply them with some research to a related technological field. I’ll discuss this more in my next blog.

Technological Convergences

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Convergences happen in all different ways. They happen in books or book series, where a good author can plan to have plotlines converge in a specific time and place. In the case of the series I just finished, the Malazan Book of the Fallen, the author was able to get two totally unrelated characters meet in really unexpected ways. It happens in films too, Crash and 21 Grams are two great examples of this. This happens in technology as well. Most of the time, we as consumers never even see it happening. When we look back though we realize it was incredibly obvious that it would happen. Two great examples of this happened with cell phones.

MP3 players have been wildly popular since they came out in the late 90’s. Napster and easy to rip CD’s made them incredibly useful and provided hours of great listening. Around the same time cell phones were becoming smaller and more popular. No unexpectedly, phone manufacturers decided that it would be useful to put a music player onto the phone. These were clunky and really only used when people didn’t have a better MP3 player. Apple had created a great MP3 player and realized, like the phone manufacturers that users only wanted to carry one of these devices. This is one of the reasons that drove them to make the iPhone. Great interface and good music experience. At this point they already had the music infrastructure and the loyal fan base to be sure of a high number of sales.

Around the same time as the MP3 boom businessmen were starting to use Portable Digital Assistants (PDA). This was a replacement to the calendar and phone book. It also provided a few applications that allowed some work on documents. It could also be used to schedule emails when the PDA was synced with the computer. It was obvious that this would be a great device to connect to some sort of network aside from plugging it in. Blackberry used to make two way pagers and figured out a way to send emails and other useful data over the pager network. This was one of the earliest smart phones. Eventually Microsoft and Palm got into the phone manufacturing game for the same reason. People didn’t want to carry two device a PDA and a phone. If you put them both together you’d have a better product and would sell more.

These two technologies converged on a similar product, smart phones. Both types of phones had a very different set of users initially. However, since the iPhone there has been a further convergence of these phones into general purpose phones. Blackberry, while still catering to the business side, is shifting to compete directly with the iPhone because business users want the apps that the iPhone has. Palm has vanished from the market being unable to compete and Android has appeared as the first PC based OS. Android is a distribution of Linux, it doesn’t run well on PCs but MS and Apple are moving in a direction of merging mobile OSes and PC OSes (sure it’s a Mac, but it uses Intel so there’s no different besides the OS).

If we look back at these convergences, aside from new competitors and firm failure, they appear to be pretty obvious. Why wouldn’t these companies move into these market spaces? I’ll discuss some of that in my next blog.

Innovation, Science and Money

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The death of Steve Jobs has really shaken the technology community. It has really made people do a lot of thinking about innovation and the impact of technology based companies on the economy. The Economist notes that the American work force is on the decline and the high tech companies aren’t making up enough jobs. That now companies like Apple and Google employ less than a third of what companies like GM used to employ. These high tech companies don’t need as many employees. Additionally, it’s a different type of work force that are required in the US. Apple outsources manufacturing because they are really concerned with driving down the cost of manufacturing and maximize profits. This is good business.

In a long article by Peter Thiel, co-founder of Pay Pal and a venture capitalist, he discusses what he calls the end of the future. Where he claims that we’ve been in an innovation slow down since the 70’s. He also argues that scientists and technologists aren’t living up to the claims they are making. He argues that in a lot of ways we’ve been technologically stagnant. Politicians have been making the same promises on energy since the 70’s and that we’ve been slowing down are rate of increase of production for food barely keeping up with population growth. I think that he does make some good points, but he definitely goes a bit over the top with his statements. He’s looking at things only within the national and regional context and is ignoring the fact that there have been cultural changes that have driven a change in how companies innovate.

Historically, companies don’t find value in doing basic research. If you look at the history of research labs within industry, they hire researchers to do incremental and radical innovation. However, this research is carried out within a scientific paradigm which was created in basic research.

In fact we’ve seen a decrease in the amount of R&D being spent by companies. This has lead to some of the stagnation in innovation that Thiel mentions. To combat this and to reduce the risk borne by the company they have been doing more and more contract research with universities and have increase the amount of money they spend with universities.

Thiel also mentions that the government might be able to help but doesn’t see it ever going to happen when you have to justify the expense by cutting something else. Since he’s a libertarian he feels that the budget must be balanced. However, our politicians are cutting budgets to the largest scientific funding agencies in the US. My wife sent me an email with some of the funding cuts, National Science Foundation is getting cut by 2.3%, in fact it’s 14% below the budget requested by the administration. The National Institute for Standards and Technology’s budget is getting cut by 9.3%. Both of these agencies create a large number of jobs. It’s been shown that one research job creates several other jobs. Cutting these budgets will reduce the amount of research which can be conducted. This will impact the number of researchers, impact the quality of education at universities and slow down the ability for universities and firms to exploit new research.

It typically takes 10 years for research to be monetizable. Cutting funding now impacts employment now and future employment. In fact, these changes will have a long term lasting impact. These choices create a path dependency within our society. Without proper funding we’ll be passed by some one that feels research is paramount.

Remembering Steve Jobs

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This post will piss a lot of Apple Fans off. I’m going to say that now.

Steve Jobs was a great designer. He built a company up twice based on maximizing control over the hardware, design and the software. He was able to do this an incredibly well. He was able to use this skill to dominate the early computer industry. However, under more competition Apple faltered as it relied heavily on a single creative driver. The designs that Apple created were radical design, these designs in a way constituted a type of radical innovation. The components within the computers themselves weren’t radically improved over the competitors, the design was what made it special.

This is the same for the iPod. By the time the iPod came out there were already many MP3 players and many of them were doing very well. What Apple was able to do was make it simpler to move music onto the device and interface with the device itself. This is the radical portion of the iPod. I feel that this is exactly what happened with the iPhone as well. They created a radical design for the interface, but in many cases didn’t even have legacy features.

Apple does a great job in marketing what any other phone maker would have expected as a normal feature. Even some of the biggest changes, like the fantastic screen it’s an incremental innovation. As a consumer I fully expected some of the newest phones to have amazing screens.

One of the things Jobs did best was to get people to buy the newest version of Apple’s phones. The iPad was also a very similar type of innovation. It’s a gigantic iPhone. However, the reason it worked so well was the fact that iOS was able to scale up and work well on it. In the end I feel that Jobs was able to use cases of Radical Design innovation with incremental technological innovation a loyal consumer base to turn products into massive success.

However, Jobs has also turned Apple into one of the largest patent trolls in the world. With the level of control that Jobs had over Apple, it seems unlikely that he would not have initiated the litigation. Jobs did remember how they lost the PC war in the 80’s and 90’s. I think that Jobs is attempting to use patent law to control the market. There were no software patents during the initial PC battle, however there are software patents now and Apple has been patenting a great deal in order to control how devices are marketed and developed.

Finally, I think that Jobs was what Jim Collins called a level 4 leader. Similar to Lee Iacocca (of Chrysler), Jobs was able to control Apple through sheer personality and create a great company. However, he doesn’t like dissent and would probably pull a George Lucas and change the original Star Wars trilogy.

Jobs did have a vision of what devices should look like and how they should work. He was excellent at creating great designs. He will be remembered for saving a trouble company, bringing design back into mobile devices and forcing a huge number of companies to compete in the mobile market space.

Amazon’s Silk

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Interesting read on Tech Dirt on Amazon.com’s Silk browser. They note that it’s a copyright infringement suit waiting to happen. If you’re too lazy to read the article, basically Silk will copy whatever website you go to onto it’s servers so it can send you a compressed version of it. For instance if a website that you’re on has a 3mb picture they’ll send you a 50kb picture instead. This does a few things. First, it will help relieve congestion on cell networks because smaller pieces of information are being sent. Second, it will save you data if you don’t have an unlimited data package. Finally, it could violate copyright. Why? Because it’s copying everything from a website and then sending you the information from a different source. Not only that, but it is effectively altering the picture they are sending you. I’m not sure if there have been any copyright cases based on compressing the quality of a picture, but for all intents and purposes it’s altering the picture. It probably should fall under fair use, but you never know some one will probably try to sue over that.

There are some other issues to consider too. The browser has predictive capabilities based off of aggregate users actions. This is actually fairly similar to what Facebook is doing, but there are no implications for ads with Amazon (at this point we don’t know if they store individual user statistics). The example they give on the website, is if you go to NYTimes.com and a high percentage of users then click on the business section Amazon will pre-load this information into their severs. This could have an impact on big websites’ server loads as well. They could potentially be hit twice for a lot of visits to their site. If Amazon predicts incorrectly, then it will hit the server at least twice.

Another interesting consideration is related to ad revenue. Let’s say users of some website like, I don’t know KBMOD.com, always visit a YouTube account after reading the front page, let’s go with InfiniteSadd, which would then auto play the video that’s on top. This of course have the ad pop up on the bottom. Now the question I have is in these situations would this count as a click, or would the ads start to filter out views and click throughs from Silk? The situation, I presented is unlikely as there’s no direct link from KBMOD to InfiniteSadd’s user profile. But’s easy to image that it could work that way.

I’d really like to know more about the user statistics that Silk will be collecting. Since the browser is going to be on their Fire device (who knows could also be an update for older Kindles as well), Amazon will know who is browsing what you are browsing and may actually keep that information in your account to predict your behavior better. I don’t see any reason why they couldn’t collect that data. I would imagine that it’s very technologically feasible to use a larger aggregate dataset for websites you don’t frequent, but for your most commonly visited websites for Amazon to have enough usage to figure out where you’re going to go next.

I think the browser is a great idea. However, I can also see this turn into another way for Amazon to better target your recommendations. If you are on your Fire and they see where you go, then they will also know what other products you might be interested in that you haven’t bought through Amazon before. If they know what interests you then they can put those into your “Silk based recommendations.” Now there hasn’t been any talk of that yet, but since they are selling the product at a loss they need you to buy a decent amount of product to get a return on their investment. I’ve seen two values, $50 and $10 losses.

Keep your eyes open for news on this, it could be a copyright and privacy issue before long.