Category: Tech Talk

Fred Stutzman writes:

Facebook seeks to become a starting point for its users web experience. In essence, it is solving the “what’s next” problem by providing users a potentially endless set of experiences to encounter within the Facebook framework. Facebook knows that it has limited resources, by ceding some control of its space to third-parties, it retains users while enabling them to spend more time exploring the endless depths of the Facebook experience. In a sense, this is Second Life applied to Facebook; Second Life is only as interesting as the environments developed within – Facebook is no different.

Sounds like a great plan, right? I agree, it does sound good on paper. But how it shakes out in the real world is still left to be known. Facebook users engage with the service to have social needs answered; while Platform adds a bunch of new capability to the service, does it actually answer social needs? I think you could argue that the diversification of information presented on a profile is a relevant social need, but what about an Amazon marketplace? Is that a relevant social need? The ultimate question revolves around how these applications enable mutual disclosure between friends – how they help friends learn more about each other. That’s been the killer app of Facebook since day one, and just because the audience has changed somewhat I don’t believe it is no longer relevant.

Read/Write Web thinks Facebook will go in for what could be the biggest IPO since Google:

We may never know the full story on why Yahoo and Facebook couldn’t agree terms on a $1Billion deal. But you have to commend Facebook for its brave move of going it alone and building out a development platform themselves. It would’ve been much easier to go the MySpace route and sell themselves to the highest Bigco bidder.

Could we eventually see the biggest IPO since Google, when Facebook puts its hand out to the public for cash? It’s looking like a good bet now. And as Facebook’s current stats show, they are growing at a remarkable pace. They have the vision, the user base, and 3rd party developer support. It seems the monetization isn’t quite worked out yet, which could still end up spoiling the party. But one thing is for sure, Facebook has gone well beyond what MySpace has to offer – and is looking distinctly threatening to not only MySpace, but the other big Internet companies. Facebook has grown up!

While Facebook is not officially in India, its user base is starting to grow. While Google’s Orkut remains the dominant player in the social networking space in India, Indian start-ups like Minglebox (which received funding from Sequoia) and established players like MySpace are also likely to be forces to contend with. My belief continues to be that in India social networking will need to take a mobile-centric rather than a PC-centric approach. So, from that perspective, the space still remains wide open.

Continue reading TECH TALK: Facebook: Looking Ahead

Fortune wrote a story on Facebook:

“Imagine that when you shopped online for a digital camera, you could see whether anyone you knew already owned it and ask them what they thought. Imagine that when you searched for a concert ticket you could learn if friends were headed to the same show.

Or that you knew which sites – or what news stories – people you trust found useful and which they disliked. Or maybe you could find out where all your friends and relatives are, right now (at least those who want to be found).”
…
“We want to make Facebook into something of an operating system so you can run full applications,” Zuckerberg [said]. He said Facebook is becoming a “platform,” meaning a software environment where others can create their own services, much the way anyone can write programs for Microsoft’s Windows operating system on PCs. Facebook, he explained, is a technology company, not a media one.
…
Today, social networking is fragmented. There are networks for dating, for philanthropy, for pet owners, for parents. But each has its own ways for members to register, describe themselves, communicate, and interact. Facebook aims to make much of that unnecessary. It will provide the underlying services – a platform – and offer access to its prerecruited pool of members. It will retain some online real estate and will still generate the lion’s share of its revenue from advertising.

Michael Parekh wrote:

If Facebook is able to even partially execute on the promise of this strategy, it could pose a long-term dilemma for the mainstream portals. Tactically, it makes a ton of sense for all of them to make sure their individual portal services are represented as applications within Facebook, thus leveraging Facebook’s networked audience.
…
Strategically, Facebook poses strategic risks for the major portals no less than what Google posed for Yahoo!, AOL and Microsoft back in the nineties, when they all used Google’s search engine as an outsourced service.
For smaller Web 2.0 companies, Facebook could be their best friend in the short-term. They potentially get substantial, and relatively inexpensive customer acquisition via Facebook, by making their services “applications” on Facebook’s platform.

In that sense, Facebook’s strategy is brilliant, since it makes a tail-wind out of the fact that the biggest problem facing hundreds of VC and angel-funded Web 2.0 startups, is to get massive, quick, inexpensive distribution.

Tomorrow: Looking Ahead

Continue reading TECH TALK: Facebook: The Vision

Wikipedia has this about the early days of Facebook: In early February of 2004, Harvard University sophomore Mark Zuckerberg founded “The Facebook”, with support from Andrew McCollum and Eduardo Saverin. By the end of the month, more than half of the undergraduate population at Harvard were registered on the service. Additionally at that time, Zuckerberg was joined by Dustin Moskovitz and Chris Hughes for site promotion and Facebook expanded to MIT, Boston University, and Boston College. This expansion continued in April of 2004, when it expanded to the rest of Ivy League and a few other schools. The following month, Zuckerberg, McCollum, Hughes, and Moscovitz moved to Palo Alto, California to continue work on Facebook’s development with additional help from Adam D’Angelo and Sean Parker….Facebook received approximately $500,000 from PayPal co-founder Peter Thiel in an angel round. By December , Facebook’s user base had exceeded one million.

Mashable put together a timeline of the key events in Facebook’s history:

2004
February – Mark Zuckerberg and co-founders Dustin Moskovitz and Chris Hughes launch Facebook from their Harvard dorm room
March – Facebook expands from Harvard to Stanford, Columbia and Yale
June – Facebook moves its base of operations to Palo Alto, Calif.
September – Groups application is added; the Wall is added as a Profile feature
December – Facebook reaches nearly 1 million active users

2005
May – Facebook raises $12.7 million in venture capital from Accel Partners;
Facebook grows to support more than 800 college networks
August – The Company officially changes its name to Facebook from thefacebook.com
September – Facebook expands to add high school networks
October – Photos is added as an application
Facebook begins to add international school networks
December – Facebook reaches more than 5.5 million active users

2006
April – Facebook raises $25 million from Greylock Partners and Meritech Capital Partners;
Facebook Mobile feature launches
May – Facebook expands to add work networks
August – Facebook development platform launches;
Notes application is introduced;
Facebook and Microsoft form strategic relationship for banner ad syndication
September – News Feed and Mini-Feed are introduced with additional privacy controls;
Facebook expands registration so anyone can join
November – Share feature added on Facebook, simultaneously launched on over 20 partner sites
December Facebook reaches more than 12 million active users

2007
February – Virtual gift shop launches as a feature
March – Facebook reaches over 2 million active Canadian users and 1 million active UK users
April – Facebook reaches 20 million active users;
Facebook updates site design and adds network portals
May – Facebook launches Marketplace application for classified listings

Mashable has an earlier article profiling Facebook.

Tomorrow: The Vision

Continue reading TECH TALK: Facebook: The Early Days

Splashcast Media, one of the companies creating applications for Facebook, had this to say about the platform: Facebook is announcing the opening of what its calling The Platform a system for 3rd party companies to program their services for use inside of Facebook user pages. As part of the announcement, about 30 preselected companies that have integrated with The Platform ahead of time are being showcased to demonstrate what kinds of things are being made possible. This goes beyond the ability to post media from outside into Facebook and it goes beyond the previous Facebook API (also called The Platform) – outside companies are now being allowed to deploy advanced functionality inside the Facebook site…Some monetization in Facebook will be permitted, so long as its not done on the same pages where Microsoft ads are being run. More may be possible in the future. That is a remarkable differentiator compared to other, similar websites that maintain tight control over monetization in their ecosystems. This is one of the big unknowns in regards to Facebook opening up but there is every indication that this will be a real game changer. When companies cant monetize their presence in larger ecosystems, then innovation becomes far less affordable. If Facebook does allow meaningful monetization to occur, they could serve as a lifeline to hundreds of small companies that will then take risks, develop innovative new products and change the face of the web.

Fortune added:

From here on it will be wide open. Anyone will have access to Facebook’s so-called “markup language,” which is intended to be usable even by those with rudimentary programming skills. So kids in dorm rooms will be able to create simple applications to coordinate TV-watching or trips to the cafeteria with their friends. And some creative amateur coders are likely to come up with amazing new things to do inside Facebook. Companies, too, will find many ways that Facebook applications can improve productivity and collaboration.

The company will impose no limitations on what kinds of applications others can create, except that they be legal. Says Zuckerberg: “They can sell sponsorships, they can have ads, they can sell things, they can link off to another site – we are just agnostic.” He promises that Facebook will not give its own applications any special privileges or exclusive access to its members.

TechCrunch thinks of Facebook’s approach as the opposite of MySpace: The payoff is two way. Not only do developers get deep access to Facebooks twenty million users, Facebook also becomes a rich platform for third party applications…Facebooks strategy is almost the polar opposite from MySpace. While MySpace frets over third party widgets, alternatively shutting them down or acquiring them, Facebook is now opening up its core functions to all outside developers.

GigaOM had this to say: This move is more than catching up with MySpace and Bebo and what have you by adding outside widgets; Facebook has become a primary relationship and identity broker for millions of people. Now outsiders can capitalize on that information in a safe way, pulling from users expressed interests in their profiles, building on their stated intention to attend events, or simply giving them more dedicated tools for expressing themselves. The outside apps will be woven into a structure thats already been built and is utilized every day…Admittedly, there is some reinventing the wheel going on. Wasnt the browser declared to be the new OS just, like, two years ago?

Tomorrow: The Early Days

Continue reading TECH TALK: Facebook: The Platform (Part 2)

Last week, Facebook launched its Platform, effectively positioning itself as a social utility. Facebook’s rise has been as astonishing as MySpace was over the past couple years. It is, arguably, as interesting a company as Google in terms of the innovations that it is coming up with. In this week’s Tech Talk, we will take a closer look at what various people have been saying about Facebook. Let’s begin by taking a look at the Facebook numbers.

Read/Write Web has some stats on Facebook:

Facebook is growing 3% per week (100,000 new users per day) and the fastest growing demographic is the 25 and up age group. Active users have doubled since Facebook expanded registration in Sept 2006. The international user base is still at an early stage, but obviously has room for large growth. Currently Canada has the most users outside of the United States, with more than 2.5 million active users; followed by the U.K. with more than 1.4 million active users.
As well as quantity, Facebook has on its side that it is a very sticky site – 50% of registered users come back to the site every day. Facebook is generating more than 40 billion page views per month, from 24 million “active” users – 50 pages per user every day, which is very very high. In comparative terms, Facebook is now the 6th most trafficked site in the U.S. and gets more page views than eBay.

Facebook also has an impressive range of social software apps – it claims it has the no. 1 photo sharing application on the web and it has just released a video app to take on YouTube.

The New York Times wrote about the launch of Facebook’s platform:

Facebook…is inviting thousands of technology companies and programmers to contribute features to its service. They can even make money from the sites users by doing so, and, at least for now, Facebook will not take a cut.
Some of the new features, demonstrated by software developers at a Facebook event on Thursday, will allow members to recommend and listen to music, insert Amazon book reviews onto their pages, play games and join charity drives, all without leaving the site.
…
Facebook is thinking big. In the parlance of its 23-year-old chief executive, Mark Zuckerberg, the company is positioning itself as a social operating system for the Internet. It wants to sit at the center of its users online lives in the same way that Windows dominates their experience on a PC.

Dan Farber puts the announcements in a broader context:

Facebook CEO Mark Zuckerberg calls this latest interation of the service a social utility, which is an apt term.

Its a utility in terms of a tool for the 24 million Facebook users, but it also reflects Facebooks desire to become a utility, like an power company, in which potentially billions of people use the service in their personal and professional lives. Facebook, MySpace, and other growing colonies of linked communities with semi-permeable walls represent the rise of the social Web and Web utility companies.

Zuckerberg describes the Facebook core function that the new third-party applications can tap into as a social graph, the network of connections and relationships between people on the service.

Tomorrow: The Platform (continued)

Indian mobile operators need to think of themselves as running two businesses. One targeted at top and middle India, and the other at bottom of the pyramid India. While the latter has huge growth potential (an untapped market of 250-300 million Indians in the next 3 years), the former is stagnant, addressing a saturated market with flat ARPUs and little growth.

All of the mobile operators strengths are in building out the user base in India. They have done this very well in the past few years and continue to do so. They also have plenty of work left in this regard hundreds of millions of Indians left out of the telecom revolution are finally going to get connected. Creating the infrastructure to get these millions on the network is a huge challenge.

In doing so, they need to rethink their role for the existing user base. This user base has been mobile for a few years now and are hungry for new services. India has a world-class wireless data infrastructure but it is barely talked about. By closing their walled gardens, the mobile operators are making a big mistake. This user base can pay a lot more after all, there were many who paid Rs 8-16 per minute for phone calls (as against Rs 1-2 today). They have money to spend. But the services available to them are limited even though for many, the mobile is the primary or even the only interactive device in their lives.

Mobile operators need to do two things to make the mobile Internet a reality in India for the first user base. First, they need to open up their data networks so consumers can go to any website they desire. Second, they should encourage the creation of a cornucopia of services by creating a business model which has more favorable revenue share terms for the service providers. Mobile operators can still make a lot of money and I would argue, that this will be a magnitude higher than what they do today by billing consumers for data traffic on open access. In other words, instead of thinking of themselves as media and worrying that they will just become bitpipes, mobile operators need to think of themselves as services pipes. If they do this, consumers will see them as the genie that made the mobile into a magic lamp.

There is a lot at stake for India. The Internet is core and necessary digital infrastructure if we are to continue to develop. Home computers and mobiles are the two necessary devices which will become the windows to the world of services. Even though we are not there yet, forward-thinking organisations and entrepreneurs can take us there.

Continue reading TECH TALK: Indias Digital Infrastructure: Mobile Data Services

So, we are in a funny situation in India in the context of the Internet. The mobile industry has plenty of devices but very few services. The PC industry has plenty of services but very few devices. As such, the real benefits of the Internet both for consumers and businesses arent easily visible and accessible. For urban consumers, the Internet can help ease lifes daily inconveniences. For rural consumers, the Internet can help increase incomes by providing access to information and markets. For businesses, the Internet can accelerate information flows and speed transactions creating real-time enterprises. And yet, for all practical purposes, the Internet has still not become an integral part of Indian lives. What needs to change?

For the PC Internet to take off, we need to get computing devices into Indian homes connected to the Internet cloud via DSL, cable or wireless broadband networks. (Given the regulatory realities and technical challenges, the best near-term bet is on DSL offered by the two government-owned telcos, MTNL in Mumbai and Delhi, and BSNL everywhere else.)

These computing devices need to be affordable and manageable just like mobiles phones. To make this happen, we need to think of thin clients or network computers. These are computers which will strip away the costs and complexity of todays desktops, without compromising on performance. At a sub-$100 (Rs 4,000 or so) price point, they will be affordable for the large Indian middle class. People will not have to make do with a few minutes of cybercafe usage every once in a while they will have a computer in their home for use whenever they want. This is what will make computing and the Internet a utility in their lives.

The $100 upfront cost will be complemented by a $10-12 monthly (about Rs 400-500) charge for connectivity and basic software and content services. The server infrastructure to complement the thin client will be at the telco exchange and thus, there will be no incremental cost for the last-mile bandwidth used. Besides the underlying operating system to provide the desktop, video and other bandwidth-intensive services can be co-located at these mini-Grids in telco exchanges to ensure fast access.

In fact, the network computing model also creates interesting opportunities for additional revenue through value-added services. The desktop could be made up of a collection of icons from different commercial entities each paying for the privilege of offering customers one-click access to their websites. One can think of this as analogous to the value-added services that exist on mobiles and account for 5-10% of revenues for the mobile companies.

For the network computing model to become a reality, MTNL and BSNL need to think of themselves as more than mere pipe providers and think of themselves as computing service providers. In doing so, they will resuscitate their landline business and create the computing infrastructure for PC-based Internet services to thrive. By leveraging their billing relationship with customers, they will also share in the upside as customers do transactions.

If MTNL and BSNL do not want to do this, they should, at the very least, allow BVNOs (Broadband Virtual Network Operators) to use their network to offer services in return for carriage charges. Either way, we need 50 million Indian households to experience the joys of home computing in the next five years.

Tomorrow: Mobile Data Services

Continue reading TECH TALK: Indias Digital Infrastructure: Network Computing Devices

There are 170 million mobile users in India, but only just over 1% of them use their mobiles for Internet access. Of course, not all mobiles have the ability to access the Net, but from a technology standpoint, I would estimate that at least 30% of the phones in India on GSM and CDMA would be able to access the Internet. And yet, few of us do. We seem quite happy just using the mobile for phone calls and SMSes. Some of us use the operator portals to get ringtones, wallpapers and games. But thats about it. Why not more?

There are a number of reasons. First, while CDMA phones have a convenient button dabao (press the button) to access a portal, the GSM phones need some extra configuration to get connected over GPRS. Second, mobile operators want to keep the users who do get connected within their walled gardens. So, they become the gatekeepers for the services. So much so, it is almost impossible for any independent service provider to create a portal that can be accessed by all users who have active data connections. Third, short-sighted pricing plans for data ensure that the ones who do want open access will have to pay a high price for it.

In addition, no one in India is really promoting the mobile Internet. Mobile operators are busy focused on new customer acquisition after all, every new $3 ARPU (average revenue per user per month) customer adds anywhere between $500-1,000 to their market cap! The handset makers like Nokia focus mostly on features that are native on the handset like a great music experience. The mobile value-added service players have still not gone out and determinedly create independent off-deck brands which attract users presumably, because they know few can access them as of now. The PC Internet companies are, well, focused on the PC Internet.

Put it all together and we have a mobile Internet that has neither users nor services. Can this logjam be broken? If so, how? Can the mobile become like a magic lamp fulfilling all our wishes? What are these wishes? When the Nokia N95 ad asks if is this is what computers have become, why dont we feel like going out and buying one? Is there really an opportunity for mobile data services beyond the downloadable ringtones, wallpapers and games?

For the mobile Internet to happen, mobile operators need to believe that Data, not Voice, will change the direction of the ARPU trajectory assuming of course that ARPU matters. In India, currently, everyone is happy focusing only on the minutes of usage. A time will come in the not too distant future when voice will go to zero-margin and then to zero. It is for that world that mobile operators need to learn from the PC Internet that creating an open platform can foster innovation in a way no closed environment can.

Tomorrow: Network Computing Devices

Continue reading TECH TALK: Indias Digital Infrastructure: Mobile Internet

Let us start by taking a look at the PC-based wireline Internet. We have 7 million computers in homes in India, growing at around 2 million a year. (Indias total installed base of computers is about 20 million, growing 6 million annually.) Compare that with the mobile industry: it is growing at 7 million a month, or over 80 million a year, over an installed base of 170 million.

Because of the low home computer base in India, people largely use cybercafes to access the internet, paying between Rs 10 and Rs 40 per hour. Indias Internet user base is estimated at be around 25-45 million (depending on which source one believes). Broadband access in India too has been slow to grow in part because most new investments have focused on the mobile infrastructure. But the bigger issue has been that the new home computer market is only a couple of million. That severely limits the target market for broadband providers. (Yes, there are about 5 million computers still not connected by broadband. If these people have not gotten broadband access to the Internet now, then I can only surmise that either access is not available or they have no reason to get one.)

Of course, broadband in India is not really broadband. Although the advertised bandwidth may be 256 or even 512 Kbps, actual speeds are often a fraction of that. Furthermore, since access plans often have very low data transfer limits, broadband in reality is at best an (almost) always-on narrowband connection.

With MTNL and BSNL controlling the most-effective form of access in the form of DSL over copper (telephone cable), private providers (ISPs and the telcos) find it hard to get ubiquitous coverage and provide cost-effective connectivity. Cable companies have got into the fray but reliability remains a big challenge.

The Internet has myriad services. New sites keep popping up daily. It is almost trivial for anyone to create an Internet presence. So, even as services mushroom, the growth of the Internet in India is hobbled by the lack of connected access devices.

Computers at Rs 15,000 or more are, relatively speaking, much more affordable than they were a few years ago. The starting prices of computers have come down and income levels for the middle-class have gone up. Yet, people have not adopted computers like they have done with mobiles. I think there are two reasons for this beyond the affordability dimension. First, they lack desirability; they are not must-have devices. And second, they are perceived to be complicated to operate.

One could argue that the new generation of mobiles are in fact multimedia computers. While thats partly true, the experience of the big keyboard and display of a computer cannot be replicated with todays mobiles. One can imagine teleputers mobile phones which have the ability to connect to external keyboards and to large external displays. But thats not available today and perhaps lie some years into the future.

Whats needed for the PC-based Internet to take off in India is a solution that combines the affordability and the manageability of mobiles. With such a solution, it will be possible to take computing to 50 million Indian homes in the next five years.

Tomorrow: Mobile Internet

Continue reading TECH TALK: Indias Digital Infrastructure: PC Internet

Recently, Business Today asked me to write a column about the Internet in India. This is what I wrote.

The Internet is back! There’s a buzz among entrepreneurs as venture capital companies are putting money into companies focused on the Indian market. Online advertising (display, search and classifieds) is growing. Users are starting to spend on transactions going beyond ticketing. All in all, the long-promised boom of the Indian Internet is underway. What needs to be done to ensure that the boom isnt just a transient bubble?

There are, in reality, two Internets segmented by the access device and the type of connectivity. The PC-based wireline Internet has about 30-40 million users, with a majority of the users using cybercafes. With only 7 million computers in Indian homes, this Internet is still a long way from becoming a utility in people’s lives. The mobile-centric wireless Internet can potentially reach a significant portion of the 165 million cellphone users in India. However, the reality is that other than voice, there are only two services which touch a large fraction of this user base SMS and ringback tones. The mobile-as-India’s-computer paradigm still has a long way to go.

Looking at it another way, for the real boom, the wireline Internet needs more devices (home computers) and the mobile Internet needs more services. What will it take to make both happen?

To solve the device problem, one needs to rethink computing in a world where broadband exists and thus make computers affordable and manageable. For this, the answers lie in borrowing two ideas from the mobile industry create a device that costs Rs 5,000, and combine it with a monthly service charge of Rs 500, and make the device simple to use without requiring its owner to become a technology expert!

The solution to these twin challenges lies in thinking ‘thin’ computers for Indian homes connected over DSL or cable to servers over high-speed networks. All the computational processing is done at the server-end, and the network computers become simple ‘on-off’ devices without compromising on the performance that current desktop computers offer.

To make the mobile Internet a reality in India, two changes need to happen, and they have to be driven by the mobile operators since they are the ‘gatekeepers.’ First, an open publishing platform is needed to allow anyone to create a mobile website that is accessible by everyone just like on the PC Internet.

Second, mobile operators need to change their billing philosophy for value-added services. The bulk of the revenue that users pay must be given to the content providers. Mobile operators should, instead, charge for packet data flow through their ‘pipes.’ At a broader level, just like NTT Docomo did with its i-mode service in Japan in 1999, Indian mobile operators need to encourage the creation of a value-generating ecosystem.

Taken together, these innovations can help build India’s digital infrastructure, create a framework for other emerging markets to emulate and provide a large domestic market for companies to finally think India First.

There are a number of ideas which I did not have the space to expand upon in the Business Today column. I will use this Tech Talk series to elaborate on the various points mentioned.

Tomorrow: PC Internet