Posted by: Peter Carrescia | 23-02-2014

Low Lock-In of Messaging Apps like WhatsApp

The news of Facebook’s acquisition of WhatsApp for $19b+ crystallized some thoughts I’ve had on mobile messaging platforms like WhatsApp and BBM, and previously desktop messaging platforms like MSN Messenger and AOL Instant Messenger.

The $19b+ WhatApp purchase price was apparently justified by the high number of active users on the platform (some high percentage of the 450mm registered users). There is however a big difference between an active user on a social network like Facebook and an active user on a messaging platform like WhatsApp. Both require you to construct a social network of your friends and associates (with all agreeing to use the same platform – no small feat in the early days). The difference however lies in what and how content is shared within that network. Unlike in Facebook where content is usually long lasting (eg. has a long half-life) and is by default shared across everyone in your social network (and often their social networks too), messaging platforms are usually sharing very short-lived content and usually only between two people.

That means that when there’s a problem (like there was yesterday with WhatsApp system-wide downtime) users can very quickly move to alternatives to address their immediate point-to-point communication requirement. Users don’t have to worry about content they’ve left behind (half-life value of a conversation between users is in the minutes), and likely have multiple ways to reach the other person in the point-to-point conversation.

So without long-lived broadly shared content tied up in the messaging platform, and with the relative ease of setting up alternative point-to-point communication paths to people in your network, the lock-in of a messaging platform is relatively low, despite the fact that there is substantial network effect. Hence the rise and fall of several messaging platforms that had all achieved broad acceptance in their time (AOL IM, MSN Messenger, BBM).

It will be interesting to see how WhatsApp evolves (will they leverage a users Facebook content and social networks to increase lock-in) and if they can avoid the same challenges as messaging platforms that cam before them.

Posted by: Peter Carrescia | 24-01-2012

The Connected Home

This past weekend I had to change some setting on my rounter and happened to look at the DHCP table.  Dynamic Host Configuration Protocol (DHCP) is the protocol that IP-based devices use to connect to a network, and the way a device gets an IP address assigned when it connects.  I was surprised to see how many devices are regularly connected.  At any one time, it could be as many as 27!

  • 4 wi-fi enabled Blackberries
  • 4 network-enabled TVs
  • 3 Bluray players
  • 1 Playstation 3
  • 1 Nintendo Wii
  • 2 AV Receivers
  • 1 Apple iPad
  • 1 RIM Playbook
  • 3 iPod Touches
  • 1 Network Printer
  • 2 Macbooks
  • 1 Dell desktop
  • 1 Toshiba laptop
  • 1 AppleTV
  • 1 TV settop box

No fridge or dryer yet, but I’m sure that’s not far away.

 

Posted by: Peter Carrescia | 03-02-2011

The CRTC and ‘Cable Cutting’

When Netflix launched in Canada late last year at the great price of $7.99/month I signed up immediately for the trial free month.  The fact that they had the first three seasons of Mad Men as part of the content sealed the deal.  I had been looking to start watching and now was my chance.  With a bit of free time on my hands, I got through the first couple season in 10 days or so.

It was Saturday morning and I was sleeping in after a late night of watching a few more Mad Men episodes when my daughter came into my bedroom.  “Dad, there’s a message from Rogers on the computer.  It says we’ve used up our data limit for the month”.  Until that time, I didn’t even know what my limit was (turns out it’s 60GB).  Well, that was the end of Netflix in my house until the next month!  Once I finished watching Mad Men I cancelled my subscription, having finished my experiment with Over-the-Top (OTT) video and thinking I was close to cutting out cable in my household – at least for the time being.

I was reminded of this the other day with the politicians getting involved in the Usage-Based-Billing decision by the CRTC here in Canada.  Thankfully we’re in election silly pre-season right now and with this issue gaining momentum the government could not ignore it and had to take the unusual step of taking a stand (how far we’ve come that Twitter is how I found out the line in the sand that our PM had drawn).

There was an interesting opinion piece in the Globe and Mail yesterday by Richard French, a professor at University of Ottawa and a past vice-chairman of the CRTC (see Second-guessing the CRTC comes at a price – it’s a great analysis).  In the piece, he makes the legitimate point that “…it seems hard to argue – as those who reject the ruling in effect do – that a minority of customers shouldn’t pay fees that reflect their heavy usage”.

Until my Netflix experience, I would have agreed with Prof. French and really had no sympathy for heavy bandwidth users.  The whole idea of broadband carriers throttling back their networks and charging over certain caps was actually fine with me.  I equated heavy home internet users with likely pirates, stealing music and movies, and felt there was nothing wrong with having those people pay.  And why should the majority of us, who use a small percentage of the total available bandwidth, subsidize the very few who use a lot?

My thinking on this has now evolved.  I don’t have much sympathy for those that use up lots of bandwidth acting as a hub for stolen content, but when bandwidth is increasingly used up on legitimate activity, and in the case of Canada, activity that often is in competition to services your broadband provider offers, there needs to be some protection for the consumer.

In the US, most broadband plans have much higher data caps than in Canada.  For example, Comcast’s is 250Gb and Verizon FIOS has no cap .   Assuming I used 250Gb in a month,  Comcast’s $30/month service would cost over $200 with a comparable Canadian service.  And what that means is that the coming television revolution (Netflix, Hulu, AppleTV, GoogleTV, etc) will never happen in Canada.  Once you factor in service subscription costs and then bandwidth costs, no one could afford to ‘cut the cable’.  Canada’s current television and broadband providers, whom are one and the same, have a vested interest in making sure that revolution doesn’t happen.

This is about much more than just metered Internet use.  This is about creating a competitive television playing field, just as the CRTC did with telecom deregulation years ago.  And as my last post stated (“Your Family Room and Innovation“), I believe firmly that this is the next big technology market.  It would be disappointing if we missed it.

Posted by: Peter Carrescia | 22-11-2010

Your Family Room and Innovation

The other week I found myself in the middle of my twice annual ritual of adjusting the time on the dozen or so clocks throughout my house.  When I got to my TV I had to stop and wonder why I had to bother.  My Sony TV came with network connectivity and was connected to my home network the day I unpackaged it.  Yet despite this built-in “premium” feature, Sony engineers couldn’t be bothered to build in an ability for the TV to set its time from an Internet source.

I guess this wouldn’t be all that bad if I didn’t have to fumble through a half dozen remotes to find the TV remote.  Yes, I have a unified “all-in-one” remote that works great, but doing esoteric things like changing time requires the original remote.  And while ‘all-in-one’ remotes are great, they are still just a hack, shooting IR codes at a myriad of devices and hoping everything stays in sync.  Why can’t all this technology just talk to each other and properly configure itself?  I often joke that if I die prematurely my home theatre will need to be dismantled as it is unlikely my family will know how to turn it on.

One remote I didn’t have to hunt down to adjust the time for was my Rogers set-top box.  It draws its time from the cable network automatically, but it’s about the only thing the set-top box does well.  Why customers have to suffer through an interface that is more dated (and slow) than the Windows 3.0 interface that was introduced to the world over 20 years ago is beyond me.  And the band-aids they’ve layered on over the last year or so make things worse, not better.

And while I’m at it, why do I even need to use an archaic electronic program guide (EPG)?  Why can’t I watch shows on my TV the way I watch video on the Internet?  I search for what I want, I find it, and I watch it when I want to watch it.  The whole concept of the program guide, with ‘channels’ down the left side and ‘time’ across the top goes away with ‘search, find and watch’.  And don’t even get me started on Rogers attempt with ‘Rogers On Demand’.

Of course, as things move towards an ‘on demand’ world, what happens to advertising?  Many, like Rogers and their partners, have taken the particularly blunt approach of forcing me to watch commercials by simply deactivating the ‘fast forward’ button on my remote.  That’s a frustrating approach, particularly when I’ve seen half the show and have to start from the beginning again and amuse myself for 35 minutes while I wait to get to the part I haven’t seen.

If you’re looking for a huge market that is ripe for disruption and new innovative approaches, you don’t have to look much further than your family room.  We’ve all learned to live with design decisions that, while they made sense decades ago when initially made, no longer do.

 

Posted by: Peter Carrescia | 03-11-2010

It’s Good for Customers, Until It Isn’t

I received a number of comments regarding my last post on Apple’s apparent heavy-handed approach to extending song samples to up to 90 seconds. The comments were unanimous that extended sample lengths were good and that consumers wanted it. Frankly, I too prefer longer song lengths!

I think back though on naturally occurring technology monopolies of past (eg. Microsoft Windows) and find that what drove these products to monopoly positions were in fact a maniacal focus on what the customer wanted. The tying of Microsoft Office and Internet Explorer (and other technologies) to Windows were things customers wanted. Most customers wanted similar interfaces, tight integration and standard setup regardless of if you bought a Dell or a Compaq. These were the exact things though that made competitors and partners furious and ultimately claim abusive use of a monopoly position. In fact an integral part of Microsoft’s defense was exactly that – customers were getting exactly what they wanted and quite the opposite from harming them, they were getting benefits.

I do see similarities here. Apple apparently for months tried to negotiate a change to the sample length with publishers but got nowhere. So then right before the Christmas season, Apple unilaterally dictates a change and says "take it, or pull your catalog". Since iTunes now accounts for the majority of music sales, and iPods/iPhone music players dominate the market, a publisher risks cutting off their largest retailer right before a key selling season if they don’t agree.

The unilateral dictating of terms based on what’s best for customers is exactly how it started with Microsoft and its OEM partners. And while it’s legal to do in a competitive market, it’s not in a monopoly.

Apple risks attracting the attention of regulators if they are not careful. The government has eventually interfered with the activities of all other "network-effect" monopolies in the past and it will do so again if necessary.

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