DigitalFriend Blog

June 2012

App Store Potential

Fri, 22 Jun 2012 11:39:11 +1000

By: gosh'at' (Steve Goschnick)

This week Microsoft had an impromptu Press Event shrouded in mystery - something they don't often do. Therefore many people in tech were expecting something a little different than usual - but they certainly weren't expecting anything too radical, for that would be so out of character for Microsoft these days. We have become used to them chasing up after other companies well after a new market has proven itself. Sure enough, when it was unveiled we got a new Tablet design called the Microsoft Surface - a product they actually did pioneer about a decade ago (but when battery recharges where far more frequent), with a point-of-difference or two from the iPad - it has a keyboard/cover and a standard USB port.

However, what one was 'hoping' for, could be something entirely less reasoned: In my case I was hoping for a rethink from Bill Gates, enough for him to come back and lead the company for a little while, giving it some much needed direction - particularly marketing direction, and his special kind of zeal and global focus. He's done a great job using that zeal on promoting the development of vaccines for malaria and other persistent bugs. He has done a revolutionary job on providing and distributing cost effective vaccines for the world's poorest and neediest children, turning the previous model on its head, putting in place an accountable delivery system, paying for much of it, and saving literally millions of young lives. He has good and capable people at the helm of his philanthropic ventures. The current cross-roads that the tech world finds itself at, provides an opportunity for Gates to bring together his two great achievements.

Apple Inc, with Steve Jobs at the helm, gave the Internet intelligentsia a timely reminder that content innovators and developers need a livelihood too, with the concept of the App Store, full of apps, and a iBook store full of interactive books, coming from a myriad of independent publishers (so-called Indies). However, this left-field initiative is currently in danger of being overturned by the usual Big Business juggernaut trying to funnel the wares, innovations and hard work of hundreds of thousands (soon to be millions) of indies, into either: the profits of existing corporate giants (e.g. Google's advertising revenue stream - read: free apps, with in-app ads); or amalgamated into just a few start-ups that become disruptive, venture-capitalist-driven mega-corporations, eventually (e.g. Facebook). Witness how Zynga bought-up a multitude of game developers in an effort to claim a value of $10 billion, before it floated (more than what Electronic Arts is worth - a company doing great creative work, for over a 3 decade period). Zynga is still valued at $5 billion on its share price today, so the old Vulture Capital game, though faltering a little, still works in tech - unfortunately. Sure, we need a handful or two of Big companies to provide the infrastructure and the platform - but we have enough of those: Google, Apple, Samsung, Microsoft, RIM, now Facebook, probably soon Twitter - but how many more do we really need at the mega-corporation level? We certainly need more with a proper global perspective.

There is an endless pressure/expectation to turn small innovative companies and partnerships into a large one, that gobbles-up the others (e.g. Zynga) or a system that renders them unnoticed (e.g. the celebrity-like channeled focus on Angry Birds). Business needs to change fundamentally, for the planet's sake really, for peoples to sustain themselves, where they are. We already have enough large global infrastructure companies. A new global business model needs to not just encourage indie development, but economically 'sustain' indie business, long term, worldwide. Apple has started it but their visionary has left the building. The new guy has demonstrated that he understands the Apple profit motive very well, but we are yet to see any brilliant counter-intuitive, grass-roots moves from him.

Most indie developers want to stay small and innovative. They want to make an above-average income doing it, doing what they love doing, working for themselves and their immediate family and a few associates - raising their quality of life and those around them in the process. They don't want to be the next Facebook/Twitter/Zynga/Amazon. The existing Big tech companies just don't get that. Silicon Valley doesn't get that. (Note: Venture Capitalist's routinely call these sorts of contented small companies 'the living dead' - so don't feel that I was too harsh before in using the 'Vulture' term on them in turn). The VC model in computer tech 'is the problem' - capital is no longer needed to get a new product to market - instead it should go and finance mining an asteroid or some seriously needed cancer vaccine, something that actually involves considerable risk. Capital in computer tech is now mainly used to finance patent trolls, as they construct a defendable business model around what was usually 'prior art'. The gravitational pull that forces new companies to get bigger and bigger, else die, is still endemic. They head towards monopoly and settle for an oligopoly or a legal duopoly - not quite monopolies, but they may as well be for all their in-step actions. Many of the problems of countries in the West are caused by them, witness high: food prices, petrol prices, utility prices, bank charges, toll road rates, etc. etc. What's the difference between that and the completely State-owned model?: about one company per market segment.

I hope that Microsoft will now/soon 'get it' with Window Phone 8 and Windows 8 - by offering and properly sustaining a new marketplace/app store and appropriate business-model support for indies, in all countries of operation, long term - where they could demonstrate that they do 'Get It!'. The other companies just don't really 'get it'. I.e. This particular business direction is still not serviced well by any of the Big companies. Apple goes closest but outside of the US, the Indie is significantly disadvantaged (Also, the fact that they have happily burned millions of Java and Flash developers shows that they aren't necessarily the friend of the Indie software publisher). Google is off the scent - they've been stuck in a mindset of 'open source' for everyone else's main product, while billions of dollars of advertising revenue for them. Back in late 2010 Eric Schmidt predicted that all those troublesome indie developers would be consumed by an elite at the top, Darwinian-style via the VC machine - so Google didn't need to look after the app market place too much - and they didn't. (To be fair, the new app store 'Google Play' under Larry Page's leadership, shows more respect and facility to the indie developers selling their wares, than the Android Market did before it. They are starting to 'Get it'.)

I think an earlier-Microsoft, a Microsoft evident in the era of a younger Bill Gates at the helm, would have 'Got It!'. Back then they had a very large, diverse, proactive indie developer base, all following them with enthusiasm because of their tools and yes, innovation. Whereas now, they only have the loyalty of those CIOs and senior IT Managers, overseeing a corporate IT shop that heavily leans towards Microsoft products (fast being exposed to the iPad invasion via user department and even CEO direct purchases). I'm really hoping the current 'unfolding' version of Microsoft becomes a champion of the small, sustainable, Indie content developer culture around the world - in the sense of sustaining them in a respectable, comfortable, life to-be-emulated (in a local community role-model sense), in doing well at what they love to do best. Mobile already has the necessary reach to make it all viable.

So Bill, what do you say? You don't have to roll your good friend Steve Ballmer who has been keeping shop rather efficiently and seems to have nicely loaded the bases of late. Just partner with him at the helm for a serious chance to make a long-needed Home Run. And together put the Indie developer up front and keep them there for a good long while, and see how that transforms and creates sustainable life-enhancing small businesses at a grassroots level, across the states, cities and townships and around the planet - with the handy and fitting reward of both: keeping Microsoft as one of those few major infrastructure/platform companies that are actually needed globally; and giving esteem-building self-employment to many who need it at HOME, Home and home.



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