.. a startup dies.  It’s a great quote – apparently from entrepreneur Chris Dixon, and quoted in today’s article in the Guardian about the EU’s antitrust review of Google.   I’ve also seen the great Wired article on  Google’s search algorithm by Steven Levy which gives an insight into the work that Google do behind the scenes to ensure that they keep at the top of the pile in the search game.

Any large business that gains a dominant position in an industry (as Google certainly has done in the search and advertising game) is going to be subject to lots of regulatory scrutiny.  The size of Google does result in real power.    The best people will want to work for Google (at least for a while) and as the Chris Dixon quote implies, this is likely to lead to a reduction in innovation.  But at the same time, Google employees will leave, and many great startups have ex Google people behind them, so overall I don’t think that is a real issue.

But control of what product or service being advertised in search results does mean that Google has a pretty influential role, and you can easily see that when a company who obtained much of their business from high placement in Google search results is vulnerable to Google changing the search algorithms. If they are no longer in the top placements then they could be very badly impacted.  But I hope that potential regulators really think long and hard about intervening, and the ultimate test needs to be the internet customer.     Any intervention must clearly provide for a better service for the internet customer.   And in particular I really hope that EU or other regulators can be kept away from any involvement in the details – because search placements are so important, a whole SEO industry has emerged to help companies increase rankings.  I trust Google more than an independent regulator to manage the continuous evolution of new strategies for gaming search placements.

Is anyone reading this blog in favour of regulating Google, and if so, why?

I think that the shift to mobile internet use is one of the major drivers for innovation, so I was interested to pick up on the remarks made by Eric Schmidt of Google (see report from The Register)  in a Q&A session at the Mobile World Congress in Barcelona.

As one question put it  “To me, it looks like Google wants to turn the mobile operator into a dumb data pipe, where you [Google] provide all the services on top”.  It’s the question that I’d also have liked to have put if I was in the audience.  I think that this is exactly the fate of the mobile operators (it’s largely already happened to fixed broadband players).  The emergence of smart devices is allowing the platforms to become the new focus for innovation.     It’s a bit simplistic (ie it’s not just Google – many players will be competing on top of the dumb data pipe) but at the moment it looks likely to happen.

Of course Eric Schmidt denied the premises of the question.  And went on to talk about the importance of intelligence in the pipes.  Google (and other players) need infrastructure that is smart – and offers additional capabilities.   He also talked about the opportunities that the growth in mobile data opened for mobile operators to make money.  But his bottom line was ‘network neutrality’, and to my mind this means that in the long run we will end up with operators mainly running the pipes.  And I suspect that as a consequence most of the pipes are likely to be fairy dumb.

I think it is a matter of where the money comes from, and where is the best return on the investment.  It is possible for network operators to make money in many ways.  They could charge for content.  But the amount that they make on content is a lot less than they could make by investing the money in gaining more customers.  Similarly for devices.  Operators could (and sometimes do) design or build exclusive devices.  But the amount of money that the make on the device isn’t likely to be anywhere near the return on investment.   And in the services area – they could offer applications through apps stores.  But they would have to sell an awful lot of apps to make the same returns as they do on their infrastructure businesses.

Of course when they do invest in infrastructure, if you want smarter infrastructure you have to find a way of getting someone to pay you to build it if you want a decent return on your investment.  But much of the added intelligence only provides small benefits to the other players operating in the field. So I would predict that while we will get some ‘smarter infrastructure’ it’s going to be relatively small – and most infrastructure will be minimum needed to support the majority of services that operate over the top of the infrastructure.

So I predict that applications are going to increasingly drive purchase behaviour, and the applications will be delivered through application stores, rather than mobile operators.  Application stores dramatically increase innovation.  By reducing the barriers to entry  (before the emergence of the application stores bringing a mobile data application to market was really hard) many more players come up with ideas.  Many, even most ideas don’t work well.  But consumers can find the applications that fit their needs, and Darwinian evolution leads to a set of winners.  The consumer benefits.

It’s interesting that one of the other major announcements at the Mobile World Congress is the announcement of the ‘Wholesale Applications Community‘ where a long list of mobile operators and industry device manufactures are getting together to provide a single route to market for developers of applications.   If the alliance works, we should end up with an apps store that could rival the Apple and Android apps stores.   I think this is a good move – but I suspect the main advantage to the mobile industry is to allow them to compete better with Apple and Google for the basic network and device space. …

What do you think?

I’ve been looking at the press on Obama’s budget and the decision to can the ‘Constellation’ programme that was going to put people back on the moon.  And then Mars.   I used to be a great Science Fiction reader, and in my youth lived through the exciting times that led to the original moon landings.  And I do think that we ought to be exploring space – although I also recognise how much we need to do to fix the planet we live on.    I really think the world should always be investing in a small amount of leading edge activity, extending the limits of human knowledge.   We also need these programmes to inspire more people to study science and take on science careers.

I also think that the US administration has done exactly the right thing in dropping the current plans.  I’m not an expert in this area, but it seems that manned space exploration has lost its way recently.  The space shuttle was a great idea – and we’ve seen some wonderful spinoffs (like the photos and knowledge from the Hubble Space telescope).  But the International Space Station has been a disaster, and the ‘Constellation’ programme seemed very old fashioned in its approach, very expensive, and threatened to completely dominate US space funding for the foreseeable future.  And to be honest I don’t see travelling to the moon as particularly useful – it seems to me that the next step for humankind should be to go to Mars, and the moon seems a bit of a dead end.  If Mars has water which looks increasingly likely, then there is a strong possibility of being able to create the resources needed to survive, and generate fuel required to return.

In the UK the newspapers have been reporting the end of manned space flight.  I think that’s not the right – it even looks to me as if Obama has increased the budget for NASA. I’m hoping that much of this money will be spent outside NASA, and used to encourage innovation in private developed space travel.  At the moment many small companies are developing space vehicles, and we even have people looking at developing space elevators.   I expect that with the right kind of encouragement from NASA  the private sector will be able to take greater risks and through competition innovate to create some of the breakthrough ideas we need to succeed.

There a good post on Rand Simberg’s blog which provides a lot more detail behind the decision.

What do you think we ought to be doing to promote innovation in the area of space travel ?

Attended a RSA lunchtime event on 28th January,  chaired by Matthew Taylor, but where Wingham Rowan, James Purnell MP and Jerry Fishenden of the LSE put forward the case for online marketplaces.   The basic pitch is that the Government should be encouraging the development of an online market (like eBay) but focused on the needs of the less well off and unemployed – allowing them to trade time and skills, resources and even money.  Wingham showed a good  working prototype  of the system at ‘Slivers of Time Working’ project, and there was also an excellent report handed out from the Joseph Rowntree Foundation titled ‘Could online marketplaces tackle poverty?’.

It’s an interesting space.  Many people in poverty have many different sources of income – could be a mix of benefits, informal work & perhaps other black or grey market activity.   A lot of services are difficult to market outside personal relationships.  The ‘slivers of time working’ project enables people to track reputation, build skills and potentially use these skills to enter the full time work market.   Potentially the same system could be used for trading or hiring goods, and even provide a mechanism for micro-credit services.

I see this as a great opportunity for a large company who wants to get really involved in a widespread internet project.  To make this work, the core system needs to have an extremely low cost of operation (under 2% of the revenue value traded on the market), but if you can make a system that works widely in this way then I could see it become the defacto way of trading many resources – and potentially not just confined to the less well off.  It could easily become another eBay or Craigslist if it went global.

Wingham argues (and I suspect he is right) that to make this happen widely requires government intervention.  He puts forward the idea of operating in a similar way to the National Lottery – the Government scopes the system and gives a monopoly to the successful bidder -and provides some interfaces that would not be otherwise available (for example – support of the new Independent Safeguarding Authority vetting and barring scheme to identify unsuitable people). But the national system would be funded commercially.   It’s a very low cost model for governments to innovate in areas that are very difficult to  impact effectively in other ways.  I believe that all political parties should be looking at schemes like this – and potentially has all kind of payoffs for society.

One challenge pointed out by James Purnell was that governments were driven by targets – and in the employment area the main target was about moving people from unemployment to full time employment, and were not interested in supporting schemes that didn’t have this as the major goal.

Anyway – I recommend reading the Joseph Rowntree Foundation report available in PDF form.

I’ve been trawling around the web, looking at the reviews from the launch of the new Apple tablet.   I guess that the iPad is only really significant if it represents the launch of a new class of devices.  Sure tablets have been around for a long time – but has Steve Jobs and the Apple team managed to produce a workable tablet or not?

The web has the usual mix of people who think it is totally revolutionary, and a lot of people who are unhappy about various aspects of the device.   I’ve been impressed with the reports of how fast the tablet works.  There is something about speed which is important, and I think that the fast HTML response of the original iPhone (compared to earlier devices) was certainly one reason why the iPhone worked so well.

Another plus is that the design and user interface (and mix of applications) will be immediately be usable by everyone who has used the iPhone.  That is very positive.

And the price points look very cleverly positioned for a first generation product.  It’s not quite cheap enough to be bought by everyone – but the second generation product probably will be.  And to me the low prices suggest that Apple see a lot of the money coming in the future through the sales of content and applications.  Apple really are shifting towards becoming a major provider of on-line services.  Choosing to compete so storngly with Amazon for online books is another sign (and very positive for the industry).

I’m not clear how easy it is going to be to put additional services and applications on the iPad – but I guess it is likely to be similar to the iPhone, and in which case we could expect the tablet to be jail broken, and potentially see what is a pretty powerful hardware platform to be used for all kinds of novel activities.

On the down side, the battery life, although amazing long for a device as powerful as this, still isn’t long enough for maximum usability. If the tablet is going to lie around people’s homes, then it will need to be plugged in much of the time.  The screen also looks vulnerable to breaking, although the iPhone screen is pretty tough in practice.

But I think that the really crucial issue for the tablet is the extent to which people really do find using it comfortable, and the extent to which it can integrate into everyday life.   I think from looking at other products (like the Kindle) there is clearly a market for this kind of device.  But is it a small market, or a large one?   I find some of the demonstrations (like the sports magazine one that appeared recently on YouTube) extremely attractive.   But with any new class of product, the way uses take to the product is critical and I guess we need to wait until the product is in daily use and see what kinds of levels of usage it attracts before we can be sure it will be successful.

Anyway – if the iPad does win out, then we’ll all be knee deep in tablets in three or four years time.    I’m wondering what Google will do.  They own video (with Youtube), but are only a small player with books (to Amazon) and music (where Apple dominate).   I expect some response from Google.  What do you think they will do?

Thanks to my regular Twine digest, I found a Read Write Web posting from Richard MacManus reviewing a recent speech by IBM CEO Sam Palmisano on 12th January at Chatham House. The focus was on the IBM “Smarter Planet’ initiative in IBM’s own words:

By a smarter planet, we mean that intelligence is being infused into the systems and processes that enable services to be delivered; physical goods to be developed, manufactured, bought and sold; everything from people and money to oil, water and electrons to move; and billions of people to work and live.

The initiative is  broad – but at the heart is based on three core trends – availability of enormous computational power (often embedded in everyday objects), connecting devices through the internet (sometimes called the Internet of Things) and the availability of processing power and analytics to turn all the data into knowledge.  The talk listed many examples of ‘Smarter Planet’ initiatives – including transport congestion schemes, smarter healthcare systems, improved financial services, smart meter systems and reduced supply chain costs for major retailers.  But all these initiatives raise some interesting questions…

The same kind of themes were also being worked on in BT Research.  And many other companies are working in these areas.   Cisco’s Connected Urban World initiative is similar in scope to the IBM’s Smarter Planet.

The IBM talk is interesting as it raises a series of challenges (and then attempts to address them).  The challenge that I really liked was

How do I infuse intelligence into a system for which no one enterprise or agency is responsible?

I think this question lies at the heart of the matter for the ‘internet of things’. As more computing and communications capability is embedded into everyday products and into the environment, it certainly opens the opportunity for new potential services. But no one player is going to be control.

A good example is in smart metering. The UK Government is calling for all homes to be provided with smart meters. Utility companies are going to provide them – but as people will want to move electricity suppliers, each meter will need to be able to work with all energy suppliers. Not only that, but in the longer term the hope is to increasingly match overall supply and demand for energy. If energy suppliers can level out demand during peak times, they don’t need to generate as much power as they do at the moment, saving money and reducing the overall amount of carbon dioxide equivalents. But to do this, the system will need to work with many different devices. And in the longer run, probably interwork with electric cars as well (as electric car charging becomes a major flexibility point for energy demand).

In the world of the internet of things, services provided by different people have to work across many different devices, owned by different people. It’s a major challenge – with huge security and privacy issues.

The talk from IBM suggests the need for leaders to mobilise the alliances and grouping needed to make these kind of services work. And suggests a new focus on coalition building – although in the Smart Meter area the initiative that they are promoting (the Global Intelligent Utility Network Coalition) does appear to be controlled by IBM, which perhaps isn’t the ideal for other suppliers.

But in general I think IBM have the right approach.  Innovators working on solutions in this space need to establish the right kind of partners and build coalitions.  And need to understand that value will come from reusing data and devices in multiple services.

Reading the morning paper, and I came across  this article in the Guardian saying

GSK will publish details of 13,500 chemical compounds from its own library that have potential to act against the parasite that causes malaria in sub-Saharan Africa, killing at least one million children every year. It took a team of five investigators a year to screen the two million compounds in GSK’s library – its entire collection of potential drugs and possibly the biggest such library in the world. The move was given a cautious welcome by charities such as Médecins Sans Frontières, although Oxfam questioned whether other big drug companies would want to develop treatments from GSK patents.

This is a good move.  Malaria is arguably one of the major problems in the world.  It has a huge cost to society – particularly in Africa, both in terms of loss of life, but also in reduced quality of life for many more people.  Jeffrey Sachs in the must read book ‘The End of Poverty‘ points out that Malaria has a massive economic impact, and indirectly is one of the causes of poverty and the lack of development in the Third world.  He’s quoted on wikipedia as saying that the economic cost of Malaria in Africa is around $12bn a year – and he estimates it would take about $3bn a year to prevent Malaria – so it would be sensible to have a global initiative to do this (using many methods – including simple initiatives like increased use of nets) but the sad truth is that Malaria is also a problem of the poor – and so existing Pharma companies are unlikely to spend the large sums of money needed to take potential drug cures to market.

Glaxo suggests that by releasing the chemical compounds it will enable many researchers to investigate and find better fixes for Malaria. I suspect that the initiative will generate a lot of new activity – and perhaps introduce an additional Open Innovation model into the pharma business.   But it will still need some broader backing to take solutions to market.  Ideally it would be good to see countries come together to back this kind of activity – and some vehicles like The Global Fund to Fight AIDS, Tuberculosis and Malaria do exist (although I suspect not sufficiently well funded by our politicians).   It is also an area that the Gates Foundation is working on, and perhaps other large charitable organisations could help fund.

Perhaps the real innovation challenge is to find new models for getting Pharma solutions more widely deployed in the world. Deployment in the third world is a major challenge.  But even closer to home, we have major problems in getting new drugs to market.

Pharma seems to be an area where there is huge effort on regulation in many countries that increases the cost of deployment of drugs.  The focus on regulation is understandable given previous tragic mistakes – but I feel we probably have the balance between risk and reward wrong.  There are huge inefficiencies – why have different approval schemes for different countries – could we not streamline the process?  And use ICT to speed up and share information on drug use and interactions, so making it quicker to get drugs to market.    For most drugs I’d assume in this day and age the best way of delivering them to customers would be through the post – a GP could enter a prescription, and they could be delivered the next day, cutting out all the middlemen in the way.  Each person could have a centralised record, which they could control and interact with – providing feedback to GP and drug companies (suitably anonymised).   In the future, also perhaps provide increased information on genetics to enable gene/pharma interactions to be identified.  We could make the whole process so much more effective than at the moment.   But like most industries, Pharma is incredibly complicated, and there are many embedded interests that are likely to make major improvements difficult to make.

Do you have any ideas for getting pharma solutions faster to market?

Mashable has a great video (about 15 minutes long) with Ben Parr interviewing Evernote CEO Phil Lubin.  I’m very fond of Evernote, which in my view is one of the best applications available for the iPhone (providing note synchronisation), and also works across platform to enable you to quickly retrieve stored information. I was an early adopter, and I use it everyday. It also has some really neat technology embedded in it – for example if you upload a photo Evernote will index any text it can find so you can subsequently search photos you have in Evernote for text.   In the rest of this post I’m going to argue that Evernote is also a really good example of how to build a successful startup.  It’s a great example of innovation at its best.

First notice how Phil Lubin describes the goal of the company.  In the video he starts with his elevator pitch – positions Evernote as ‘your external brain that follows you around for the rest of your life’ – and later references this when discussing the future of the business.   It’s a great story – and finding the right story is important.

He talks about the remarkable success of the service – although they have a high churn rate to start with (like most internet services) they have an extremely low churn rate in the longer term – once you stick with Evernote for a month, then there is a very high likelihood that you will remain using the service.   I think that the early success had quite a lot to do with the iPhone and the lack of synchronisation of notes – a gap in the first iPhone product.   I’d also say that the ability to read text in photos probably attracted some technology enthusiasts to try the product – so the functionality in the early days was important in getting Evernote talked about.   But another issue that I think was extremely important was the design and usability of the first Evernote products.  The product had a simple uncluttered design, and was very fast.   It the product had not been so responsive, I think it would have been less likely to catch on.  In the video Phil says that he and the others are engineers and need to improve the usability of the product in the future – but in my view it was pretty neat to begin with.

Evernote have also published APIs and ow hundreds of other applications are being built that use or build on top of Evernote – it’s a great example of a company that has exploited the Open strategy, and built a highly effective platform.  If the scanning options from Shoeboxed were available in the UK at a reasonable price, then I’d be using Evernote to get rid of more odd papers I’ve collected over the years.

The video is also interesting in the discussions on the largest user – the one who has 85,000 notes in Evernote.   In passing Phil made a very strong statement on privacy – by pointing out that they didn’t know who the user was, or what they were using Evernote for – and asking for that user to come forward if they were interested in being used as a case study.  If you look at the privacy policy on Evernote it looks to me as if  Evernote can and will gain access if required for legal reasons (although presumably since Evernote supports some client encryption, people who are really concerned about security could use client encryption) – but they  appreciate the importance of privacy to the end user in this market, and go to considerable lengths to protect privacy and make it clear in their public statements.

And as an internet startup it also adopted a good charging mechanism – very high users need to pay.  I’d imagine the majority of users (including myself) don’t pay.  But those who do provide a stream of cash that I’d imagine probably pays the day to day runing costs, enabling VC funding to focus on growing the product into new areas.

Evernote is a great example of innovation on the internet.

From my weekend edition of Feedly, I’ve just come across an article  Architecture on the Cusp posted on BLDGBLOG by Geoff Manaugh that highlights The Third & The Seventh, a fifteen minute film by Alex Roman.  He apparently took a year off to create an entirely computer-generated, yet extremely beautiful photorealistic tour of what I believe are real buildings. I really recommend looking at this film.  And I’m going to argue we will see the underlying technology used more often in everyday life in the future.

The first thing to say is that I didn’t realise that CGI could produce such realistic video images.  There is a huge amount of creative work that must have gone into this, and I’d imagine a heck of a lot of computing power.  I really love the windmill sequence, and the library sequences towards the end (I think the building here is the Philips Exeter Academy Library which looks worthwhile visiting when next in New Hampshire).  But the video also highlights the rapid progress in video technology today.  Behind the scenes vast processing capability, plus the emergence of great video editing software, is taking the process of creating lifelike video from computers and making it available to individuals.   I guess only people with huge expertise can make outputs as good as The Third & The Seventh – but I suggest we’re going to see an awful lot more video in our everyday lives that will be cgi generated.

It’s interesting to speculate on what will possible in future mobile phones.  The processors in mobile phones are already very powerful and will continue to evolve.   What applications could exist in the future?  We already see some basic augmented reality applications appearing on platforms like the iPhone and Android phones.   I’ve been pretty impressed with various applications that can capture images and use the images to look up real life data – like the Amazon application that I use to maintain my wish list whilst shopping for books (although I suspect this uses real people to do the look up so perhaps isn’t the best example).

Peering through a mobile phone isn’t perhaps the most obvious way of looking at the world.  But there is also a lot of progress on augmented reality delivered through spectacles – Microvision has got some neat designs  – and a number of suppliers are demonstrating devices that project on the retina – although I imagine that there may be considerable public resistance to this.

I’m pretty hopeless at remembering people and faces.  I could imagine an application where your mobile phone could recognise someone you have met before, remind you of the last instant you met, and perhaps remind you of other associations that existed – like the company association,  twitter feed, or blog outputs for the person.

What would your favourite new application be?