Views on the new media market

Adobe - what's the strategy?

Adobe's keynote at MAX had a mix of technologies - we saw:

• Magazine creation for tablets with InDesign
• Animation of XHTML5 with a prototype timeline tool Edge
• Video playing on TVs with AIR
• Hardware accelerated 3D with Flash molehill

The question that Adobe didn't attempt to answer was

What technology should the 3,500 people in the room focus on for the future?

Adobe seems to be taking a tools strategy going forward - they will let whatever tool you want to use create output for the devices you need to target. Unfortunately Adobe has a broad range of tools, with different histories and strategies - and doesn't seem to have any vision as to where they are going to place their development bets in the future.

This is reminiscent of another large organisation that up until very recently had a multiple tools, runtimes and developer choice strategy. Nokia. If we look back just 6 months to develop for Nokia devices you had a wide choice of Symbian, Java, AIR, Flash, HTML widget runtime, XHTML browser, PhoneGap, Silverlight, Python, Qt and, I'm sure more if I was to look more closely (maybe commenters can fill in the blanks)

All this created confusion and lack of focus - none of the individual solutions was great, and development resource was spread thinly across all of them. The advantage was that this allowed Nokia to claim the broadest set of support for developers - unfortunately in the fight for developer mindshare against Apple and iOS, it didn't work - with Apple's iTunes App Store creating more outright successes than Nokia's Ovi store (or it's multiple predecessors)

With the arrival of Stephen Elop (ex Macromedia, and ex Adobe) Nokia's strategy has changed - they now have a clearly articulated, focussed strategy on just two development environments:

XHTML5 for the web

Qt for the device

While this strategy is painful for the developers who have been excluded (Java, Flash, Python, Silverlight etc) it does allow Nokia to focus it's resource on creating the best possible experience, and without the strategic limit of a virtual machine in Qt, I expect Nokia to be able to squeeze more performance per $ of cost and mW of battery out of it's phones hardware than it's competitors using virtual platforms like Android will be able to.

What do I expect? Adobe will start to lose ground against more focussed competitors, while Nokia will surprise people in the US market with significant growth over the next 3 years.

Adobe - the future is magazines, apparently

Adobe is holding it's annual developer conference in LA this week. It's interesting to see what they chose to lead off with at the keynote given by their CTO Kevin Lynch.

The major part of the keynote was taken up by demonstrations of what is being achieved using Adobe's InDesign tool in the area of magazines with great demos by Martha Stewart (of Martha Stewart Living) and Conde Nast's Joe Simon showcasing what Wired has been able to achieve.

So the next billion dollar market for Adobe is magazines.

Sorry, I mean that next billion dollar market for Adobe is Magazines on digital tablet devices.

WHAT?

Truly this was very strange. While it's clear that Adobe's InDesign customers are in pain (they have already had a decade of the web challenging their traditional print business model) does anyone believe that the emergence of tablet devices is set to revolutionise the magazine content type market, and create a significant new, multi-billion dollar opportunity?

Surely anyone with a significant opportunity in content has already had 10 years of experience on the web in building a great, engaged, monetized community around quality content - tablets are emerging as part of that ecosystem, but is this something that Adobe should be focussed on - or is it simply another example of how the shift to connected, digital content is continuing?

The challenge for magazines isn't in getting the right package of technologies to allow consumers to better consume their content - it's in the competition for individual's time, and the associated competition for advertisers's money to pay for the content creation that will capture and keep the audience's attention.

So what do I recommend for a magazine brand and content owner?

First - understand where consumers see the value in your content - is it an impulse purchase of a £3 magazine driven by the desire to see high quality glossy photos of lifestyle/homes/fashion? Is it the curiosity driven by the desire to peep into the lives of celebrities without having to read lots of text, alongside glossy paparazzi shots? Is it the desire to read thoughtful, editorial on major issues?

How do people consume this? How do they share the content? What do they keep of the content?

Now look at the technology that surrounds these audiences - and work out how to improve on the experiences and impulses that are driving them to consume the content in the first place - make it easy, rewarding and fun for them to consume the content. Help them to share the content with their friends. Remember that consumers see the whole experience - so make sure that the values that you are applying to your content also apply to the adverts alongside your content (yes, that means no garish, annoying, animated banner adverts on your web content)

Creating compelling content experiences is hard - but your opportunity to create new, long term revenue streams would be significantly enhanced by experimenting in depth with what engages the community around your content, how to help them connect, and discuss the content that you've provided them. Make sure that people feel that they are getting £3 of value from your content - just like they used to when they bought the glossy magazine from the newsagent.

Apps or web - what direction will RIM take?

RIM's co-CEO Jim Balsillie is quoted in Business week saying  

The world is wrong about apps. Many are just glorified bookmarks, he argues, that aren't necessary if you can connect customers to the Web

Which is both right, and wrong at the same time. On small, portable devices the web and apps serve different purposes - Apps are all about convenience and focus on an individual task. The Web is great at discovery and occasional usage.

RIM have a great example in their own device suite - RIM's instant messenger product (BBM) is a great app - everything it does can be easily achieved with a website (in fact arguably better with a website as then it wouldn't be restricted to just BB devices - in fact this seems to be exactly what Salesforce.com is working to achieve with their Chatter product)

However it's undeniably a very successful app, and is underlining a growth pattern for RIM outside it's traditional enterprise market.

Now it's hard to argue that RIM needed to recognize that they were very late to enabling the web on their devices - a failing that they have fixed on the BlackBerry Torch with their WebKit based browser, but they need to work very hard to bring that experience to their whole product portfolio.

The worry of statements like the above is that RIM do indeed believe that the Web is all they need - and that they won't invest in enabling superb app experiences - which would be odd as superb app experience for Email is what got them to where they are today, but if they do that - then I'll be forced to reverse my view on RIM's prospects - as the winners in the mobile market will be those companies that are able to enable superb web experiences alongside superb app experiences.

Return of the natives

In 4.0 Apple SDK preview Apple dropped a bomshell on Adobe - with an addition to the license agreement they prevented applications that are not natively designed and coded for iPhone from being built - included in this is features such as Adobe's Flash -> iPhone compiler.

Adobe have a large number of passionate fans - from the armies of developers who make their living from Adobe's tools, through to some of the large media brands that use Adobe's tools - including both Condé Nast and New York Times who have explored (with Adobe's help) creating cross platform applications that can deliver to the iPhone and iPad.

Luckily for us observers we are able to watch a a battle play out between two competing vendors - in the "integrated hardware platform" corner - is Apple, with the iPhone OS platform and various hardware variants (iPhone, iPod Touch, iPad). On the "horizontal software platform" side is Adobe - with the hardware independent AIR platform.

The IT industry has seen this movie play out a few times some examples include

• Proprietary mainframes vs a loose collection of standards "Unix" (the loose collection of standards in Unix won - no single company reaping the rewards)
• Desktop hardware vs software OS (Microsoft won with a proprietary software stack)
• Microsoft vs Netscape in the web browser wars (the loose collection of W3C standards + plugins won here)

There isn't always a clear "right" way to do things here - no matter how much standards avocates, or CEOs of proprietary stack vendors might hope there is - each solution has both advantages and disadvantages.

We can simplify the choices down to two options

• Do I go for reach, at the lowest cost I can achieve per platform?

or

• Do I deliver individuals the best possible experience on the platform they have chosen to use?

For the mobile phone industry there is an answer to each of these - for reach then the web browser gives the best solution - developing for the web has big advantages in speed of deployment, analytics and maintenance. There are some compromises in the functionality that can be achieved - but as Google are adept at demonstrating, web solutions can come very close to native application solutions.

Of course very close isn't another way of saying not quite as good - and this is the reality - native applications will always be able to be slightly better than a web application can be - they have more access to device APIs, lower level access to the hardware, and can both control every aspect of the screen and navigation, and also offer user interface experiences that go beyond what the user would expect in a web browser. So if your goal is to create the best possible experience - then a native application will always be able to win when competing with a web application.

So what of runtimes like Adobe AIR? Don't they offer the best of both worlds? Unfortunately not - whatever the runtime is, whether it's AIR, Java, or a cross compiled natively executed framework like Qt - you are still a step removed from the underlying native APIs, and subject to a set of additional restrictions. In many cases these restrictions are worth the compromise - the speed and low cost of development makes it worthwhile.

A question facing any framework or runtime today is this what is it possible to create using my runtime that would be impractical as a native development?

There are specialised runtimes that achieve this - an obvious candidate is Unity a framework for creating 3D games. While these could be created as native code - the effort is best spent in the mechanics and appearance of the game graphics, not the (common) underlying 3D framework.

So what conclusion do we draw on the fight between Apple and Adobe around support for Flash applications on the iPhone? Is it possible to create something using Flash for the iPhone that would be impractical as a native development? No. Flash was successful as it enabled web developers to create things on the web that were impossible using any other technology. This same advantage doesn't exist in the application space. In fact I'd go further than this:

Adobe AIR is the biggest strategic mistake that Adobe has made in the last 4 years

By choosing to devote resource to AIR and compete in the application space Adobe has lost focus on Flash and it's advantages in the web technologies space, and moved into competing on desktop applications - an area where Adobe has no significant strategic advantage.

Fortunately for Adobe they have partners like Apple able to give them a pointer in the right direction - drop the focus on applications, and refocus on web technologies - embrace HTML5 support in your tools, and move all the engineering effort currently deployed on AIR to focus again on Flash and extending what can be delivered on the web browser.

AIRpad beat Apple at their own game?

Adobe have been doing an excellent job in co-ordinating media to focus demand for Flash on the iPad. There have been many arguments put forward - one of the most thoughtful pieces is by Jeremy Allaire on TechCrunch one call that I haven't seen is for Adobe to step forward and put their money where their mouth is. Why don't Adobe produce a competing tablet device?

Adobe has all the right partnerships in place - they have been working with ARM for over a year to accelerate flash on ARM cores. They are working with HTC to put Flash onto HTC devices, and have a relationship with Qualcomm accelerating Flash on Snapdragon devices. So building a device wouldn't be that hard. What about selling it? Adobe has great channel to the creative market - who are used to paying around $599 every 18 months for upgrades to Adobe's Creative Suite products. Their consumer products have an existing channel to market through PC and accessory stores - so what would an AIRpad consist of:

• Simple flat, multi-touch display - the power here is in the software platform
• OS - small, simple and light - there are multiple linux based offerings here, an obvious one to pick would be Chromium OS
• Browser - webkit based - Chrome is the obvious pick here
• Application runtime - AIR - which includes Webkit, and already has it's own application store with a rich set of applications
• eBooks - Adobe Digital Editions which already has deals in place with multiple book publishers

Such a product would provide a great showcase for creative agencies to demonstrate their talents to clients - and also provide a great reference design for other hardware manufacturers who want to beat Apple to license from Adobe and drive distribution of.

With Adobe's success in building products that lead to rich, digital content, taking the step into a digital content consumption platform, complete with hardware would be a great way for Adobe to demonstrate it's vision and commitment to it's creative customers - and enable them to have a rich, broad platform that lets them express their creativity in any way they want.

How about it Adobe? When can I get an AIRpad?

Adobe's innovation dilemma

With Apple's launch of the iPad the number of web devices Flash doesn't reach is set to increase. Will this impact the use of Flash by the creatives who are Adobe's core supporters - it's instructive to look at what Flash uniquely provides, and also how did Flash get to the position it is in today.

While many people associate Flash with animated banner adverts (while in fact plenty of animated banners are in fact animated GIF images), Flash didn't start out there - Flash's roots go back to 1996 with the first release "FutureSplash Animator"

There has always been demand from creatives for high quality, interactive experiences - back in 1995 Macromedia Director and the Shockwave format ruled the roost here, with CD ROMs being the key vehicle for delivering interactive digital content. With the rise of the internet the opportunity for Flash opened, and Macromedia (who acquired FutureSplash and re-released it as Flash) allowed an internal competition between Director and Flash, to drive innovation, and ultimately prioritised Flash over Director.

Flash wasn't always as ubiquitous as it is now however - a key point in driving the ubiquity of Flash was the 11 June 1998 deal between Macromedia and Netscape to bundle the Flash Player as part of the Netscape download package. At the height of the "browser wars" between Microsoft and Netscape this was a key deal in delivering a better experience to computer users - and put Macromedia on the path to be a defacto standard.

Merely being there wasn't enough however - Macromedia were able to continually innovate on the Flash Platform enabling people to get more out of their rich web experiences. If we look at the timeline of Flash with key features we see

• 1997 - Flash 3 release transparency and the object library allowing for richer functionality within Flash
• 1999 - Flash 5 improved ActionScript and provided streaming MP3 bringing sound to the web
• 2002 - Flash Player 6 added support for video on the web for the first time - enabling YouTube
• 2004 - Flash Player 7 added Object Oriented programming and rich vector effects
• 2006 - Flash Player 9 new virtual machine for ActionScript with much faster performance, and full screen video

Each release has also brought incremental improvements - such as the move to h.264 video support in 2007, however with any platform the introduction of major new features has slowed down - as the user base has expanded, and the growing number of existing customers ask for new incremental features, rather than spending time and effort on radical, risky innovations.

While there is an ever growing number of new features in Flash Player the adoption of the new features has slowed down - and from the October 2008 release of Flash Player 10, we are still waiting for the 10.1 release.

This comes at a time when creatives are encountering new platforms on mobile - whether iPhone native applications, Android or Blackberry Java applications, or beginning to think about what they could do with the iPad.

Adobe's dilemma is - do they continue to incrementally improve the core Flash Player and Creative Tools used by the large army of creatives that they deliver to - and defend their platform - or make a major bet on a new area - and strike some new "Netscape" type deals to deliver a new wave of creativity to developers?

What should Adobe be thinking about? We can take our lead from the features that are easily accessible in Mobile devices, yet still very hard to do on the web:

• Accelerated 3D - is ubiquitous in desktop PC's now, and is growing fast in mobile phones due to the popularity amongst consumers of iPhone style smartphone experiences
• Location - many smartphones are location aware - applications and services are being built to take advantage of this - many laptops would also benefit from being location aware for the same applications and services
• 3D Video - consumer electronics and the TV industry is betting on a future that includes 3D video, support for 3D video on the web could accelerate the uptake and demand

I await with interest to see if Adobe have an aggressive as well as defensive strategy to address the growing army of web browsers that do not include Flash.

And one more thing

So Apple launched a new category yesterday. It's the web pad. Sorry, I mean the Tablet PC, no, no, I mean the MID, err, the eBook. Well something like that anyway.

What consumer want has the iPad converted into a need?

Apple have a track record in bringing products to market in an existing area, and executing better than the incumbents in creating high end, premium, high margin products. They have achieved this with desktops, laptops, portable music players and phones. As Steve Jobs presented the iPad is targetted at the space currently occupied by netbooks, and previously occupied by an array of products, none of which have demonstrated huge success.

What has made netbooks a success in this category? Price. Netbooks offer the promise of laptop functionality at a much lower price point - making them an acceptable additional device. The iPad is close here - the entry level device at $499 is close enough to netbook prices at around $300 to cause people to look - though the gap is still significant enough to dissuade many people.

The same is true for eReaders - Amazon's Kindle is $269 - so it's possible to get a netbook and a kindle for the same price as an iPad. Will consumers view the style and functionality of the iPad as worth the premium?

iPad has some very elegant software in it - it seems to do what it's aiming at very well - what is the likely impact?

Winners

• iPhone software developers. With the marketing hype and hope around iPad skilled iPhone software developers will find themselves even more in demand
• Digital media companies - particularly those with a clear content monetization strategy built off a solid web presence
• HTML5 + CSS developers - Safari in the iPhone OS is significantly ahead of most browsers in what it can do
• RIM - business people with money, and wanting a portable "iPhone like" experience can now keep their Blackberry (with all the advantages of power consumption and corporate email) and buy themselves a personal iPad - less pressure to get iPhones in corporates.
• Amazon - the rush to get eBooks will help Amazon's retailing - you can after all read your Kindle books on the iPad, using the Amazon Kindle iPhone application, I'm willing to bet Amazon can be a better book retailer than Apple - if they no longer have to produce and sell hardware even better - they make money on the content.

Losers

• Adobe. No Flash on the iPhone makes Adobe's core proposition to web developers weaker. Anyone who want's to reliably deliver video to the iPhone + iPod Touch + iPad economy needs an HTML5 solution as well as Flash.
• Intel - Apple's delivery of a superb ARM based browsing solution hurts Intel in the growing low power market. Expect to see more smartbook type notebooks based upon an ARM core with much better battery life than intel based devices
• Microsoft - the emergence of a new "application economy" around iPhone OS hurts Microsoft's long term position in being able to leverage Windows as the platform of trust for application developers

Let's see 1 year from now where these players end up.

Flash on iPhone?

Adobe have announced a distribution platform that directly addresses the challenge to developers of getting your application found by consumers.

Their business model is simple - they buy advertising space from developers at $5 CPM, and they sell installs at $1 per install.

More details on the Flash Platform Distribution service page.

What is interesting is that they also support iPhone applications - is this an early indicator that Adobe will at some toolchain support for Flash on the iPhone? If so it's likely to prove disappointing to Flash developers, as they are specifically targetting "Applications" with this solution - which might mean no flash in browser for the iPhone.

Vodafone 360

Vodafone are expected to announce Vodafone 360 on Thursday this week.

I'm watching this announcement with great interest - as Vodafone has been quiet in the rush of operators to launch "App Stores" - yet with Vodafone's size and scale they have the potential to influence large numbers of consumers globally.

Vodafone have been undergoing a bit of an internal refocus recently - significantly their CEO Vittorio Colao moved from massive Vodafone site at Newbury to Paddington while an office move for the CEO of a multi national isn't all that significant, the message to Vodafone staff that the focus is moving to the team in Paddington, significantly the Vodafone Internet Services head Pieter Knook who is at the forefront of driving Vodafone's push to generate new revenue from internet services.

Vittorio presented the following slide at a recent investor's conference

Which sets out the two sides of an operator - both an efficient raw data pipe to customers, and also a "smart pipe" which enables new distinctive Vodafone assets to new customers for Vodafone.

This in turn creates new Service opportunities - which benefit both Vodafone, and Vodafone's customers.

I'll be watching closely what Vodafone reveal on Thursday - what I'm expecting is

• A new Vodafone 360 branded handset jointly produced with Samsung
• Social media integration, powered by Zyb
• An Application Store that supports JIL and also LiMo Foundation platform binaries

What I'm most interested in is how Vodafone combine the reach they have with customers, with the services the offer to third parties - with their marketing skill and reach they have a huge opportunity to bring mobile applications and services to far greater numbers of consumers - which open more opportunities for developers.

What language for your mobile app?

5 years ago the choice for a company creating mobile applications was easy.  The clear global leader in mobile was Java (J2ME).  If you wanted reach you needed to create your app in Java, and port to the different platforms and devices.

In some regions there were specific leaders - BREW, led by Verizon in the US, with support in Korea and Latin America.

Smartphones were a segment of their own - with their own solutions, and a self selecting group of high value consumers who could afford handsets, and would expect appropriately high quality applications that could be achieved with access to native SDKs

The mobile market going into 2010 is starting to look a little different, and challenges the accepted wisdom that Java is best for reach.

As we enter 2010, we have even more fragmentation in the mobile platform with more devices coming out with different platforms, platforms supporting multiple development environments.

I expect that by the end of 2010 a mobile developer who is creating "mass market" applications will need to consider the platforms below that will all have greater than 10% market share in countries in Europe

• J2ME - for "feature phones" from Sony Ericsson, Samsung, LG and Nokia
• Symbian - for "smartphones" from Nokia
• Android - for "smartphones" from HTC, Sony Ericsson, Motorola
• LiMo - for "smartphones" from manufacturers to be revealed
• OS X - for "smartphones" from Apple
• Blackberry - for "smartphones" from RIM

There are also going to be some "also ran" platforms - Windows Moble, Palm's WebOS - but at least 60% of the market share is going to be split between 6 platforms, some of which force use of Java, some force use of native code, and some allow choices of the two.

So any application developer is going to need to consider creating at least one native application, one java application, and might choose to take advantage of other technologies (Web Runtime, Flash) that provide an advantage for a particular application.

This significantly increases the cost for any application developer who aims to reach the mass consumer market on mobile, compared to using desktop & web technologies where there are fewer competing platforms and fewer differences between the platforms.

The installed base of PC's globally is around 1 billion, by comparison the number of mobile phone users globally is around 4 billion.

If you want to deliver a new service to the users of those devices you need to look deeper however.

The global number of unique internet users is estimated as 1.6 billion - each PC worldwide is shared between 1.6 people.

In much of europe mobile penetration rates are typically 120% - so by comparison the average phone is used by 0.83 people.

So a developer targetting the "middle class" economies, where mobile, PC and internet usage is growing, and there is disposable income to spend on new applications and services has a tough time - 1.6bn people can be reached using web, managing fragmentation across browsers.

To achieve the same in mobile the developer is going to have to manage at least 6 platforms, where each platform has it's own fragmentation similar to supporting the PC browser market.  While the market is still 2.5 times the size, it's 6 times the cost.  This is compounded by the fact that price expectations are lower in the mobile market than in the PC market.  The most common price point in Apple's App Store for the highest grossing applications is $4.99 - a fraction of what is achieved by the massive revenue generating applications such as Microsoft Office in the PC arena.  

The economics for mobile developers are already tough - and will continue to get tougher in 2010, but it's not all bad news - as the smart developers in mobile will be able to achieve scale beyond the PC, and will be able to reach emerging markets faster than the PC will.  The simplicity, convenience and low cost of mobile devices create new opportunities that the PC can't reach - but 2010 will continue to be a year of investment for mobile application developers.