Open Social Media is a decade away

Today we wanted to send a video birthday greeting to our eldest, who is far away. We asked our youngest to make it happen (in part because her newer iPhone has 64gb while my two-year-old 16gb is full).

The two of them have in common Snapchat and Instagram; the eldest also has WhatsApp and the youngest has Twitter. Our youngest first considered Snapchat, but that’s temporary and has a 10-second video limit, so instead chose Instagram that has a 15-second limit. They both also have Facebook, but that seems mainly used for relatives and other clueless people to send one-way communications to these teens. They also talk via Skype but (like me) don’t launch it often enough to see text messages.

I use Twitter hourly and Facebook every day or two, while my Instagram and LinkedIn (web page) get launched perhaps once a month. So I went to Facebook to send a birthday greeting to our eldest — as did 11 other people, including my sister — but unlike with my middle-aged friends, did not prompt an ongoing stream of likes and replies.

Clearly there is both a proliferation of competing social media platforms and little or interoperability. Some people do automatic (one-way) feeds using tools like TwitterFeed and Hootsuite, but that doesn’t allow for conversations to take place across social media boundaries.

I am told that at the turn of the (20th) century telephone systems were not fully interoperable, and having a phone in one town meant you couldn’t call another. I wasn’t there and my dad’s gone, so (short of spending an afternoon on Google) I can’t confirm this. But (grabbing The Fall of the Bell System from my bookshelf) it’s clear that by 1913 AT&T had achieved interoperability between its local operating companies and its Long Lines division, allowing transcontinental calls to be made on its system.

From my (aborted) dissertation, I also know that the design points of 1st generation analog cellular systems in the US, Japan and Europe were to be fully interoperable with the PSTN (Public Switched Telephone Network). The US pre-cellular mobile phones of the 1960s required an operator to route calls to the PSTN, but the invention of the microprocessor made it possible for the AT&T’s car phone (and later Motorola handheld phones) to automatically complete calls. When the EU and the CEPT invented GSM —and with it Short Message Service — they made text messaging also interoperable (except with landlines) over the PSTN.

And, of course, fax machines used the PSTN to complete calls, but generally agreed on a series of (ever-improving) transmission standards for the graphical representation of the images sent over those calls. So when the telcos were involved, they grokked interoperability.

A Lesson from E-mail

Perhaps a better — or at least more recent — analogy comes from the proliferation of incompatible e-mail systems prior to the commercial Internet.

Using Google, I found a February 1987 posting I made to the Info-Mac e-mail list. After I quit my job to become a Mac developer but before co-founding Palomar Software, I used this as the signature line

Joel West                            MCI Mail: 282-8879
Western Software Technology, POB 2733, Vista, CA  92083
{cbosgd, ihnp4, pyramid, sdcsvax, ucla-cs} !gould9!joel
joel%gould9.uucp@NOSC.ARPA

In between, I know my various Palomar business cards had e-mail addresses for MCI Mail, AppleLink (later eWorld) and perhaps my AOL account as well. When Apple finally provided full Internet interoperability, it said joelwest@AppleLink.apple.com, while the next business card said joel@palomar.com when we bought our own domain name and locally hosted server.

So there was roughly a 10-15 year period when the proliferation of proprietary e-mail systems meant that two people could have e-mail accounts but not be able to e-mail each other — and (like today’s social media) people might maintain multiple e-mail accounts.

Now, any e-mail user can send to any other. With various MIME and HTML extensions — and dozens of client implementations —  the e-mail may get garbled or unreadable due to mutually incompatible interpretations of the format standards, but that’s a function of commoditized (often free) e-mail clients that don’t reward quality control.

Open Social Media

Will we ever have open social media? That would mean that there was some sort of formal interoperability standard (beyond OpenSocial), that it was implemented by the major platforms and that these implementations include the full functionality of their native platforms — public and private messages, text, images, video, “like” and perhaps even adding friends. (This ignores inherent incompatibilities such as the SnapChat model of disappearing messages).

The business models of these various companies seems to assume (or hope) that we will not, and that they can create stickiness and keep us in their proprietary walled gardens for as many hours/day as possible. This creates winners and losers: I like the idea of LinkedIn for contacts but hate it as a content site, and so only visit it when I’m seriously procrastinating (not Twitter or Facebook or blogging procrastinating) to avoid something I really ought to be doing.

One path forward would be vertical integration, but with one exception that seems a long way off. The exception is Facebook, which owns WhatsApp, and so could make them interoperable at any point.

Microsoft has Skype — but no real social media — but until one of these platforms falters and is available for sale, it will have nothing to integrate. Google still thinks people will someday use Google+ and would probably be blocked anyway by the EU from buying one of the major social media platforms. Apple with iMessage seems to want to add convenient, easy-to-use clients on top of the existing (commodity) addressing and delivery systems like text messaging, rather than build a proprietary communications platform and try to gain share against the Silicon Valley upstarts.

The 10-15 year time horizon could apply here as everyone copies each other’s features and (like email) social media platform become passé and readers move on to something else. Twitter launched in 2006, WhatsApp in 2009, and Snapchat in 2011. So realistically, barring some blockbuster acquisition there’s not much hope for the rest of the 2010s, but the 2020s seem likely to bring improved interoperability in this segment.

Facebook as a 'public' forum

A big news item this week in SoCal (if not nationwide) has been the military trial of the Camp Pendleton Marine who publicly criticized the president. A military hearing Friday ruled against Sgt. Gary Stein, 26, of Temecula, self-proclaimed leader of the “Armed Forces Tea Party.”

I wanted to root for Sgt. Stein, given my belief in free speech and my particular revulsion at deliberate efforts in 2000 to invalidate the votes of overseas military. At the same time, a civilian-controlled military (as the US has always had) must have certain lines that are not crossed.

The 2008 regulations for military conduct seem relatively fair. For example,

4.1.1.6. Write a letter to the editor of a newspaper expressing the member’s personal views on public issues or political candidates, if such action is not part of an organized letter- writing campaign or a solicitation of votes for or against a political party or partisan political cause or candidate. If the letter identifies the member as on active duty (or if the member is otherwise reasonably identifiable as a member of the Armed Forces), the letter should clearly state that the views expressed are those of the individual only and not those of the Department of Defense...
4.1.1.7. Make monetary contributions to a political organization, party, or committee favoring a particular candidate or slate of candidates, subject to … applicable law.
4.1.1.8. Display a political bumper sticker on the member’s private vehicle

The restrictions for active duty military mainly ban “partisan” activity. Clearly, arguing for or against a president nominated by a political party would count. (Does that mean it would have been ok to criticize a President Perot? It would have been so easy…)

I don’t know all the facts of the case, including what he did and what warnings he received before the prosecution began. For example, many of the Tea Party organizations were organized as non-profits, advocated for things like reduced taxation and spending, but never endorsed (or attacked) specific candidates. I don’t know if Stein crossed that line, but the penalty — loss of his job, an other-than-honorable discharge, loss of post-separation benefits — seem harsh by civilian standards. (While his attorneys might argue for a “general” discharge, apparently this would not save his GI Bill benefits).

Still, one open question is whether certain forms of online participation count as public advocacy. (Again, I don’t know what Stein did — so this might not apply in his case). The Marine Corps Times — picked up by USA Today — reported that an attorney for the commandant of the Marine Corps is asking the DoD to clarify policies for “social media” in an updated version of the regulations.

Let’s get real here: we’re not talking about “social media” — we’re talking Facebook. An open Twitter stream is the same as posting to a web page or shouting on a rooftop, and today “Google+” remains a negligible portion of the world’s social media traffic (beyond Google employees). So for today, this is really (like so many other things) a Facebook issue.

I have 82 Facebook friends. My rule for Facebook is that I wouldn’t friend someone who I haven’t (or wouldn’t) invite into my home, or vice versa. (I generally add co-authors because these tend to be the most durable friendships that academics make.) My webpage is locked down (like those for the rest of our household) so that you don’t see much on my page unless I’m your friend.

So if I post something on Facebook that is only seen by my Facebook friends, is that really public advocacy? Yes, 82 is more than 5-10 friends on a night out, but it still seems analogous to talking in a bar or a poker party among a limited number of close friends. (Or certainly the annual Christmas letter). And is it right (or realistic) to ask our Armed Forces to give up having opinions or sharing them privately with their friends?

I’m not saying that such a policy would help Sgt. Stein. Although he doesn’t identify himself as a military member, it doesn’t appear that Gary Stein has limited his Facebook thoughts to only close friends, or his political commentary to non-partisan advocacy.

Unfortunately, bad facts make bad law: if we had a less polarizing president, it might be possible to debate the best policy without having the opinions so intimately tied to one controversial serviceman and his political criticisms. However, we haven’t had such a president this century — and maybe not since the 1950s — so that window may not open any time in the foreseeable future.

First shoe on Motorola's Android strategy

Motorola today announced their first Android phone, to be available in time for Christmas on the Android T-Mobile network. As a piece of hardware, the Motorola Cliq is a touchscreen with slide-out keyboard. This is the same phone as the previous leaked Motorola “Morrison” model.

Motorola’s main claim to fame (other than the brand and distribution) is Motoblur, a new skin that integrates social networks, contact management and email similar to Synergy under Palm webOS.

There are two curious things about the announcement. The first is starting with T-Mobile, the smallest and least important of the major US operators, and the one that has all the installed based of Android phones. Aren’t there Sprint, Verizon or AT&T users that also want Android? (Supposedly the Motorola Sholes will be available on Android later this year).

The second curious thing is Motoblur, which is not quite a GUI but more than an application. Obviously it’s an attempt to create differentiation within Android (and perhaps fix some of its usability problems). Is it also an attempt to create switching costs between Motorola and other Android handset vendors? If not, then when a user drops his Cliq in the pool he’s just as likely to buy an HTC or Samsung as a Motorola.

If Motoblur is about switching costs, then Motorola will have to commit to offering a family of Motoblur phones over the next few years -- and that Motorola hopes that such phones will be a big part of its business.

This sort of semi-platform strategy strikes me as neither fish nor fowl. Motorola doesn’t have its own smartphone platform, but it wants some of the benefits of doing so. Sony Ericsson and Nokia tried this with custom GUIs on Symbian and eventually gave up, although the cost of maintaining a full GUI would have to be more than maintaining what appears to be a grouping of applications (or an integrated app suite) on Motoblur.

Interpreting the MySpace layoffs

Tuesday, Fox subsidiary MySpace announced it was laying off 420 of its 1,420 employees. It’s hard to tell from outside what this means, and it’s in fact likely that today even the most knowledgeable insiders can’t say for sure what the future brings.

Here are four possible explanations.

1. MySpace was fat, dumb and happy. This sentence appeared in dozens of news accounts:

“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” MySpace CEO Owen Van Natta said in a statement.

Van Natta was only hired in April and previously was a top exec at Facebook. Perhaps Van Natta was right: late last year, the larger Facebook had an estimated 700 employees (according to Reuters via Wikipedia).

2. Fox has botched the acquisition. MySpace was once dominant, but being a subsidiary of big old media has not helped MySpace cope with increasing competition from its Web 2.0 rivals (especially Facebook). Fox Interactive Media (the division created four years ago to manage all the parent company’s new media efforts) is also in trouble and facing its own layoffs.

3. MySpace is in trouble. Its subscriber base is flat, while Facebook has been rapidly growing. Facebook took #1 worldwide last year, and passed MySpace in the US last month. Meanwhile, Twitter is also gaining on MySpace.

Network effects business rewards those who get ahead, and right now it’s hard to see how MySpace will dislodge Facebook. Is it consigned to be a permanent #2 (or even 2nd tier) ala Yahoo or HP workstations or Sony Ericsson or Motorola cell phones

On the other hand, MySpace could find a nice way to segment its audience to meet needs not being met by Facebook. The latter has found some clever ways to apply its technology, and so far LinkedIn has a distinct (even if overlapping) value proposition with Facebook. Apple has found its niche PC business to be a profitable one, and has used it to support its market leading music distribution system. (MySpace is the only one of the big 3 with a full-fledged media company behind it).

4. It’s symptomatic of broader Web 2.0 problems. A chronic problem for Web 2.0 companies (like many Web 1.0 companies) has been winning users but not revenues. MySpace was among a list of 11 Web 2.0 companies that CNET last year predicted were facing trouble. (The forecast troubles also included Twitter but not Facebook).

My crystal ball doesn’t say whether MySpace can turn it around, or whether these troubles extend to Facebook and Twitter. Right now, I feel like the Web 1.0 skeptics did in 1999: which would have caused me to reject spectacular failures like Webvan and Pets.com, but also (apparently) lasting companies like Google and Amazon.

Seven Facebook lies

Newsweek writer Raina Kelley offers an amusing critique of the Facebook generation that she calls “Facebook made me do it: Seven lies we tell ourselves about social networking”. Her list

1. I Only Friend People I Really Know
2. Facebook Made Me Do It
3. Wall-to-Wall Flirting Isn't Cheating
4. I Use Facebook to Keep in Touch With People
5. I'm Soooo Over Facebook
6. And I am Soooo Not Competitive
7. Facebook is My Friend

Despite this advice, teens show little evidence of learning from the many well-publicized mistakes of their peers. I am not looking forward to the day I have to deal with this as a father — about a decade ahead of Ms. Kelley.

Interestingly, her Facebook page seems to be gone but her LinkedIn page is still there, albeit quiescent. She also does not appear to be among the few dozen Facebook members (profiled in the WSJ Friday) who have joined the largest of several Facebook groups for those giving up Facebook for Lent.

Billion-dollar Web 2.0 decline

Facebook, valued at $15 billion at the time of a $240m investment by Microsoft in October 2007, is now worth only $3.7b according to internal company documents discovered by AP in a recent lawsuit. It‘s possible that Mark Zuckerberg is no longer a billionaire.

Some had expressed doubts about the initial valuation. In any event, it’s only funny money as there is no liquidity until an IPO, and Facebook held out too long to pursue that opportunity any time soon. Given how conservative M&A has become, and difficult it’s proven for Web 2.0 startups to monetize their networks, it’s hard to see how they’ll again sustain a $10b market cap.

Facebook don't need no stinkin' business model

Interviewed by Germany’s leading newspaper, Facebook CEO and founder Mark Zuckerberg explains why his current lack of a business model is no big deal:

…what every great internet company has done is to figure out a way to make money that has to match to what they are doing on the site. I don't think social networks can be monetized in the same way that search did. But on both sites people find information valuable. I'm pretty sure that we will find an analogous business model. But we are experimenting already. One group is very focused on targeting; another part is focused on social recommendation from your friends. In three years from now we have to figure out what the optimum model is. But that is not our primary focus today.

I loved the comments, including this one (even though it’s an obvious shill for selling a $400 report);

In the oblivious parallel universe, growth has nothing to do with revenues, and so it is for Mark Zuckerberg, CEO of Facebook,

Facebook is the quintessential Web 2.0 startup, and thus epitomizes the indifference of Web 2.0 startups to making money.

Hat tip: Good Morning Silicon Valley, Oct. 9, 2008

Profitable Christmas PNE strategies

Positive network effects are normally associated with platform strategies such as those for videogame consoles and PCs, as outlined by the book Information Rules. In the last few years, new PNE strategies have been attempted with social networking websites, but many of these sites are still using unproven (if not dubious) revenue models.

At tonight’s first round of Christmas gift exchange, I became better acquainted with two new business models that seem to combine network effects and direct revenue models in novel (and promising) ways.

The first example was the JibJab animated cartoon site, which is best known for a series of political satires such as “This Land” played on the Tonight Show during the 2004 presidential campaign. The company’s claim to fame is superimposing facial pictures on top of cartoons and then tilting them back and forth to the music.

Now the company has branched out into personalized video greeting cards (not its first attempt to monetize its brand and technology). My sister sent a JibJab Christmas card in which her family’s pictures were superimposed on a movie of Santa’s elves goofing off at work. It turns out my teenage niece got a card from a friend, sent her own card to her friends, and then her mom said “let’s send this to our friends.” Two interesting freemium wrinkles are that some cards are free, and you start out with an initial credit, so it’s easy to get started (as my niece did) before you realize this will end up costing real money (although a lot less money than 20th century technologies like sending Kodak photo cards).

So the more people who send cards to their friends, the more potential customers JibJab gets, and each one gets lured in with a freemium model. My only questions is that once everyone’s doing it (as with the Blue Mountain ECards) the novelty wear off?

The other new business model is Webkinz, which for $14 gives you a small stuffed animal combined with a paid social networking game site called KinzChat. As with my niece (same niece) and nephew’s Wii, the Webkinz was a hot product in short supply this Christmas shopping season. Participation in the fad has even helped retailers carrying the product.

So Webkinz has to build a website with games, login tools, age-appropriate content etc., and then they get to command a high gross margin ($5? $10 per toy). The KinzChat logon only lasts for a year, and then the parents must go buy another premium-priced stuffed animal or junior will be kicked off the website.

No clue as to how long this fad will last — Beenie Babies, Cabbage Patch Dolls, pet rocks, and other similar fads eventually faded away. But it seems safe to predict that Webkinz will spawn a whole raft of online re-interpretations of low-tech toys.

It's the APIs, stupid!

One way to make lots of money is to create and control a popular platform. But sometimes it's possible to control a platform without creating it, often by creating an abstraction layer to unify previously disparate APIs.

Such is Google's soon-to-be-announced "Open Social" initiative, covered today by Business Week, O'Reilly, Wired, and the WSJ.

The idea that the Google APIs will provide commonality (and thus direct network effects) by combining a range of 2nd tier social networking sites, including Friendster, LinkedIn and Google's own Orkut. Noticeably absent are the US market leaders, MySpace and Facebook. (This confirms the point I made a few years back that shared or common APIs are always a strategy of losers trying to catch winners).

As Business Week reported:

If the plan is successful, Google could bring its leverage to bear on the social networking market and potentially slow the momentum of high-flying Facebook. "This is an open version of what Facebook has done," says Marc Andreessen, a co-founder of Ning, which provides tools for building social networks. Andreessen was the founder of Netscape Communications in the '90s. ...

For Google, OpenSocial is the first step in a plan to hit back at Facebook and Google's chief rival, Microsoft (MSFT), which on Oct. 25 announced a $240 million investment in Facebook (BusinessWeek.com, 10/25/07), beating out Google for a stake in the fast-growing company, now worth an estimated $15 billion.

Today was also the day that Google's march to world domination reached another milestone with a $700+ stock price and a $220 billion market cap that left America's largest banks in the rear view mirror. Only four US companies have a larger market cap: Exxon Mobile, GE, Microsoft and AT&T.

A pretty good week for a company that still has yet to announce its major platform initiative of 2007 (the gPhone).

Will mobility revolutionize Web 2.0?

On Monday, I moderated a panel at the Smartphone Summit, held in San Francisco as part of this week's Wireless IT & Entertainment conference. The main conference is organized by the CTIA (the main US cell phone trade association), while Monday's "Summit" was privately organized and heavily sponsored by leading mobile phone companies (notably Symbian).

The session I moderated was called "Smartphone Interactivity (Social Networking & Personal Communications)," one of two parallel sessions that closed out the summit. The claim of the program was that:

In today's world, MySpace, YouTube, Facebook, and many other social networking experiences have made their way into everyday life around the globe. The next natural extension of the social interactive experience is to the wireless smartphone device. With the capability to run audio and video along with GPS locating, there is no limit to the type of social interactive applications that could be deployed over smart mobile devices. Join the pioneers taking social networking wireless for an in-depth look at the implications of this technology, including how it may be monetized for ROI of those enabling these experiences, as well as security of the experience.

WIth only a few minutes to present, I focused on two goals. One was providing a preview of the study by my graduate students (Eduardo Sanchez and German Benitez) who are doing their theses on social media business models for the mobile phone industry. The other was to provide an overview of what's going on in the industry, based on what I know from working with Eduardo and German, reading the trade journals/websites and going to industry events (particularly last month's Mobile Monday event).

In my slides, I joked that the buzzwords "Social networking" or "social media" or "Web 2.0" seem to be used interchangeably, so it was a relief to hear that a morning panel had been unable to agree on a definition of "Web 2.0." (Tim O'Reilly claims to have invented the term "Web 2.0," but people seem to use his buzzword more than his definition.

I saw people taking pictures of my slides with a cameraphone (you can download them free from my website). I didn't think the slides were particularly insightful because I was rushed between two conferences and a backlog of grading (which I've been working to clear today).

I had a chance to attend a few earlier sessions, and what I heard confirmed most of what I'd prepared. "Social networking" (or "social media" or "Web 2.0") business models seem to be driven by two major trends. One is user-generated content (like this blog), and the other is taking advantage of the value created by direct network effects, i.e. the N x (N-1) possible linkages of a population of N users. (This is called Metcalfe's Law, but researchers last year showed that it grossly overstates the value of a network due to the long-known distribution of value via Zipf's law. In fact, this power law describes many of the interactions on the Internet.)

Obviously the strongest possible business models are those that combine both. While both Facebook and MySpace are about allowing friends to stay in touch, MySpace also plays a major role in spreading word-of-mouth for members' favorite music. (Jason Ling of MySpace was up from the fires in Los Angeles to speak on the panel, but his prepared slides were left behind when Delta lost his luggage.) However, in visiting a booth at the trade show Tuesday, someone showing Nokia's download site there is a difference between organizing around social networks like Facebook (I want to see people who I know) and around content as with Flickr or YouTube (I want to see a video of the latest politician's gaffe).

One of the unresolved questions regarding mobile social media is whether there will be mobile-only and PC-only networks, or whether the successful sites will support both. (I almost said "platform agnostic," but with 500 different phones out there, developers of mobile applications have to do a lot of work to be platform agnostic just within the mobile space.) Of course, it takes considerable work to turn a PC website into a good cellphone website, which is why everyone was excited to see how well Google Maps works on the iPhone.

I think such dual PC/mobile content drives a related trend that I picked up on at the Summit, which is the rising use of web-based applications. One reason is that developers need to span not only the PC and phones, but also the various platforms within each. The other reason for web-based apps is that it's finally practical: the iPhone has one of the first decent phone-based browsers, but Nokia (and others) are going to make sure that it's not the last.

This led to the only heated argument on our panel, in which Faraz Hoodbhoy (CEO of PixSense) said I was wrong. Perhaps I didn't make myself clear, or he wasn't listening clearly, as I never said web apps are the be-all or end-all. My point about mobile web apps is that they're a least common denominator which are getting more practical and will be good enough for many of the Google-, Yahoo- and MySpace-type applications that are already designed for them.

There are plenty of apps that require offline access, or low latency, or persistence, for which a native app will be a much better solution. There's many things you can do on the native Google Earth application that you can't do on Google Maps. I don't know what the relative mix of the two approaches will be -- and even web apps have to be tuned for the different form factors -- but I think mobile web apps are here to stay.

Seeking world domination of social media

In researching PCs, cell phones, and other consumer products, I was struck by how the brands that are dominant in one country are not in another. The story usually wasn’t very complex, reflecting a domestic firm that succeeded in its home market but not anywhere else: Fujitsu was the dominant PC seller in Japan, HP & Dell in the US, Siemens in Germany, Acer in Tawian, Lenovo (née Legend) in China, etc.

There were a few brands that were able to become truly global by cracking some (thought not all) overseas markets, of which Nokia, Motorola and Samsung cell phones would be good examples. But it didn’t really match the pattern of IBM in mainframes or Boeing vs. Airbus in commercial airliners, where the same firms sold the world over. Some of it must have to do with economies of scale: the up front R&D costs for an A380 or 787 are unparalleled in any industry, whereas any teenager in a garage can assemble a Wintel-compatible desktop PC.

ValleyWag has posted a global map of the dominant social networking (aka social media) sites by major country. So it’s myspace in the US, facebook in the UK and Canada, Orkut in India and Brazil, friendster in Southeast Asia and LiveJournal in Russia. Yes, deliberate efforts to create a national champion have succeeded in France, Germany and Korea, but otherwise the story seems much more subtle than that.


At first glance, the social media are less nation- or language-bound than the old media (TV, records, newspaper, books, magazines). For one-to-many distributed content, you need long roots in a country to understand their tastes and generate an attractive assortment that consumers will like.

However, if you are Six Apart of San Francisco — makers of Movable Type blogging software and operator of the TypePad and LiveJournal services — you need to translate your software into Russian and then let Russian users generate their own content. Network effects take off after that.

I’m sure the story is more complex than the previous paragraph might imply. Some of my academic colleagues who are opportunistic econometricians (known as “data miners” in our trade) will want to study the social networking quasi-experiment — using factors such as market entry timing, localization (translation) and existing competitors — to systematically explain the success of various social media competitors.

Technorati Tags: business models, publishing, social networking, Web 2.0

Nokia vs. Yahoo smackdown!

Yahoo bought the photo sharing service Flickr in 2005. This morning came the news that Nokia bought Twango, founded by Microsoft refugees in Redmond. Telecom blogger Om Malik calls Twang “a combo of YouTube, Flickr, Shutterfly, Photobucket and Xdrive.”

There are some odd aspects to this. #1 of course is that Nokia supports Flickr on its phones, and in fact Flickr made Nokia S60 phones the centerpiece of its ZoneTag location-aware photo sharing prototype (including a very recent update to support some S60 3rd Edition phones).

The 2nd odd thing is that Nokia is buying a content sharing service, when its biggest customers are mobile phone operators that see themselves as being in the content service business. Does this presage a broader push into consumer services — head to head with the operators as well as Internet behemoths like Google and Yahoo? I realize Nokia expects to be beholden to no one, but in Strategy 101 we teach that moving outside one’s competencies and competing with major customers are two very bad (and common) outcomes of vertical integration.

Caroline McCarthy of CNET says it best:

It's unlikely that this acquisition will affect a whole lot of people who aren't Nokia customers (and it's not yet very clear as to how Twango itself will change) but it'll be interesting to see how this affects mobile media-sharing.

Technorati Tags: diversification, Nokia, social networking, vertical integration, Yahoo

Competition vs. network effects

On Saturday, I got an invitation to join Doostang. My initial impression was that it was something like LinkedIn, to which I already belong.

After reading a little further — including a semi-official self-promotion — I concluded that Doostang is something like LinkedIn, except later and smaller. (They would say “more exclusive”). A little googl’ing showed that blogger Matt Huggins did a great job (last week, as it turned out) comparing LinkedIn, Orkut, Doostang and other similar business/career networking sites.

I like competition in dot-com commodities. I have logons for Travelocity, Orbitz and even Expedia; if I don’t like the Amazon price, I check B&N. It goes without saying that I check multiple news sites.

But, as I concluded in my dissertation, Herb Simon is right when he says humans make decisions based on bounded rationality. (This is a bit of an obvious conclusion since he won the Nobel Prize for this finding). In particular, I found that computer users satisfice rather than optimize on their computer choices: if a software package is good enough, they don’t bother to look for the best possible one. And if they have enough software, they don’t look for more software just because it’s there. (Games or movies with novelty-seeking would have a different dynamic).

So why would I want Doostang if I already have LinkedIn? I already turn down Plaxo requests for contact maintenance because I use LinkedIn for that purpose instead. Although he doesn’t list his sources, Huggins estimates LinkedIn at 11 million members and Doostang at 125,000; since the value of being a member of a network grows with the size of the network, LinkedIn is potentially 90x more valuable.

Various sites say Doostang has been around since 2005, but this week is my first invitation. So right now it doesn’t look all that valuable. And for me LinkedIn is more a way to stay in touch with friends than pursue career opportunities, since job mobility in academia is roughly one new job every 10-40 years.

Technorati Tags: Linkedin, social networking