Why Microsoft didn't get it right until version 3

People used to say that Microsoft didn't get it right until version 3.0 (or 3.11 for that matter). I've had a line of thought that goes something like this on the subject (not entirely polished, so please give feedback).

When a new type of hardware and software combination arrives, a firm that offers vertically integrated solutions (i.e. develops both hardware and software) can initially offer smoother integration and a better user experience than firms in a horizontal ecosystem (i.e. different makers of hardware and software) can. In the 90's and early 00's, that advantage seemed to hold until the horizontal ecosystem came up with a version 3.0 of its software.

In our ever more online world, firms have also been able to connect online services to hardware and software combinations. The best example is probably how Apple combines hardware (Mac, iPhone, iPad), software (iTunes, Quicktime, Safari) and services (iTunes Music Store, App Store) to create a better overall experience.

Another example is how Research In Motion has combined the Blackberry phones with the BBM chat service to create something special that competitors don't offer. One of Nokia's issues seem to be the inability to create a hardware, software and services combination that can compete with the iPhone.

It might be even harder for a horizontal ecosystem to replicate the ease-of-use of a vertically integrated system when it also needs to get the online services right (see Android Market). Especially as major players in the different layers don't fully trust each other, as they've seen how the majority of profits often flow to a few firms (an example being Microsoft and Intel in the PC ecosystem) and few firms want to "take on for the team" to make sure the ecosystem grows strong.

Facebook has passed 500 million active members

This Wedensday Facebook announced that it has passed 500 million active members. That's massive, especially considering that about 50 % is said to log in every day. A nice infographic on Facebook members in different countries can be found at Mashable.

U.S. tech companies Q2 report card

All numbers are in billions of U.S. dollars.

Jobs at Spotify

We're looking for some great people to join Spotify's Premium Sales Team in London. If you know great people or are interested yourself, please have a look the following openings:

* Premium Manager - Campaigns
* Premium Manager - Retention
* Web Designer

I'm also always interested in meeting great and interesting people, regardless of if they're currently planning to change jobs.

The digital media future is (almost) here

In the late 1990's, almost everyone in the media industry went gaga over the promise of digital distribution of media products and services. As consumer behavior change slower than most visionaries want, it's taken almost 15 years to (almost) reach the promised future. Some very interesting data points reflecting the shift to digital distribution of media products:

* Amazon is selling more Kindle e-books than hardcover books. Obviously this doesn't take into account paperbacks, which in my opinion is probably the best reading experience, but it shows a massive shift. In the last four weeks Amazon has sold 1.8 e-books for every hardcover book. With the Kindle going down in price and the iPad and smartphones driving e-books sales, this is a market that should have a lot of room to grow.

* Digital make up 35.5 % of U.S. music sales, with iTunes being the by far largest retailer with 26.7 % of the total market. Wal-Mart had 12.5 % (mostly physical) and Amazon had 7.1 % (5.8 % being physical and 1.3 % being digital).

* Digital downloads were 48 % of U.S. PC games unit volume and 36 % of revenue. The major retailers for traditional PC games were Steam, Direct2Drive, Blizzard.com, EA.com and WorldofWarcraft.com. Major casual game retailers were Bigfishgames, Pogo, Gamehouse, iWin and Realarcade. That is obviously not taking Facebook games like Farmville into account.

With a combination of digital growing (driven by changed consumer behavior, products that take advantage of the medium and better online retailing) and physical having slower growth or even declines, expcting more than 50 % of media to be delivered digitally in 5-10 years seems like a quite reasonable assumption.

Removing friction to increase sales (Amazon Prime example)

Making any part of the buying process easier, i.e. removing friction from the process, will drive sales.

The first version of an e-commerce web site or a media site with a paywall in-front will always have a lot of friction. But with active work a site often double its sales by communicating unique selling points better, making sign-up and payment pages easier to understand and adding additional payment options.

Often most of the work to remove friction is done on the web site, but just having moved to the U.K., I've been able to try Amazon Prime, a way to remove friction from the final stages of the buying process by doing away with delivery costs for individual orders.

By paying Amazon an annual fee of £49, a customer gets next day delivery of the things she buys from Amazon.co.uk without a per item delivery charge. It combines quick delivery and no variable cost.

While Prime is only useful for customers making about 10 purchases or more a year, to those customers Prime takes away the need to even consider delivery costs. The price you see is the price you pay. No extra attention required. Less friction in the buying process after you've found a product you like. For a repeat customer, the process becomes as simple as buying an iPhone app and that must be a good thing for sales.

Usage drives sales, if you make it easy to buy (iBooks edition)

In the last few days I've started to play around a little with Apple's iBooks. As I'm reading on my iPhone4, at first I wasn't sure if I'd enjoy reading a book on a small screen. But after having read 2-3 previews of books, I realized it is a nice experience that that I think it can be a nice substitution to playing a game, checking Facebook or sending a text when I have 5-10 minutes in transit or am waiting for someone.

To try if I will enjoy reading a longer book on the small screen, I've bought Andrew Ross Sorkin's Too Big To Fail. I guess I'll know if the user experience holds for a long read in a week or two.

However, the actual book buying experience had a few interesting points.

* iBooks is a different application from the iTunes and App Store on the iPhone. It likely decreases initial adoption and usage, but I guess the tailor-made UI could be more effective in driving sales per user.
* iBooks has extensive previews of books (and a chunk of free public domain books), which is a good thing. The same way free applications in the App Store make it easy to spend time in that store, previews and public domain make it easy to spend time in iBooks.
* The combination of iTunes accounts with credit card information and people spending time exploring books will drive impulse buying. (I'd suggest that as good a technical platform the iPhone is, a big part of the general magic for music, apps and potentially books is the retail environment Apple has created with iTunes.)
* A big negative is that once I bought Too Big To Fail, I was told that the book was over 20 megabytes and could only be downloaded over WiFi. Not what I wanted to hear on the bus just having spent around £10. A nice solution would be partial downloads of chapters over 3G if Apple and the mobile operators don't want to push to much data over the 3G network.
* An observation is that while most apps cost one to a few pounds, books seem to hoover around £10. It will be interesting to see if book formats that allow for £1-5 price point develop.

Agile Advertising

Read the blog post and the slides from Gustav von Sydow's speech on Agile Advertising and the four feedback loops at Cannes Lions. Very good stuff.