Google, Yahoo Struggle with Technology Innovation

March 30, 2011

Old vs. NewGoogle is taking a slice from Apple’s strategy, bringing back company co-founder Larry Page to ignite innovation at Google, where the stock has flatlined for the past year. Page is scheduled to take over next week as CEO from Eric Schmidt, who is reportedly under consideration for the Secretary of Commerce position in U.S. President Barack Obama’s cabinet.

It’s often difficult for mature companies to innovate the way startups do. For one thing, they lack the financial compulsion that drives entrepreneurs to market or die. Look at how News Corp. has shouldered losses at MySpace while Facebook restlessly innovates, or what happened to AOL after the merger with Time Warner, or what might happen to The Huffington Post now that it has been acquired by AOL. Google can afford to simply hold onto a company such as YouTube without the pace of self-improvement often seen in startups.

Amir Efrati, who covers the Internet for The Wall Street Journal, has been stirring things up in Silicon Valley this past week with fascinating reports on attempts by Google and Yahoo to stay innovative. In an article last Saturday, Efrati used unnamed sources to speculate that Larry Page is being called back to “speed up what [Page] says has been sluggish decision-making at Google’s top levels.”

One of Page’s new edicts, according to The Wall Street Journal, is face-to-face bullpen sessions:

… [E]very afternoon, [Page] and the company’s executive officers sit and work on small couches outside a boardroom in Building 43 at Google’s headquarters.

That might have worked when Page left the company in 2001, with 200 employees. Whether it will work 10 years later, with over 100 times as many people on the payroll, remains to be seen.

The difficulty of fostering innovation in mature companies is one of the main drivers behind the Minitrends project at Technology Futures, Inc., the Austin, Texas, technology forecasting firm and publisher of the book, MINITRENDS, and this blog. The authors devote a significant portion of the book to fostering innovation in large corporations:

Fewer than 30 percent of the companies listed on the Fortune 100 twenty-five years ago are still on the list today. Often the primary reason for the demise of such companies has been a failure to recognize and react to changing trends.

One of the ways that companies innovate is through acquisition rather than invention. Efrati generated a second round of buzz this week when he quoted Yahoo’s director of development, Steven Mitzenmacher, on The Wall Street Journal‘s Digits blog as saying Google’s investment in YouTube was “crazy.” It’s an odd comment, given YouTube’s burgeoning revenues and the fact that Yahoo is embarking on a buying binge to remain relevant.

Savvy institutional investing reporter, Riley McDermid, follows the fallout from Page’s return to Google in an insightful article at VentureBeat. Always one step ahead of the competition, McDermid managed to write about The Wall Street Journal‘s article a day before the article appeared. It’s hard to keep up with futurists!

So where do large corporations find the stimulation they need to stay at the forefront of technology trends? Among the resources mentioned in MINITRENDS are innovation competitions and working papers. Among the best examples of where to find both is the National Collegiate Inventors and Innovators Alliance (NCIIA), which held its version of “March Madness” — an innovation competition — in Washington, D.C., last Saturday.

The NCIIA competition is sponsored by companies that are working to stay competitive and rewarding innovation in education. The NCIIA has already published all the conference papers online, for free; they contain a treasure-trove of ideas for mature companies looking for a little stimulation or entrepreneurs looking for adventure.

If you prefer to watch rather than read, we recommend you screen the videos submitted to the NCIIA’s “Open Mind” Awards and nicely catalogued by David Orsman at Inventors Digest. It’s by doing research like this that you are likely to find the Larry Pages and Steve Jobs of tomorrow, who will set the technology trends that others follow.

STEVE O’KEEFE
News Editor, Minitrends Blog

Source: “Obama Nears Appointment Of Eric Schmidt As Commerce Secretary,” BusinessInsider, March 18, 2011
Source: “At Google, Page Aims to Clear Red Tape,” The Wall Street Journal,” March 26, 2011
Source: “Larry Page already cracking the whip at Google, a week before he takes the reins,” VentureBeat, March 25, 2011
Source: “Yahoo Executive Talks Acquisitions, Slams YouTube Buy,” The Wall Street Journal‘s Digits Blog, March 28, 2011
Source: “The Open Minds Awards: Taking Innovation off Campus & into Commercialization,” Inventors Digest, Feb. 18, 2011
Photo courtesy of Jeff Keyzer (mightyohm), used under its Creative Commons license.

Is Google a Monopoly? EC Launches Investigation

December 2, 2010

We monitor technology trends on this blog. One of the biggest tech trends of late is accusing Google of having a monopoly, or monopolies (plural), which begs the question of what, exactly, Google has a monopoly over? Most of the accusations center around search.

Google ‘owns’ search,” says Columbia Law Professor, Tim Wu, in a November 13 piece for The Wall Street Journal‘s WSJ “Review” section. Wu’s new book, The Master Switch, is sounding the “Google as monopoly” bell which rang loudly before the U.S. Presidential elections in 2008 but has quieted down since.

Wu’s definition of “ownership” is quite a bit looser than a pure monopoly. Google “owns” less than two-thirds of the search market, according to ComScore. In June of this year, Google held 62.6% of search queries; Yahoo held 18.9%; and Microsoft’s Bing has grown to an impressive 12.7%. Having a dominant position in a field with few barriers to entry is not a monopoly. Just ask MySpace.

Two days ago, however, the accusations that Google has a monopoly moved from the rhetoric to real threat as the European Commission opened an investigation into whether Google has abused its position as the dominant search engine by intentionally skewing search results to benefit entities it owns. From the EC’s press release announcing inquiry launch:

The Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services which are specialised in providing users with specific online content such as price comparisons (so-called vertical search services) and by according preferential placement to the results of its own vertical search services in order to shut out competing services. The Commission will also look into allegations that Google lowered the ‘Quality Score’ for sponsored links of competing vertical search services. The Quality Score is one of the factors that determine the price paid to Google by advertisers.

The argument here is not that Google is a monopoly because of its size. Rather, that Google has used illegal means to penalize competitors, which is what eventually gets so-called monopolies in trouble. I have long suspected that Google Blog Search favors blogs on the Google-owned Blogger/BlogSpot platform over rival WordPress. The EC review is based on favoring Google’s price comparison results over rival Foundem.

Two Google vice presidents have posted a response to the EC’s announcement on the Google Public Policy Blog, but they do not dispute the EC’s claim of favoritism. It was Microsoft’s exclusionary sales contracts that required PC makers to install its operating system and not competing software that got the software maker into antitrust trouble, not its market share.

As long as consumers have access to alternatives, does Google really have a monopoly on search? Does Facebook have a monopoly on social networking? The same could have been said of MySpace three years ago. MySpace has suffered hundreds of millions of dollars in losses for owner News Corp. Facebook could fade just as fast and, believe it or not, so could Google. In a previous post on this blog, we cited Morgan Stanley’s Mary Meeker as noting that seven of the top 15 Internet companies by market capitalization in 2004 are not in the top 15 today.

The primary reason for the demise of [Fortune 100] companies has been a failure to recognize and react to changing trends.

Those words come from the new book, MINITRENDS, by futurist John Vanston with Carrie Vanston. One of the main reasons the Vanstons wrote this book was to give large companies a formula for staying innovative. It’s easy for entrepreneurs to pioneer new ideas, and often much harder for those ideas to come from within giant organizations. But it can be done, and MINITRENDS provides a process these giants can use to identify and develop new methods and markets.

It has been Microsoft’s argument against the antitrust regulators that, absent criminal barriers to entry, its businesses are open to competition and subject to decline unless Microsoft continually innovates. Bill Gates, who is no stranger to the issues now facing Google, lashed out at Matt Ridley, author of the new book, The Rational Optimist, in last weekend’s WSJ Review:

Like many other authors who write about innovation, Mr. Ridley suggests that all innovation comes from new companies, with no contribution from established companies. As you might expect, I disagree with this view.

Gates knows that Facebook’s advertising network could upend Google’s fragile hold over the online advertising market, and that Facebook itself could fade as fast as MySpace did in a matter of a few years. For those companies who hope to stay ahead of the game, as Apple and Microsoft have consistently done, MINITRENDS provides a way of nurturing innovation — a process that itself is a significant innovation — in the quest to remain competitive.

STEVE O’KEEFE
News Editor, Minitrends Blog

Source: “In the Grip of the New Monopolists,” The Wall Street Journal, 11/13/10
Source: “Search engine Bing gains market share,” BBC Technology News, 07/14/10
Source: “Antitrust: Commission probes allegations of antitrust violations by Google,” EUROPA Press Releases, 11/30/10
Source: “MySpace losses lead way down for News Corp.,” Los Angeles Times, 08/05/09
Source: MINITRENDS: How Innovators & Entrepreneurs Discover & Profit From Business & Technology Trends, Technology Futures, Inc., p. 13.
Source: “Africa Needs Aid, Not Flawed Theories,” The Wall Street Journal, 11/27/10
Image by cambodia4kidsorg, used under its Creative Commons license.

TV Brawl: Broadcast, Cable Networks Battle as Viewers Cut the Cord

November 24, 2010

Cutting the cordFor the first time since the advent of cable television, the number of subscribers to cable TV is dropping, and it’s leading to some ugly fights as cable and television networks try to protect their turf.

For a thorough analysis of what’s going on, you can’t beat Jon Orlin’s coverage of cable’s decline at TechCrunch. Orlin is the production director for TechCrunchTV, and he formerly ran video production at Yahoo! Here are his latest numbers on the decline in cable subscribers:

In Q2 for the industry overall, a record 711,000 subscribers abandoned cable tv, and six of eight operators suffered their worst quarterly subscriber losses ever.

At Technologizer, Sean Captain, a freelance journalist who reports on media and technology for everyone from The New York Times to Iconoculture, says the rumors of cable TV’s demise are greatly exaggerated. Covering the annual Future of Television Conference at New York University last week, Captain opines:

[...C]ord cutting is about as real now as growing new organs in vats. Consumers will do it — but they won’t do it in droves just yet.

He might well have added that existing television providers will not go quietly into that good night, following the music companies who have watched as the market for recorded music has morphed into free online streaming.

On Monday, November 22, a U.S. District Court in New York issued a temporary restraining order prohibiting television streaming service, FilmOn, from re-transmitting over-the-air television broadcasts. FilmOn was sued by TV networks Fox, CBS, ABC, and NBC for re-transmitting their content without their consent.

Editor of The Washington Post‘s “PostTech” column, Cecilia Kang, describes FilmOn’s novel copyright defense as follows:

They point to a copyright exemption for cable television operators that allows them to retransmit broadcast signals by paying a copyright royalty fee.

Essentially, FilmOn is picking up Los Angeles television stations that broadcast over the air, then streaming these stations online. Since rolling out in the United States a few weeks ago, FilmOn has attracted 30 million users. The service is currently free and was still operational at this writing — a day after the restraining order was filed.

Cable TV’s grip on television-watching households is being challenged by Apple TV, Google TV, and a host of smaller competitors that allow people to watch their favorite television shows on a variety of devices through the Internet. TechCrunch’s Jon Orlin recently reported a “shocking statistic… [--] 20% of Internet traffic during peak times in the U.S. is coming from Netflix.” Just yesterday, video darling Netflix announced a new “streaming-only” plan for viewers who no longer need or want DVDs.

Also yesterday, Mike Shields, the digital media reporter for MediaWeek and AdWeek, reports that Viacom is blocking its cable lineup from being streamed by Google TV. Viacom owns Comedy Central, Nickelodeon, and MTV, among other popular cable channels.

Last month, we noted here that even the Consumer Electronics Association thinks TV is “played out.” We’d love to hear your comments about the future of television and the many services that are seeking to displace cable TV as the king of home entertainment.

STEVE O’KEEFE
News Editor, Minitrends Blog

Source: “Internet TV and The Death of Cable TV, really,” TechCrunch, 10/24/10
Source: “Cutting the Cable-TV Cord? Maybe Some Day,” Technologizer, 11/22/10
Source: “FilmOn streaming TV site temporarily shut down by court,” The Washington Post, 11/23/10
Source: “Viacom Blocks Google TV Users,” AdWeek, 11/23/10
Photo courtesy of uzi978, used under its Creative Commons license.

The Future of Futurists Is Uncertain

October 22, 2010

In a pair of interesting articles for MIT Technology Review, one of the best futurists in the business, Tom Simonite, says the future for futurists is not what it used to be. It appears that computers might be getting better at forecasting the future than futurists are.

Simonite is no slouch when it comes to predicting trends. Not only is he the IT editor for MIT Technology Review, he’s also the online technology reporter for NewScientist. On October 4, Simonite reviewed a new search technology by startup company Recorded Future that doesn’t just find what’s out there, but what will be out there, related to any search term.

The search engine works by looking at patterns of when a company says it will release a new product, for example, compared with the actual dates of product releases. The search engine can then make predictions about when a promised new technology will actually become available. Recorded Future founder Christopher Ahlberg told Simonite how it works:

[Recorded Future uses] a constantly updated index of what Ahlberg calls  ’streaming data,’ including news articles, filings with government regulators, Twitter updates, and transcripts from earnings calls or political and economic speeches. Recorded Future uses linguistic algorithms to identify specific types of events, such as product releases, mergers, or natural disasters, the date when those events will happen, and related entities such as people, companies, and countries.

In an earlier piece for MIT Technology Review, Simonite reviewed a new search technology developed by Yahoo, called “Time Explorer.” Like Recorded Future, Time Explorer searches through articles for predictions made about the future, then plots the results on a timeline so that browsers can see what is likely to occur on any given topic in the near future.

The future for Recorded Future looks bright. The company has received funding from the venture capital arms of both Google, Inc., and the Central Intelligence Agency. Being merely human, it’s hard for me to predict when this technology will be coming to a search engine near you.

STEVE O’KEEFE
News Editor, Minitrends Blog

Source: “See the Future with a Search,” MIT Technology Review, 10/4/10
Source: “A Search Service that Can Peer into the Future,” MIT Technology Review, 8/25/10
Video courtesy Recorded Future from the company’s YouTube Channel
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