Flixlab has developed a cloud-based social video platform that enables consumers to easily share raw assets and create polished movies from the video clips and pictures on their smartphones, and their friends’ smartphones, and upload them to social networks.
“I don’t want good students. I don’t want Ivy League kids. I don’t want the typical rank and file that go off to IBM or get pulled into Microsoft and Google because they got an internship via their career center.
I want kids that spent their time doing things that live and breathe algorithms. I want the students that enjoy programming competitions and breaking into each other’s computers. I want the kids that cracked a copy of Photoshop not just because it was cheaper than buying it – but also because it was fun.
I don’t want computer nerds or even software engineers. I want hackers.”
These were the words from my friend Jen, a recruiter at a very-well funded startup in Silicon Valley. Jen’s comment highlights a growing trend in Silicon Valley – the popular embrace of the hacker in establishing and maintaining a culture of innovation.
Last year one of my friends quoted something from Twitter that has had my noodle cooking for a while now:
The early 2000’s have not been kind to Microsoft. Windows Vista was met with dismay upon release, despite a variety of technology enhancements over Windows XP. Arch-rival Apple had gone from near bankruptcy to titan with the iPod and a refresh of both its Mac hardware line and operating system. With its new muscle, the Cupertino-based firm has exacted a serious toll on Redmond’s annual revenues across the consumer sector in the past decade.
Google’s rise to power and the introduction of open source as an enterprise standard has also bloodied Microsoft. In addition to providing Redmond with a new major threat in a variety of software markets, the blossoming of Google has helped to propel the parallel rise of open source software in enterprise deployments. No longer was running an expensive Windows Server with SQL, and IIS the norm. The LAMP (Linux Apache MySQL PHP) stack emerged and eliminated Microsoft’s foothold in the web server market – a paradigm shift propelled by competitors Oracle and Google.
Even worse Microsoft was no longer cool. True – Apple’s artistic flair and Jobs’ beatnick style helped to always make the company the more hip alternative. But Microsoft always remained easily within the top three of in-demand tech companies to either intern or start ones’ career in. Google and Post-Google Silicon Valley firms like Facebook have largely usurped Redmond as the fun place to be for new engineers, jeopardizing Microsoft’s position in the eyes of young hacker talent.
This is a very dangerous proposition for Redmond. If Generation Y decides to go to Microsoft’s competition instead, innovation for the next twenty years in computing will go with them.
Even in the first strokes of this new decade though, it’s clear that there’s a change in the wind coming from the cold north of Seattle. Post-Gates Microsoft has emerged swinging hard, wielding an impressive value proposition to consumers and young job-seeking engineers. Truly, winter is coming. Redmond is striking back.
While Apple certainly commands a significant control of the consumer electronics and ultra-mobile computing space, and both Apple and Google remain the dominant players of the skyrocketing mobile phone market in the United States, Microsoft remains strong in its core competencies and is gaining fast in the mobile OS sector. Windows 7 is considered a success at 250 million units sold as of Q4 2010. Windows Phone 7, Microsoft’s late entry into the mobile OS market, is gaining remarkable steam on Android and iOS and expected to supplant RIM’s OS in market share by the end of 2012. Microsoft Office remains the dominant Office suite despite a variety of (even free) alternatives, and Redmond remains an exciting and fun place to start one’s journey into technology despite heavy competition.
So what happened? How has Microsoft been able to reverse their fortune and strike back at their competition in just three years?
They refreshed their brand and technology strategy from the inside out. In effect, Microsoft is rebuilding the death star we all saw in the 90’s. Only this time it’s bigger, stronger, more popular, and minimizes the number of catastrophically explosive exhaust ports.
Microsoft has started to recover its momentum in three ways:
Beauty – UX/HCI
Much of Apple’s rise to power is arguably the result of their competitive advantage in industrial design. The iPod, the Macbook, and even OSX are all cool because they provide an amazing user experience. In contrast, Windows XP was – while ubiquitous – boring. Early 2000’s and 90’s desktop PC’s were beige monoliths that did little to defeat Apple’s portrayal of the PC industry in their famous 1984 ad. Even when competitors began to release MP3 players with similar functionality to the iPod that were more friendly to Windows, they were quickly discarded in favor of the more beautifully functional Apple alternative. Microsoft addressed this need by pushing their research initiatives towards the ever-important and nascent fields of UX (user experience design) and HCI (Human Computer Interaction). Much of this was the result of them hiring Chief Scientist Bill Buxton, an eccentric computer scientist cum industrial designer who helped the firm revolutionize its approach to how the company’s products interact with the user.
Examples of Microsoft’s new emphasis on UX design can be seen in the Zune and Windows 7/Windows Vista’s Aero interface.While Apple and Google continue to lead at the front by having first-mover advantage with technology like mutlitouch and instant-boot technology, Microsoft’s investments have them hot on their trail – and in some cases even superior. The Xbox 360, Windows 7, and Windows Phone 7 showcase exemplary UX polish that’s accentuated by a fluent and inarguably beautiful symphony of typography, solid realization of core design fundamentals, and functionality. This has allowed them to close the gap with OSX in operating system UX, and even enabled the company to make their late entrance into the mobile phone market a disruptive one.
Popularity – Entice the Resource Market
Being a college programmer is a bit of a mixed bag. Even though you’re an invaluable resource to large companies because of your fresh ideas and wide-eyed wonder, your lack of experience with the development of a company’s technology is a detriment.This makes introducing development experience core to a company’s product development key for major tech firms, and explains why firms like IBM and Google spend considerable sums of money in contributing research and technology to major tech schools in order to help control the curriculum of computer science majors.
Microsoft realized that their traditional approach of “being the only game in town” was slipping with the rise of open source languages and OS’s like Java and Linux. Furthermore, by not being beautiful, late ’90’s/early 2000’s MSFT was even less incentivizing college students to invest time in learning proliferating core Microsoft technologies like the early .NET framework and the Windows API. Microsoft has since rolled out a series of programs meant to win back Generation Y.
Addressing the issue of cost, Microsoft created the MSDNAA (Microsoft Developer Network Academic Alliance). This allowed vetted tech schools to provide free versions of Windows, SQL server, and development tools to college students. The MSDNAA allowed Microsoft to better compete with free open source software, and trumped expensive student alternatives within Apple that required college students to purchase membership in Apple’s expensive developer program.
Addressing the issue of popularity, Microsoft created the MSP (Micrsoft Student Partner) Program and Imagine Cup. MSP’s are paid Microsoft developer evangelists recruited out of universities to popularize the brand. Soon MSP-run Microsoft events became ubiquitous at many key campuses in the United States, with the attraction of free Xbox 360s and video games helping to add to the brand’s appeal. Imagine Cup, Microsoft’s humanitarian invention competition, allowed student inventors a paid outlet to compete for seed funding for a socially conscious projects using Redmond’s technology.
All of these measures have been met with wide appeal, and the brand’s image continues to improve with this core audience.
Muscle – Capitalizing off Competitive Advantage
While in decline, Microsoft was far from dead in the ground. The company’s rebound can also be attributed to strategically using more popular aspects of their brand to push the company’s development initiatives.A good example of this is their use of the Xbox 360. The Xbox brand has been a strong player in the video game console space since 2001. Modern development for the Xbox is largely done in the XNA Framework, which uses .NET. This ensures that game developers wishing to release on the Xbox need to use .NET, and further popularizes the .NET suite (particularly C#) via complementary demand.
Microsoft may not be the coolest game in town. But it’s certainly not dying anymore, and companies like RIM – and even Apple and Google – need to realize that Redmond is coming back with a vengeance.
Cue the Imperial March theme.
SF New Tech Contributor Andrew “Andy” Manoske is a PM by day, hacker by night, and sometimes in the evening he fights crime. He currently serves as a product manager at NetApp – the youngest in the company’s history – and previously held technical positions at SAP, Microsoft, and Electronic Arts. He received his Bachelors of Arts in Economics and Computer Science from San Jose State University in 2010, and was a finalist in Microsoft’s Imagine Cup competition and the Silicon Valley Neat Ideas Fair.
Twitter: @a2d2 Website: http://www.zomghacks.net
Apple’s new App store for Mac OSX systems will be opening up on January 6th, 2011 according to a post on San Jose Mercury News. This will allow for OSX users to install programs from iTunes similar to how apps are searched and installed from the iPhone store. Also, developers for OSX applications will be able to use iTunes to deploy and sell their applications.
In addition to this, Apple has published final details of the pricing scheme for developers. Similar to the current pricing structure for the iPhone, the Cupertino-based company will take a 70% share of all revenue from all paid desktop apps sold over the Mac App Store. 30% will go to the developers. Free apps will continue to be free to deploy using the Mac App Store.
Currently, Apple has still not yet released any implementation details about changes to their OSX SDK.
Apple’s use of iTunes as a program and package management solution has dramatic consequences for both developers and users of OSX applications. Deploying applications over iTunes has the potential to dramatically decrease the time to develop and sell an OSX application.
It remains to be seen how the development community will react to Apple’s pricing scheme, or how Google or Microsoft will respond to this development. For more on that, check out my previous post – Economics, Strategy, and World Domination – What the New Mac App Store Means to Apple.
(photo credit: philipp Klinger)
[Editor’s Note: SF New Tech welcomes contributing writer Andy Manoske. Andrew is a product manager by day, hacker by night, and sometimes in the evening he fights crime. He enjoys writing about economics, computer science and software, and all of the crazy stuff that happens when you mix them together. On the Web . On LinkedIn ]
On October 20th Apple unveiled the details behind Lion (10.7), the newest iteration of the OSX operating system. While Lion adds a variety of feature enhancements for their user interface with Mission Control – a tool designed to manage the wealth of applications your average user opens in a given session – most of the excitement of this release centers around the addition of PC applications to the app store.
The new app store brings the simplicity of installing iPhone Apps to Mac OSX. No more Googling for hours or mounting a .DMG file and dragging icons into your Applications folder. With a few searches and a click, Lion users can quickly find and install programs with the ease of installing a mobile app.
While this may be a big step forward in allowing users to get away from the pain and hassles of finding and installing software, this is also a strategic boon to Apple. Have no doubts: while built to improve the experience of OSX users, the app store is specially designed to better arm Apple in their siege on the market for personal computers.
Developers Deliver the Value
Apple knows just how important it is to have the development community on your side from their experience with the iPhone. The iPhone’s rise to becoming the must-have smartphone is more than simply a result of clever industrial design and exciting advertisement. The luxurious and iconic iPhone user experience is buoyed by its application library just as much as it is by marketing and product placement. A wealth of applications that do everything from helping users manage their bank accounts remotely to letting them know where’s the best place to get drinks nearby adds incredible value and utility to the device. Computers are no different: PC users derive value from applications they can use on their computer, not simply the hardware itself.
For the developer then the objective is to build an application as fast as possible while minimizing the time to bring it to market – a special type of problem in economics known as constrained optimization.
Developing desktop applications that would be deployed on the app store handles this constrained optimization problem neatly.
Software developed and deployed on the app store would easily be searchable by every Lion user worldwide. Assuming a developer’s program is appealing, this increases the probability that someone will use it. It will be easier to find and there will be more people browsing through the library of apps. As the probability increases of someone using their application, a developer can expect more people to install and run their app.
The app store also would minimize the amount of time necessary to deploy an application by doing away with the nastiness of handling dependencies and creating installers. As a developer, simply hacking up an app that compiles from code and runs nicely isn’t enough. You have to write an installer that handles placing files on the user’s computer in an orderly fashion while simultaneously ensuring that all of the libraries and tools necessary to run the program are there. This is a huge hassle for large applications that support different computers or types of hardware.
With the app store, all of this would be handled for the developer. If you build an application tailored for the OSX app store, handling dependencies and writing installers is all done for you by Apple. Much of the heavy lifting around supporting the various types of OSX are done automatically, and you would only have to support one type of install process (versus one for every major and minor iteration of OSX). This saves your average developer a ton of time and stress in deploying and maintaining an application, consequently making it more appealing to create programs for OSX.
Using the app store also has ramifications on the delivery model of software. Dealing with documentation is a much easier affair, and deploying systems to a wide audience without the need to master a series of disks or other physical media saves both time and money for developers. These gains are especially important for developers looking to scale: logistical issues with packaging and shipping often stymie lean, high growth companies like tech startups.
Complementary Demand to Keep Macs Relevant
Apple’s attempt to appeal to consumers with an “easy to search and install” repository of programs is clearly built around the idea of complementary demand – the economic principle of two products having a symbiotic relationship. Much like how the demand for ketchup is affected by the demand for french fries (if more people want fries they will probably want more ketchup to go with it), the demand for a particular type of personal computer is affected by the demand for the applications on it. If Apple can make it easier for people to install programs, this will increase the demand for said programs because the time opportunity cost (e.g.: how much I “pay” in time spent doing something) of installing it will decrease. This increase in demand for OSX-specific programs will increase demand for Apple PCs like the Macbook Pro and the iMac, increasing revenue for Apple accordingly.
If the Mac store catches on, it’s likely Apple would levy some sort of fee on developers deploying applications on it and derive some measure of revenue from there too. Traditionally this isn’t a huge source of revenue for Cupertino. However, that may change.
Apple currently takes a 30% cut from developers in the revenue of each unit sold and charges $99 annually to submit apps to the app store. This might change with the new app store. With the higher per-unit cost of software – Photoshop tends to be more expensive than your average Mafia Wars clone – a 30% per unit cut could noticeably impact Apple’s profits. Apple has to be very careful in how they factor for this new market though, as the marginal costs of producing complex software suites like Adobe CS5 are much higher than most mobile apps. With a higher marginal cost, the profit margins per unit tend to be lower. Apple risks driving large vendors away if they accidentally cut too deep into their software’s revenue.
Apple’s strategy for making it more attractive to build programs for desktop application developers may serve another – arguably more devious – purpose than simply improving the value of Macs to users. It may be an offensive maneuver designed to deprive these rival platforms of developers. Because many of the popular languages, libraries, and frameworks used in developing applications for OSX aren’t available for Windows and Linux (or are otherwise implemented or used in dramatically different ways), the work a developer does for OSX won’t necessarily carry over. Porting the application to either of these competing platforms could require a significant amount of extra work without the commensurate revenue.
Short term, this ensures Apple has de facto exclusivity over any of the apps these developers creates. But in the long run, Apple could keep said developers “locked” into developing for OSX because the switching cost to go back to Windows or Linux will be too high in comparison.
They might have to familiarize themselves with platform specific libraries, learn new technologies and tools that may have been created and become popular in their absence, or even learn another programming language. We see this with very platform-specific languages like Objective-C: a popular language for OSX libraries like Cocoa, but relatively unsupported in the Windows and Linux world. It becomes a logistics and maintenance nightmare developers can’t afford, especially after leaping through the hurdles needed to complete to just sell something in the app store.
The Mac app store is more than simply a great tool to increase the utility and satisfaction of Mac users. It is a strategic maneuver for Apple, designed to shift the balance of personal computing power from Redmond to Cupertino!