Why Would Anyone Want to Buy a ‘Facebook Phone’?

Visit the original post at my Forbes blog The New Persuaders.

So Facebook wants to make a smartphone. Not just a nice app that it sorely lacks right now, but a piece of hardware that it supposedly will design, with the help of a half-dozen former iPhone and iPad software and hardware engineers it has hired.

As farfetched and even crazy as this may sound to those of us rubes who like to do more than just check in on Facebook with their smartphones, it’s apparently a longstanding obsession of the company. That obsession was recently heightened by an initial public offering that went less than swimmingly partly because investors were worried about the company’s lack of a strategy to make money from users on mobile devices. The idea, it seems, is that Facebook needs a clean mobile slate to fulfill its vision of socially infused advertising, so the only way to do that without interference from Apple, Google, carriers, or simply status-quo thinking by phone makers is to do its own.

But little of this rampant speculation makes much sense on its face. Mainly, the idea that Facebook needs to do this to ensure that it can run ads more easily ignores the fact that users–who ultimately would make a decision whether to buy a new phone–aren’t clamoring for ads from Facebook on their devices. A design that essentially makes the smartphone safe for Facebook ads seems unlikely to appeal to Facebook users. Maybe they won’t mind ads on their phones as much as some people might think, if they’re relevant to the activity at hand, but Facebook would have to offer very much more than that to get people to part with their existing phone.

Here’s the thing: Every smartphone is a Facebook phone. Every phone is a Google phone. The essence of the smartphone, like the computer, is that it’s programmable–you can, and people do, make it their own personal phone. Anything that limits that flexibility, even in the name of making it easier to use the most popular Web service on the planet, will be a nonstarter with the masses.

Read more »

The Top 10 Tech Trends, Straight From the Top 5 Tech VCs

Cross-posted from my Forbes blog The New Persuaders:

Everyone in Silicon Valley wants to know what’s coming next, and every year for the past 13 years, a panel of the most forward-thinking minds in technology and tech finance convenes here to provide a look at what innovations are likely to emerge in the next few years.

Last night it was time again for the Top 10 Tech Trends dinner, hosted by the Churchill Club, which puts on a bunch of Valley events with top tech folks every year. I wrote about last year’s here as well.

This year, the 14th, the panel is especially venture capital-heavy, but these folks are also, to a person, heavyweights in the Valley, so their opinions carry special weight. On the panel: Kevin Efrusy, general partner at Accel PartnersBing Gordon, investment partner at Kleiner Perkins Caufield & ByersReid Hoffman, partner at Greylock and executive chairman and cofounder of LinkedIn; panel regular Steve Jurvetson, managing director of Draper Fisher Jurvetson; and Peter Thiel, president of Clarium Capital. Moderating the festivities in place of longtime emcee  Tony Perkins, Churchill Club cofounder with Forbes Publisher Rich Karlgaard, are Forbes’ Eric Savitz, San Francisco bureau chief for the magazine, and Managing Editor Bruce Upbin.

The panel portion of the dinner, which attracts several hundred people (you can watch it live here for a fee), starts at 7 p.m. Pacific at the Hyatt Regency Santa Clara. The audience gets to vote–in past years, with red and green cards as well as electronic voting devices. This year, they’ll be using a Twitter-based polling system. Panel members have similar red-green paddles they hold up. I’ll post the highlights as they happen.

And we’re underway. Eric and Bruce will describe each trend and then the owner of that trend, one of the panel members, will explain it.

1) Radical Globalization of Social Commerce: Efrusy explains that companies today will be instantly global, or they will fall behind those that aren’t. For the previous Web generation, international was a distinct minority. Groupon, for example, was half international when it went public last year. If you want to be the leading global player, just leading the U.S. might not be enough. You can’t wait to win the U.S. and then open an office.

The other panel members wave half-red, half-green panels. Gordon, who waved a red, says that’s going to take awhile. Hoffman, also red, said the U.S. is still the most important. Thiel’s in-between, I think, but because he thinks it’s not very interesting. Jurvetson says it’s true, but 12 years old. It’s what every consumer Internet startup has been doing for 12 years. Thiel on second thought thinks it’s a worthwhile rule to go international early to avoid local copycats.

The audience shows mostly greens, matched by about 70% supporting the trend on TwitPolls.

Read more »

Will Digital Stuff Always Be Worse Than Analog?

ImageWhen I tweeted today that it’s getting tougher to do phone interviews because of poor-quality cell and IP telephony calls, I touched a nerve. “Bring back the Bell System!” said one tweeter.

The fact is, cell phone quality has never been great, but a lot of people, CEOs and executives included, now seem to use them almost exclusively, so the poor quality is more noticeable–and annoying. And while enterprise-quality IP phone systems seem fine, home versions like your cable company’s or Google Voice that more people are using still don’t match landlines.

Perhaps it’s just a transitional phase, before we get the unlimited bandwidth we’ve been promised for so long. But it seems like a long transitional phase.

And it’s not just phones. CDs still don’t sound as good as vinyl, and MP3 files are even worse. Do I even need to mention Internet video? Most people probably don’t notice that the average digital camera image can’t match the best film images, but film images taken with a good camera still have better resolution (or at least the grain looks better than pixels).

Of course, digital has its advantages. No skipping records, for instance. (Well, not actually true–my car CD player doesn’t like it when I hit a bump.) No snarled tape. Digital phones and music players are much more convenient to use, and do a whole lot more than just make calls. Videos taken with most digital cameras look a lot better than anything we used to take with tape-based camcorders.

I don’t mean to sound like an old crank, even if I might be. But I wish in the rush to digitize everything, we could remember that quality matters, and make that as important as convenience.

We Have Met the Evil and It Is Not Google or Apple: It Is Us

Cross-posted on my Forbes blog, The New Persuaders.

So much talk about evil these days. Google is evil for promoting results from its Google+ social network on search results pages, and even for changing its privacy policy to make clear its services share data. Apple is evil for not coming down hard enough on harsh working conditions at its Chinese suppliers’ factories.

Well, maybe. But if they’re going to be honest, the many pundits piling on to today’s titans of tech need to look up from the screen and into the mirror. Google’s and even Apple’s businesses, warts and all, don’t exist without our explicit participation. As Pogo famously said, albeit in a different context: “We have met the enemy and he is us.”

Now, I’m still not so sure Google’s actions on either score rise to the level of evil by any reasonable meaning of the term. (In fact, the furor over Search plus Your World  makes me think of Pogo creator Walt Kelly’s second most famous line: ”Don’t take life so serious, son. It ain’t nohow permanent.”) But it sure looks like Google’s at least edging closer to the evil line than its hifalutin ideals ever seemed to suggest.

For its part, Apple has taken considerable effort improve the factories that produce the gleaming iPhones and iPads we love. But if today’s New York Times story is correct, it’s clearly culpable in its seeming ambivalence about coming down hard on its suppliers exploiting workers.

Fact is, though, these companies get away with things we don’t like only because we let them. As powerful as Apple and Google seem, they both answer to customers and users. That would be us. And unlike politicians, they must answer to us every day–if we insist they do.

But we can’t do that just by bitching about them on blogs. You want Google to back off on personalized search and data-sharing? Opt for the plain results (click the Hide Personal Search button up there on the right), sign out of your Google account, or even delete it entirely. Or try Bing, or DuckDuckGo. Easier than blogging about it! And if enough of you do it, rest assured that Google’s data crunchers will notice, and if they’re as smart as they like to think, they’ll figure out how to change things.

You want Apple to fix its factory conditions? Don’t buy that next iPhone or iPad, and tell Apple why. If enough of you just say no, Apple will notice, and maybe start to use some of those unbelievable profits to change things.

Everything else is just talk. And there’s been quite enough of that already.

What’s Coming in Internet Advertising: 12 Predictions for 2012

I did my annual predictions first on my Forbes blog, The New Persuaders, since they’re focused largely on the Internet media and advertising I cover there. On that blog, they’re done as separate posts, but I wanted to gather them up in one place here, as I’ve done in previous years. So here’s what I think will happen (or in some cases, not happen) this year in my corner of the technology and startup world:

Facebook goes public, but won’t start an IPO landslide: Facebook will make the signature stock offering of the decade, one that reportedly will value the social network at up to $100 billion. But it won’t launch a thousand IPOs as a gazillion venture capitalists and angel investors hope.

Of course, the first part of that prediction is a gimme. But I can’t go without mentioning it because the Facebook IPO will be one of the biggest stories of 2012. Assuming Goldman Sachs or Morgan Stanley don’t stumble in pricing and selling the offering, Facebook’s IPO will be every bit as important as Google’s in 2004. It will be a sign that Facebook is a real, sustainable company (if there was any doubt left by now), but also a sign that social networking is getting woven into the fabric of our entire online experience.

The second part of the prediction depends less on how the Facebook IPO goes than on how (or whether) the economy recovers. If the recover remains slow to nonexistent and the stock market reflects that, IPOs will be sparse. If we get the slow but growing economic improvement we seem to be seeing now, more companies will go public but not a gusher. But the point is that Facebook is such a singular success that it’s not going to set the tone for lesser (often far lesser) Internet companies.

Facebook’s ad business booms–but not at Google’s expense: Facebook’s social advertising looks promising, but won’t come close to challenging Google’s huge success in search ads this year–maybe ever.

Obviously, Facebook is having no problem raking in the bucks from advertisers eager to reach its 800 million-plus audience–or more specifically, the millions of people in whatever target markets they choose. EMarketer reckons the company will gross nearly $6 billion in ad revenues this year, up from $4 billion in 2011. And that’s before we know anything about Facebook’s likely plans for mobile ads or an ad network a la Google’s AdSense that would spread its ads around the Web.

From reading a lot of articlesyou’d think Facebook is stealing all that money directly from Google. That’s not mainly the case, given Google’s own considerable growth in display advertising, though Facebook’s success may well blunt that growth in the future. Instead, Facebook currently is eating Yahoo’s and AOL’s lunches, and those of many ad networks that, until Facebook ramped up its ad business, were the main alternative for advertisers looking to target sizable audiences.

What would make Facebook a huge Google-scale company is the theft of an entirely different meal: television advertising. After all, Facebook shows much more promise as a brand advertising medium than a direct-marketing medium like Google. It needs only to draw a small fraction of the $60 billion or so spent on television advertising, the biggest brand medium, to be enormously successful. But even then, it’s not mainly a Facebook vs. Google contest.

Facebook still needs to answer a big question, however. That’s whether its “social ads,” which incorporate people’s friends in ads in a 21st century version of word-of-mouth marketing, will have nearly the effectiveness in driving attention and ultimately sales as search ads, which appear in direct response to related queries, often involving products people are looking to buy. The potential is intriguing, and there are some nice examples of how well social advertising can work.

But despite Facebook’s considerable work in providing new kinds of metrics on marketing and advertising impact on its users, marketers and agencies aren’t yet universally convinced they need to spend a lot of money on Facebook ads. After all, they can get a lot of mileage out of their free Facebook Pages and Like buttons around the Web. (Not to mention, it remains to be seen whether these ultra-personal ads will cross what blogger Robert Scoble calls the Facebook freaky line.)

Bottom line: If Facebook is to be the Google of the this decade, its advertising has to at least approach the engagement of search ads, especially as Google itself moves to become more of a brand advertising platform with YouTube and continues its push into display ads. While Facebook is building what seems likely to become a great business on anew vision of advertising that could change many decades of tradition,2012 won’t be the year it closes that deal.

Read more »

How Did I Do on My 2011 Predictions?

It’s that time of year for the annual Prognosticators’ Ball, when most of dine on humble pie. I will be opining on what’s coming in 2012 for the parts of tech I follow, but first a report card on how I did a year ago. Here’s what I predicted, followed by my completely unbiased assessment of each:

* There will be at least one monster initial public offering in tech. Take your pick (in more or less descending order of likelihood): SkypeGrouponZyngaDemand MediaLinkedInTwitterFacebook (only if it has to). But despite many stories that will call this event a bellwether,  the IPO won’t bring back anything like the bubble days of the late 1990s (and thank goodness for that) because there are still only a few marquee names that can net multibillion-dollar valuations.

Bingo! Four of those companies went public (and one, Skype, got bought by Microsoft), but it remains clear that the IPO window opened only a crack so far.

* App fever will cool. Good apps that encapsulate a useful task or bit of entertainment–Angry BirdsAroundMeGoogle Voice–will continue to do well. But those apps that do little more than apply a pretty layer atop Web content won’t get much traction–and moneymaking opportunities are uncertain in any case. The bigger issue: Once HTML5 becomes the widespread standard for creating Web services, enabling much more interactive Web services right from the browser, I wonder whether the need for separate apps will gradually fade.

Wrong! I still wonder, even more this year, about the appeal of apps, which increasingly look like a return to the bad old days of constant upgrades. But the day of reckoning, if it ever comes, certainly didn’t happen in 2011.

Read more »

Five Small Stories About Steve Jobs

Lots of people who were closer to Apple cofounder Steve Jobs than I have written moving memorials to a man who, in an industry and a region where people love to say they want to change the world, actually did it. The Apple II, the Macintosh, the iPod, the iPhone, the iPad–and Pixar!–none of these would have happened, certainly not in the same culture-jolting way, were it not for Jobs’ imagination and determination.

Because I was busy enough watching Intel create the electronics revolution, chronicling Scott McNealy and Sun kicking Hewlett-Packard’s butt for awhile, and witnessing Jim Clark and Marc Andreessen birth the commercial Internet, I can’t share tales of watching the genesis of the particular revolutions Jobs sparked from a front-row seat. All I’ve got are a few small, even inconsequential tales of Steve Jobs from my brushes with him over the years. But I wanted to share them anyway in the hope that they add a little more color to the life of a man who brought so much to ours.

I met Jobs face-to-face for the first time just before he was to introduce, if I’m not mistaken, the NeXTcube computer in 1990. BusinessWeek writer Kathy Rebello and I visited Jobs to see the machine at NeXT’s offices in Redwood City, Calif. He was his usual charming self–and make no mistake, despite his well-deserved (and self-described) reputation as an asshole, he was very charming. And his enthusiasm was infectious even though I had doubts about whether he could widen NeXT’s wedge between Apple and Sun into a sustainable business.

I remember two things distinctly. One was his focus on the shape and design of the jet-black machine, which I recall him touching fondly. That love of good industrial design is something he clearly never lost.

The other thing I remember is that he nervously fingered the wedding ring on his finger. When I jokingly asked him if it perhaps it wasn’t fitting so well, he launched into a story about his grandfather, who was a machinist (if I remember correctly–though seeing that his adopted father Paul was a machinist, I wonder if I heard wrong). Anyway, he said his grandfather was operating a machine with his wedding ring on, and it got caught in the machinery, removing his finger along with it. So every time he felt the ring on his finger, it gave him a twinge.

Now, this was Jobs before his canonization as the savior of Apple, so perhaps it’s just an example of a CEO trying to make nice with reporters with a personal tale. Still, the story stuck with me precisely because it was such a human, uncorporate story to bother telling.

I also saw Jobs just a couple of times doing his famous product introductions. One was the introduction of the first NeXT machine at a huge gala event in San Francisco in October 1988, if I recall correctly, because BusinessWeek writer Katie Hafner needed help reporting on a NeXT story she was working on and I was the new guy getting sent to whatever needed doing. (She thought she was getting an exclusive, though Jobs apparently promised an “exclusive” to two other publications–vintage Steve Jobs.)

In demonstrating a built-in dictionary that could call up definitions with amazing speed, he said, “Hmm, what shall we look up? How about ‘mercurial’?” That was the most common descriptor of Jobs at the time, and his joke brought down the house. Like I said, he could be the most charming guy in the room when he wanted to conjur up his famous reality distortion field.

The next time I saw Jobs onstage was just three years ago in San Francisco at his introduction of the iPhone 3G at Apple’s Worldwide Developer Conference, helping out my BusinessWeek colleagues and Apple aces Peter Burrows and Arik Hesseldahl. I hadn’t seen Jobs in person in many years, onstage or anywhere else. Of course I knew about his health issues, but as I liveblogged the event, it still struck me how frail he seemed:

Maybe it has been far too long since I’ve seen Jobs speak in person. But he seems a little laid-back, even tired?

As it turned out, this appearance kicked off another round of speculation on his health. Even without the benefit of hindsight today, it felt to me that, at the least, Jobs’ ability to carry Apple entirely on his shoulders was fading.

Update: Oh, how could I forget that photo shoot? For a special issue on Silicon Valley in 1997, BusinessWeek had somehow gathered many of the leading lights of the Valley at that time. I later wondered how on Earth we made that happen, but there’s Jobs on the left, dressed characteristically with more style than the rest put together.

I don’t remember much about Jobs’ behavior during the shoot beyond his huddling with his friend and Oracle CEO Larry Ellison at one point. And maybe that was the point: While there was no doubt he had to be in that photo, he wasn’t yet Steve Jobs, the icon, he was the guy who had just returned to Apple after it bought NeXT and faced a huge uphill battle to save it. Still, he was Steve Jobs; I remember his letting the magazine know that he was annoyed about the photo because his white shirt stuck out from under his vest.

One last story: My wife and I used to frequent a small restaurant in downtown Palo Alto called Caffe Verona. One evening around 1999, more or less, we were getting coffee, and suddenly I noticed that ahead of me was Ellison. That was interesting enough, but then I saw him take his drink out to the small patio entrance–where sat Steve Jobs and his wife.

Being a reporter, and because I think neither recognized me in the dark, I took a seat outside a few feet away, hoping to overhear any juicy details about coming products, Silicon Valley gossip–whatever. Long after my wife went back inside to get warm, I kept nursing my cappuccino and pretending to read magazines. So what did I overhear?

A half-hour of talk about the details of macrobiotic diets.

It was a mildly funny story to tell for years afterward. After Jobs’ health issues, it became less funny. But I always thought it was significant for another reason anyway. Here was one (actually, two) of technology’s leading lights, and they somehow found time to pal around talking about everything but their businesses.

Ultimately, what I remember about Steve Jobs was not the showman, the icon, the visionary. I remember a real human being who just happened to change the world.

LIVE Inside Google Search Event: Search by Image and Voice, and Faster Too

Google will shortly provide an “under the hood look at Google Search” for a group of reporters and bloggers in San Francisco. According to the invitation, Google Fellow Amit Singhal, who for a decade has headed the core search ranking team, and others will “share our vision and demo some of our newest technology and features.”

It’s uncertain what Google will talk about, but events like this often are a forum for introducing new features. The last time Google did a similar event, the company introduced Google Instant, which shows search results as you type–a very significant change in its iconic search engine. Given how much competition Google’s facing not only in search but from social services from Facebook to Quora, it seems likely the search giant will have some notable new features or services to talk about. I’ll be liveblogging the highlights (as will many others). You can also watch it here. And you can submit questions to insidesearch 2011@google.com.

UPDATE: Google announces three key new features:

1) Voice search on desktops and notebooks, not just mobile.

2) Search by image, not just words.

3) Instant Pages, which eliminates load times when clicking on pages in top search results.

Bottom line for us: Easier and faster search no matter where you are.

Bottom line for Google and its competitors: It has no intention of getting one-upped on mobile devices.

Read more »

Reed Hastings at D9 Conference: Netflix Will Remain Complement, Not Competitor, to Cable

Netflix has had an incredible run at transforming television, so I’m always interested in what CEO Reed Hastings has to say. This morning, AllThingsD‘s Kara Swisher is interviewing him at the D9 conference in Southern California. I’m not attending, but AllThingsD is doing a livestream of a few sessions, including Hastings. Here’s what he had to say:

Q: Is Netflix so successful that it’s driving up the cost of content beyond what even it can afford? Hastings: We’re in this virtuous cycle. We’re paying more for content, but we continue to grow with 35% gross margins. So it works as long as subscriber growth continues.

Q: Is it just handing over money to Hollywood that has improved its perception of Netflix? Hastings: Yes (in a word).

Q: What about the Starz deal (a key one for lots of movies and TV shows, which Netflix got cheap a couple years ago)? Hastings: We’ve grown a lot since then, so we’ll pay more for the content.

Q: $200 million as rumored? Hastings: Wouldn’t be shocking. (Though Starz wants a lot more than that.)

Q: Where do you go next to get fresher content? Hastings: We look at what we think our subscriber count will be at the end of the year, so what is our budget? Then we go out and do deals. Consumers want us to have all the new stuff. But the new stuff is very expensive. You can’t get it at $8 a month. We’re really much more of a complement for the new-release business.

Read more »

Five Visionaries on What’s Coming Next in Technology

Every year for the past 13, the business and technology forum Churchill Club of Silicon Valley has held a very popular annual dinner where about five tech forecasters and finance people offer up their predictions on what’s coming next in technology in the next three years. On the panel tonight at the venerable Santa Clara Marriott are Curt Carlson, president and CEO of Menlo Park research lab SRI InternationalAneesh Chopra, first chief technology officer of the United States; venture capitalist and speed talker Steve Jurvetson, managing director at Draper Fisher JurvetsonAjay Royan, managing director of Clarium Capital, Peter Thiel‘s company (Thiel was supposed to be here); and futurist Paul Saffo, managing director of foresight (an appropriate title) at Discern Analytics. Emcee is Tony Perkins of AlwaysOn. I’m liveblogging the highlights.

If I remember previous events, this one is a little different in that Carlson, not each individual panelist, is presenting the trends. Each of the panelists raises a paddle with green on one side, to show they agree that the predicted trend will happen, red on the other to show they don’t. Yeah, it’s kinda hokey, but it’s fun. The audience votes with handheld devices as well as little red and green cards.

Read more »

Follow

Get every new post delivered to your Inbox.

Join 7,785 other followers