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October 5, 2009

IT history is repeating itself - but it is not a shame

Following a twitter discussion with Tom Wentworth , Kevin Cochrane and Stephane Croisier on the impact of Facebook Connect on Web Content Management, Stephane made following comment, which needs an answer in more than 140 characters.

Facebook Connect is a technology that allows third party web applications to connect and share data with the Facebook social network. It supports authentication, access to user properties like name and birthday, and it allows sharing of application data on Facebook, for example a website could post custom status notices that would appear in my Facebook activity stream as "Lars did xyz on site abc". Jeremiah Owyang called Facebook Connect an example of Social Colonization earlier this year. And while in Jeremiah's description the colonization turns out to the mutual benefit of Facebook and the connecting site, there is still a negative connotation with the term "Colonization", which is shared by many people in the industry, most of them outside Facebook.

The cornerstone of our discussion is that while Facebook Connect is the most popular example for social network interoperability technology, there are numerous other emerging standards and technologies that can be used to create a distributed social network. The most important examples are:
  • RSS /ATOM - a way to exchange data in feeds between applications on the web
  • OpenID - a way to identify yourself to a website using the credentials of another website
  • OAuth - a way to grant an application access to a certain part of your data on a website
  • OpenSocial - a way to exchange data about users between social networks
  • OpenSocial Gadgets - a way to embed small web applications, gadgets into other websites
  • ActivityStreams - a way to share the activity of an user on a social network with other websites
  • DISO - a collection of technologies to create a distributed social network
This open ecosystem allows developers to create distributed social networks without relying on a single centralized "Conquistador" like Facebook who controls data and access to the system. Yet, for now I would recommend website owners to invest resources first into implementing Facebook Connect. The main reasons are: you get access to the largest possible user base, the integration model is well tested and needs no fiddling with multiple, developing technologies and users already know what to expect from a Facebook Connect integration. Once the limitations of the centralized model become obvious, for example because the central hub is unable to scale, loses the trust of users, or benevolence turns into malevolence - then it is time to federate and to invest into open standards and open source.

This pattern can be observed numerous times in technology: a proprietary leader defines the market, fails in an attempt to fully dominate the market and is attacked by other players in the industry striving for standardization and openness. "If you have a problem for a long time, maybe it's not a problem, but a fact". It think this pattern is not a sign of our industries inability to learn, but a result of the basic economies of innovation.
  • Innovation is hard and costly, so you try to keep it for yourself (proprietary)
  • In technology, network effects make successful innovations wildly successful
  • In order to fully monetize the hit innovation you had, you have to keep a close grip to it
This explains why hit innovators are favoring closed solutions: it is the easiest way of getting their investment back. What worked for IBM, worked for Microsoft, worked for Oracle, worked for Apple, worked for Facebook, so why shouldn't it work for your next innovation? In fact, it will work for the innovator, it just won't work for users. Companies do not do the right things all the time, but if you are locked in into a technology, you are betting on your vendor hitting one home run after the other. And this is why users and visionary followers are pushing for openness, standardization and decentralization - another significant effort, but one that requires an existing, proven market to justify the investment in standardization.

The reason why history is repeating itself is simple: we cannot start out with a standardized solution, because we neither know what to standardize nor if it is worth the effort. Once we know, there is an established, proprietary player that is holding to his closed technology.

Filed under  //   apple   diso   facebook   microsoft   oauth   openid   standards  
Posted by Lars Trieloff 

Comments [6]

April 4, 2009

Designing a lock-in effect

Did you know that there is a Beatles song about the Microsoft Windows, Microsoft Office and Apple's iTunes? Of course, there is not, but there is a song about the lock-in effect. The song is called Chains and appeared first on the Please Please Me album. Listen for yourself.

If you do not have the time to watch the video, this is the crux of the lyrics:

Chains, my baby's got me locked up in chains.

And they ain't the kind that you can see.

Whoa, oh, these chains of love got a hold on me, yeah

Software companies love their customers so much that they would like to keep them forever, so they try to lock them in. The best lock-in effect leaves the customer of the software in a situation that keeps uses chains of "the kind that you can [not] see" and make the lock-in appear as "chains of love".

The best time to attempt creating a lock-in effect is when your new product is having maximum market impact and growth. The reason is that at this time you will have most goodwill in the market, so customers and prospects will be uncritical to your attempts of creating a lock-in. Even if the chains are recognized,hey, they are chains of love. The second reason is that with having achieved maximum growth there is still plenty of time for your product to become a cash cow that can subsidize the development of related products that will reinforce and profit from the lock-in effect.

A good example is how Microsoft created its lock-in of the Desktop. After the launch of Windows 95 and NT 4.0 it had overwhelming market acceptance. My father took me, as a boy to a trade show, just to see Bill Gates speaking. And we were not the only fans eager of new Microsoft products. With this momentum, Microsoft could consolidate its offering by combining the Windows operating system with the Microsoft Office productivity suite, with the Exchange groupware server. This combination created a sustainable ecosystem, that customers happily accepted, developers adopted (remember the times when custom business applications were Visual Basic desktop applications) and that allowed Microsoft to conquer adjacent markets such as the Browser market.

The design problem with Microsoft's lock-in is that it is too visible and obvious, which means customers are aware of it, which creates an opportunity for competitors to attack the lock-in and offer "breaking free from the Microsoft lock-in" as an additional value proposition. As a result, Microsoft's ecosystem of connected applications is under market pressure: Firefox is gaining market share on the browser market and has just surpassed Internet Explorer, at least here in Europe. Google (and millions of web developers) are working to make the desktop operating system irrelevant, with Android they are challenging Microsoft's hold on mobile operating systems. With Eclipse developers have an alternative to the Visual Studio brand of software development environments (yes, I am aware, there are other cool open source IDEs, but not a single one has the breadth of Eclipse). Microsoft, noting how competition is starting to pick the locks, is doing its own job to damage its lock-in by offering a web-based version of Microsoft office that teaches customers to accept compromises on the look, feel and functionality of their productivity software, which opens another window of opportunity for competitors.

For a better way to design a lock-in we should not think of the big padlock, but of the thousand lines that are tying down Gulliver. For one, he is being tied down, while sleeping, which means - start the lock-in while nobody, at least not the customer, is watching. Secondly, with thousand lines there is no single line to identify that drives the lock-in, that can be easily attacked.

A good example of this is Apple's iTunes. Apple offers a very comfortable lock-in to its customers to make sure they stay loyal when new competitors emerge. Wether it is a streaming service like Spotify or Amazon's MP3 download service, all of them are unlikely to lure me away from iTunes - and it is not just iTunes, it is the iPhone, that extends the lock-in to the mobile carrier, it is the Airport Express and Apple TV that wire the living room entertainment system, it is the Genius service that gives personalized music recommendations (which are better than Amazon's item-based recommendations), it is the iTunes remote control application for the iPod touch, it is the Bonjour music sharing, it is the locked iPod database, it is the integration with iLife. If one line breaks down, for example DRM in the iTunes store, there are still enough combination points to make the lock-in effective and attractive.

If you have the opportunity to create a lock-in effect, keep these rules in mind:

  1. do it at the right time
  2. make sure nobody is watching
  3. make it attractive to be locked in
  4. keep building integration points
As a customer, keep in mind that a lock-in is not necessarily a bad thing. Vendors create a lock-in, because they do not trust their customers to stay loyal, customers should ask themselves if they trust a vendor's continued ability to innovate and satisfy your needs. The more mutual trust there is, the more attractive a lock-in appears and the less important it becomes.

Filed under  //   amazon   apple   beatles   google   images   lock-in   microsoft   product management   spotify   videos  
Posted by Lars Trieloff 

Comments [0]