The Proliferation of Connected Devices and the Need for Offloading

Last week, Google launched its own, unlocked 'superphone', the Nexus One. Apart from a possible reference to the movie 'Blade Runner', the name 'Nexus' may also refer to the fact that today's smart or superphones are an amalgam of mobile technology, cloud services and connectivity.

The capabilities of mobile devices are developing at a neck-breaking pace. Ever more smartphones, netbooks and e-readers are equipped with the powerful and energy efficient processors of companies like Intel and ARM. Later this month, Apple is believed to introduce the 'iSlate', a so-called tablet computer . Tablets are apparantly the new form factor for mobile computers as OLPC (One Laptop Per Child), whose activities contributed to the birth of 'netbooks', plan for a tablet version (OLPC 3.0) by 2012. Freescale recently announced a reference design for tablets based on its own technology, while during last week's Consumer Electronics Show (CES) both HP and Dell showed off tablet-like devices.

Many of the applications and content that are to be used on these tablets will reside in the 'cloud'. This helps to save on processing power and storage, which in turn benefits weight and battery life. [Spotify, Pandora] Apple's acquisition of LaLa, a music streaming service, may suggest that in the near future Apple users no longer have to sync their music library between numerous computers, iPhones and/or iSlates, but can access their library where ever they are and whatever device they work with or carry with them. Even Hollywood seems to consider streaming the way forward: except for Disney, who has its own technology, all major studios are working together in DECE to come up with a standard for online distribution of movies.

The proliferation of connected mobile devices and their use of cloud and/or streaming services will result in very strong growth in mobile data. Cisco forecasts that global mobile data traffic will increase 66 times between 2008 and 2013, which compares to a CAGR of 131 percent. Such growth is likely to put mobile carriers' networks to the test, as is illustrated by the problems that AT&T is having in New York City and T-Mobile Netherlands in the Amsterdam Arena and Amsterdam Central Station.

It is for this reason that mobile carriers should consider ways to offload mobile data traffic from their core network, for example through auto-roaming onto private and public WiFi networks. This way, the core network is reserved for voice traffic and subscribers who are not within WiFi coverage. Subscribers benefit as they experience faster mobile data connections, while carriers can reduce their investment in additional network capacity (primarily RAN, although backhaul connections may also need to be upgraded).

Offloading provides operator-owned WiFi networks (Netherlands: KPN, T-Mobile) with a new lease on life. Carriers that do not yet have a network of WiFi hotspots should partner with one or more hotspot providers. For example, O2 is partnering with BT Fon, which has over 500.000 hotspots in the UK and 700.000 worldwide. Such a partnership is far cheaper than having to invest in additional RAN and backhaul capacity and given that most operators nowadays rely on flat fee data bundles, no revenue is lost through offloading mobile data traffic.

My Apple Media Center

I recently completed setting up my Apple-based media center. Based on a Mac mini, AppleTV, eyeTV and Airport Express, this set-up lets me record TV shows on my computer and view them on my flatscreen TV, while music from iTunes can be streamed to my stereo, providing me with a much better listening experience than those small PC speakers. Below I'll describe my set-up in some more detail:

• I am using Elgato Systems' EyeTV Hybrid to record TV shows on my computer, which are then automatically converted to an AppleTV-compatible format and added to my iTunes library. By doing so, these shows are automatically synchronized with my AppleTV and thus available for watching whenever I want. Using tvtv's Electronic Program Guide, recordings can be scheduled in advance. Although video recordings can become quite large in size, storage is not an issue as I added a 500GB LaCie miniHUB to the set-up.
  
  
• To be able to view other video content on my 32" Samsung flatscreen TV, I use iSquint. iSquint is a powerful open-souce app that can convert nearly any video format to the MPEG-4 format, which is required by AppleTV. Like eyeTV, iSquint can automatically add converted files to your iTunes library and thus to your AppleTV. Ain't that convenient?
  
  
• Apple's Airport Express lets me retire my CD player. With all my music available in iTunes, I can stream any song, album or playlist directly to my stereo. This set-up has the advantage that now all my music can be scrobbled and uploaded to my last.fm profile. While officially Airport Express only works in combination with iTunes, Rogue Amoeba's AirFoil lets you stream other audio sources via Airport Express as well. Hence, when listening to webradio or other webstreams you're no longer bound to your computer either.

A key element in this whole set-up is my AppleTV. I was probably one of the first people in the Netherlands to own one: I had it pre-ordered and when I picked it up from the Apple Store I was told that they would not be able to offer any support yet as they didn't even have one set-up in the store themselves. Although its practical use is limited as the iTunes Store is not yet selling movies or music videos in Europe, using AppleTV in combination with eyeTV and iSquint makes it well worth its $299 price. BTW, one of the video podcasts I enjoy watching via AppleTV is GeekBrief TV with Cali Lewis.

One thing AppleTV doesn't let me do is to watch webcasts or videostreams directly on my TV. That would be ideal in combination with Joost, the new brainchild of the founders of KaZaa and Skype. Using some of the same peer-to-peer technology as KaZaa and Skype, 'Joost is a new way of watching TV on the internet. With Joost, you get all the things you love about TV, including a high-quality full-screen picture, hundreds of full-length shows and easy channel-flipping.' I actually have the privilege of being a Joost beta-tester and it is my belief that online TV services like Joost may very soon come to compete with traditional TV, especially theme channels which make up the majority of cable operators' premium packages.

Up In The Cloud

Slowly but surely more and more of my digital life is moving up in the cloud. It started with this blog and a Flickr account before I even had my own digital camera. I hardly used my Flickr Pro account, so despite the fact that I nowadays do own a Canon Digital IXUS 40 I will stick with a basic account for the time being... My life is simply not that exciting and photogenic (...). This week, however, a trip to Finnish Lapland is on the agenda, so provided the battery will last in the cold (last week's maximum temperature was -15 degrees Celsius), expect me to post some nice pics upon return.

Next up was me using .Mac to sync calendars, contacts, keychains, mail accounts and mail settings between my MacBook Pro (March 2006 - ??) and Mac mini (January 2007 - ??), back up files and make files accessible away from home using iDisk. Especially iDisk proves to be very useful for me as it gives me access to private files away from home and working on my company laptop.

Then of course there are the sublime Google services like Google Calendar, Docs & Spreadsheets, Gmail and Notebook. With its 2GB storage capacity per account Gmail can actually be used in much the same way as .Mac's iDisk. A recent addition, Picasa Web Albums, allows you to create online photo albums a la Flickr, but you probably won't be surprised to learn that I haven't used Picasa yet (if you are surprised, something may be wrong with your short term memory! What did I just tell you about my Flickr usage?!).

But while all these web-based services and Web 2.0 sites are great, they are not the ones that triggered me to write this post. That honor goes to MP3tunes and Last.fm. MP3tunes, which was founded by Michael Robertson, of MP3.com and Linspire fame, provides you with a 'locker' wherein you can store all your digital music. Once you have uploaded all or part of your music to your locker, you can play your own music everywhere around the world, provided that you're connected to the cloud and the computer (or other internet-enabled device, i.e. Nokia's n800) you're using has an audio card and speakers. For playback you can either use MP3tunes' Flash player or you can stream them through your favorite mediaplayer. Music that is protected with DRM, for example anything bought in the iTunes store, can only be played by streaming it via the associated mediaplayer (in our example that would be iTunes). Big deal, you might say. But now imagine that you're working late and with all your colleagues gone you wouldn't mind listening to that CD you bought the other day. Simply accessing your locker from your desktop computer will do the trick. Or otherwise think of the many times you're over at a friend's place and you come to talk about this great new artist you recently discovered (yeah right...). Now you can let him hear it for himself straight away. Or when you're on holiday and catching up on your work e-mail in an internet cafe... O.K., I figure you're probably getting it by now.

Actually, when we talk about sharing your musical preferences and discovering new music and artists, that is precisely what Last.fm helps you to do. As you listen to music and use Last.fm, you build up a unique musical profile to share with your friends. Using a technique named 'scrobbling', Last.fm keeps track of all the music you play on your computer and, amongst others, tells you how your musical preferences compare to those of your scrobbling friends. It also finds you some musical neighbours, people whose taste in music appears to be quite similar to your own. That way you may find out about some new artist that you were unfamiliar with but whose music you mostly probably will appreciate as well. So there you have it, a social network where people connect on the basis of their musical preferences. But instead of writing and reading about it, I suggest you tune in to Last.fm and check it out yourself. In case you want to learn more about my taste in music, know that I go by the name of 'musicomnivore' (that's a bit of a give-away, isn't it?).

Final thought: that internet connection seems to turn into somewhat of an umbilical cord that connects me to my digital life...

Autumn cleaning

Although I don't want to use this blog as a personal diary, I found I had to share this particular event with the outside world nonetheless. As mentioned in my personal profile, I am quite a bit of a business magazine addict. Ever since graduation from London Business School in July 1998, I subscribe to both BusinessWeek and The Economist. "So what", you might say, "big deal!". It is not so much, however, that I subscribe to these magazines, but that I held on to every single issue since August 1998!! In these thousands of pages, you could read all about the internet hype, the Millenium, the bursting of the internet bubble, 9/11, the war in Afghanistan, the war in Iraq, Enron, the bombings in London, the rise of India and China and much, much more.

But now I have decided to throw them out. But before I did so, I took a few photos, which you find below. How's that for autumn cleaning?!

Synkronized

Yes, I know the title of this post is misspelled and should read 'Synchronized' instead, but being the creative person I am (...) I just had to include this subtle reference to Jamiroquai's 1999 album by the same name. This post is not about music, however. In my previous post I mentioned that Parallels Desktop for Mac allows me to run alternative operating systems like suse 10.1 and Windows XP in parallel with Mac OSX, without having to reboot. Furthermore, Parallels Tools enable folder and file sharing between Mac OSX and Windows XP. Something Parallels doesn't support is the sharing of bookmarks, cookies, saved passwords and browse history among browsers in different virtual machines. For a true Transparent OS to materialize, however, such synchronization would be required. Enter Google Browser Sync.

This extension for the Firefox browser allows you to synchronize your browser settings – including bookmarks, history, persistent cookies, and saved passwords – across your computers (or virtual machines, for that matter). It also allows you to restore open tabs and windows across different machines and browser sessions. Instead of having to export and import bookmarks from one computer to another yourself and maintaining synchronization manually, this extension does all this for you, automatically. But the real benefits come from sharing cookies and passwords and having a single browse history across computers or virtual machines. It is easy to continue a session that you started on another computer, while looking up the URL of that site you visited yesterday while working from your desktop is now possible as well.

Although Google will most likely have developed this extension with sharing across physical computers in mind, its use across multiple virtual machines is illustrative of the kind of synchronization mechanisms needed to turn the Transparent OS into a reality.

Transparent OS

In my previous post, I wrote about the network becoming the computer and the reduced relevance of a computer's OS as more and more applications move online, thus enabled by AJAX (Asynchronous JavaScript and XML). But although these developments indeed make it less relevant which OS you are running on your computer, it is a given that every computer still needs one. Did I just say 'one'? If current developments around virtualization are any indication, many of us will soon not have just one but multiple OSs running alongside each other, enabling us to work with our favorite applications without having to worry whether or not our system operates under the right OS, i.e. Windows XP, Mac OSX or Linux. This end-state, whereby it is transparent to the user which OS underlies a particular application, I have come to call the 'transparent OS'. Although the industry still has a long road to travel before this state is reached, several developments point in this direction.



As the proud owner of a MacBook Pro with Intel Core Duo processor, I recently installed Parallels Desktop for Mac (RC2). This virtualization software allows me to run Windows XP and Suse Linux 10.1 alongside Mac OSX, without the need to reboot as is required by Apple's own BootCamp. Furthermore, Parallels Tools enables, amongst other things, clipboard synchronization and shared folders between host and guest OSs. This makes that I can use each OS for tasks that it is best suited for; Suse Linux 10.1 for the geeky stuff, Windows XP for the mainstream stuff and Mac OSX for the 'insanely great' stuff! In all honesty, I first and foremost work under Mac OSX but especially in situations where no support for Mac OSX is available (yet), the power (and potential) of the virtualization concept in a consumer context comes to the fore. In the post 'DRM = DRaMa', I mentioned the fact that my ISP provides IP television services, which work with Windows Media Player only. This meant that whenever I wanted use this service, I had to boot up my Dell laptop from work, even if I was working on another, non-Windows computer at the same time. Now, I can work on whatever I need to do on my MacBook Pro, watching some IP TV via Windows Media Player under Windows XP in a separate window on my Mac OSX desktop at the same time. That's progress, don't you think? ;-)

Maybe this example has not yet really convinced you of the validity of my claim that the 'transparent OS' is upon us. In that case, listen to this. It is rumored that Apple may actually incorporate the Windows API in the next version of its own operating system, Mac OSX 10.5. This would mean that users, who are hesitant to upgrade to Vista (Microsoft's own new OS, now due out in 2007) but are looking for a stable and virus-free OS, can buy themselves an Apple computer while still being able to run all their (expensive) Windows XP applications. As said, all this is based on rumors, but if it turns out to be true it sure brings the 'transparent OS' a step closer! So, watch this space!

The Network Is The Computer, Finally

For years, Sun has been proclaiming that "the network is the computer". With the Sun Grid (www.network.com) becoming available in the U.S., this message is no longer pretentious or overblown. Every American with a big computing job and a Paypal account can now buying an hour of computing power for just $1.00. For the time being (?), Sun has to restrict access to U.S. citizens only, as the FBI (or NSA) fear that when such computing power is made available to the wrong people (read: spammers, terrorists,...) it could be turned into a weapon of some sort...

With this first commercial grid becoming available, I believe we get a peek of what the future will look like. Instead of having to invest in powerful hardware themselves, both scientists and start-ups can rely on grids. With massive computing power being available to all at low costs, more and more companies will get involved in data mining, searching for patterns in click streams, purchase behaviors, etc. In his article 'Competing on Analytics' in the January 2006 issue of Harvard Business Review, Thomas H. Davenport already showed how a new breed of competitor like Amazon, Harrah's and Capital One is dominating rivals by amassing and analyzing mountains of data. BusinessWeek, in turn, ran a feature on the increased applicatbility of mathematics, including statistics, in business. One of the world's largest consumer goods companies, Unilever, actually started to experiment with grids a couple of years ago, recognizing their potential value early on.

But apart from computing power, more and more applications are being transferred to the network. AJAX, which stands for 'Asynchronous Javascript and XML', enables a new type of web applications, which already begin to compete with client-based applications like Word and Outlook. So, it will not just be ASP-like offerings like salesforce.com that replace client-side applications, but also innovative services like AJAXwrite, AJAXsketch and Zimbra, which challenge traditional desktop apps like Word, PowerPoint and Outlook.

Hence, with broadband, both wired and wireless, becoming near-ubiquitious, the network may indeed become the computer. At the same time, Scott McNealy is to be considered a true visionary, foreseeing this trend as long as 10 years ago!

Office Perils

Last year, in a post on July 30, title The Power of Open Put To The Test, I mentioned a test I was planning to see how open source productivity tools held up in a consulting environment, where colleagues and clients rely on Microsoft's Office suite. Outcome of this test, which focused primarily on OpenOffice 2.0's compatibility with MS Office, is that while functionality-wise OpenOffice (OO) appears to match MS Office fully, some things still go astray with respect to the conversion of document formats. For example, while the quality of import and export filters in Impress has made a giant leap when compared to previous versions of OO, layouts may still get mixed up a bit when PowerPoint documents are imported.

Another barrier to full-fledged adoption of OO by professionals like me is the lack of support for macros in Excel. Programmed in Microsoft's proprietary Visual Basic it is understandable that OO does not support them, but it also makes that I will never have the required 100% guarantee that Excel models produced by colleagues or clients will function in Calc as intended. And although I strongly discourage colleagues to use macros in the first place - Keep it simple, stupid! (KISS) - it sometimes proves too tempting to resist. Hence, it still is a bridge too far for consultants to rely solely on open source productivity tools for their day-to-day work, especially as most of their clients are likely to use MS Office.

Given these issues, the use of Linux-based laptops by professionals is somewhat problematic as well. While Microsoft does offer Office for Mac, the release of a Linux version of Office is highly unlikely. A more practical work-around would be running MS Office under Wine, a Windows emulator for Linux. However, the fact that Wine is still working towards version 1.0 (currently at version 0.9.8), full compatibility and stability cannot be guaranteed yet. Or you could buy CodeWeavers' CrossOver Office, which allows you to run a broad range of Windows applications under Linux. Finally, one could simply wait until open source projects like OO fully support the Microsoft Office Open XML format, whose specifications were released some time ago. But be warned: you may have to wait forever!

Drucker Revisited

In an earlier post, commenting on the death of Peter F. Drucker, I mentioned that the next book I would read would be one of Drucker's. Although I slipped in some other books first (Richard Florida's The Rise of the Creative Class and The Flight of the Creative Class), I finished Drucker's The Practice of Management from 1954 about two weeks ago. I can now understand why Drucker is often called 'the Guru of Gurus'. Although his language is sometimes somewhat dated (or just typical 50s), he writes about management in a clear and concise way, discussing topics which are still being debated by management writers today. According to Drucker, management is made up of three things, namely managing a business, managing managers and managing worker and work. The work of the manager himself consists of five basic operations:

• Setting objectives
• Organizing
• Motivating and communicating
• Measuring
• Developing people

The Practice of Management is the book in which Drucker introduced Management by Objectives (MBO), which is very much the front runner of Kaplan and Norton's Balanced Scorecard. In essence a tool to establish alignment and implement strategy, it touches upon business architecture, the subject of my own book, as well, although indirectly. In conclusion I can say that I enjoyed reading my first Drucker book and believe that some more will follow in the future.

Google, Don't Be Evil!

Yesterday, Google announced its Google Video Store, which will sell thousands of downloads, including recent television broadcasts of popular CBS shows and professional basketball games, as well as vintage episodes from series that went off the air decades ago. The video providers have the option of offering content on a download-to-own or download-to-rent basis. In contrast to iTunes, Google Video will allow content owners to set their own prices.

Although this is exciting news, I am also a bit worried by this announcement. Google will use its own flavor of DRM (Google DRM) to protect this video content, if its owner desires to do so. This makes that these videos can only be viewed using Google's proprietary viewer and cannot be transferred to any mobile device like Apple's iPod Video. That in itself may be acceptable, but not the fact that Google only supports the Microsoft platform.

Google also announced its Google Pack, a one-stop software package that helps you discover, install, and maintain a wide range of essential PC programs. It contains several Google applications such as Google Earth, Google Picasa, Google ScreenSaver and Google Desktop, as well as several third party applications like the Firefox browser, Norton AntiVirus software and Adobe's Acrobat Reader. But again, the Google Pack is only available for Windows XP users. And although the FAQs of the individual Google applications mention that they might consider Mac support in the future, nothing is said about Linux.

This kind of bugs me, especially because Google is known for running its thousands of servers under Linux and making valuable contributions to the Open Source community. But if even Google chooses to support only the dominant platform, others are unlikely to act differently. As argued in my previous post, such behavior will seriously limit the success of the Linux Desktop. So, for what it is worth I would like to call upon Google to live up to its motto 'Don't be evil' and bring its applications and services to other major platforms (Mac and Linux) as soon as possible, thus enabling true competition at the platform level.

Postscript [12/1/06]: Today, Google released a Mac version of Google Earth, so it may indeed live up to its promise to consider Mac support for its applications in the future.

DRM = DRaMa

It is often said that the success of Linux at the desktop will first and foremost depend on the wide, Windows-like availability of applications and games. Personally, however, I believe that Digital Rights Management (DRM) is potentially a much bigger threat to the success of the Linux desktop than the limited availability of applications and games in comparison to Windows. The move towards web-based applications continues, reducing the importance/relevance of users' local platform/operating system; this trend is related to the arrival of 'Web 2.0'. Furthermore, games may nowadays be popular with both the young and old, but this mainly concerns console gaming, i.e. Xbox or Playstation2; the contingent of users who base their choice of PC platform on the related availability of games is in my belief very small indeed. DRM, on the other hand, may seriously limit the uptake of the Linux desktop among consumers as major DRM systems tend to ignore it, either for competitive reasons (Microosft, Apple) or lack of scale (Adobe, IP TV initiatives).

DRM offers Microsoft a very powerful and effective weapon to enforce its desktop monopoly. Advertising its Windows Media DRM as 'a proven platform to protect and securely deliver content for playback on a computer, portable device or network device,' Microsoft omits to explain that the related codecs (encoder/decoder) are only available for the Windows platform as part of its own Windows Media Player. Hence, third party content that is protected using Windows Media DRM is only available to Windows users. Apple, in that sense, is less restrictive. Its DRM system, Fairplay, caters to both the Macintosh and Windows platform, allowing users of these platforms to watch protected movies (Quicktime), buy music (iTunes Music Store) and listen to that purchased music on their desktop (iTunes). But while the decision to support the competing Windows platform is obviously related to the latter's market share, Apple is unlikely to bring Fairplay to other competitive platforms such as Linux. Hence, Linux users will be locked out from consuming DRM-based content; to do so, they will need to have access to another desktop environment as well. As perosnal computers morph into personal media centers, Microsoft is using DRM to tie the average conumer to its Windows platform, maintaining and enforcing its desktop monopoly.

Two other examples of DRM-related issues Linux users may run into involve e-books and IP TV. Although Adobe offers a Linux-version of its popular Acrobat Reader, this version does not include the e-book reader found in the Windows and Mac versions of the software. This excludes Linux users from buying and reading protected e-books from, for example, Amazon.com. Similarly, my ISP's IP TV service requires the use of Windows Media Player, thereby excluding users of any other platform from this service. While these limitations are likely to stem from the fact that it would not be economically feasible to support smaller platforms, they pose another threat to the future success of the Linux desktop.

So, maybe the EU should not force Microsoft to offer a copy of the Windows operating system without its Windows Media Player pre-installed, but force it to make versions of that player available on other platforms instead. Ideally, all DRM systems should be forced to be available for all major platforms/ operating systems as to ensure that they do not obstruct fair competition at the platform/OS level. Until that time, DRM stands for DRaMa to the Linux desktop and its users.

The Tipping Point

I just finished reading The Tipping Point by Malcolm Gladwell. Published in 2000, the book soon became an international bestseller. Although I had heard enthusiastic stories about this book, it was not until last weekend that I bought my own copy of The Tipping Point, together with Gladwell's second book, Blink, which was published earlier this year.

In the book, whose subtitle is "How Little Things Can Make A Big Difference", Gladwell explains and analyses the 'tipping point', that magic moment when ideas, trends and social behaviours cross a threshold, tip and spread like wildfire. In other words, Gladwell looks at what causes social epidemics.

According to Gladwell, three rules underlie the Tipping Point: the Law of the Few, the Stickiness Factor and the Power of Context. The first rule, the Law of the Few, states that the success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts. There are three kinds of people: Connectors, Mavens and Salesmen. Connectors are people who are (surprise!) very well-connected in that they know many others. They bring distinct groups together, acting as 'hubs'. A Maven, on the other hand, is someone who accumulates knowledge, they are information brokers and can be compared to human data banks. Salesmen, finally, are pursuaders, who build trust and rapport far quicker than normal people. It is Connectors, Mavens and Salesmen who super-charge the word-of-mouth mechanism, thereby starting social epidemics.

Not every message, however, will start an epidemic. Such messages should be 'sticky' and hence the Stickiness Factor relates to the structure and format of the message. The message should create some sort of involvement, moving people to action. Furthermore, the delivery of the message should involve repetition, making the message more memorable. Finally, there is the Power of Context, which means that the circumstances have a lot to do with the fact of a message tipping or not; to tip or not to tip, that's the question.

A former business and science writer at the Washington Post, Gladwell illustrates the rules primarily with social examples, apart from a brief discussion of the concept of the 'chasm' in high-tech marketing as described by Geoffrey Moore in his book Crossing the Chasm. It is not difficult to see, however, that buzz marketing is based on similar concepts. I was surprised to find that the author did not make any reference to the field of system dynamics, especially because Jay W. Forrester has written extensively on the application of system dynamics to social problems such as unemployment in America's big cities. Nevertheless, The Tipping Point is an interesting read and I can only hope that Blink is equally insightful.

Postscript: Check out www.digitaltippingpoint.com, which addresses the question as to when Open Source software and in particular Linux will reach the tipping point and overtake closed source and Microsoft Windows on the desktop.

Peter F. Drucker

A week ago, on Friday November 11th, Peter F. Drucker passed away in his sleep, aged 95. Having published 38 books, Drucker is generally considered the guru's guru and according to BusinessWeek Drucker was "the man who invented management." However, being the business junkie I am, I must admit that I have never read any of Drucker's books. I am not alone in this, though. Tom Peters says he earned two advanced degrees, including a PhD in business, without once studying Drucker or reading a single book written by him.

This week, many of the publications I read dedicate one or more articles to Peter F. Drucker and his legacy. BusinessWeek's cover story is aptly titled "The Man Who Invented Management: Peter Drucker", while The Economist runs a special report, "Trusting the teacher in the grey-flannel suit." Knowledge@Wharton runs a story, "Farewell, Peter Drucker: A Tribute to an Intellectual Giant", wherein various Wharton professors reflect on his legacy and his contribution to management education and Wharton in particular. Having read these articles it is clear to me that the next book I buy has to be one by Peter Drucker. According to Drucker himself, he did his best work early on - in the 1950s, so I think I will start with The Practice of Management, published in 1954.

Books on System Dynamics

I just finished reading The Critical Path, Building strategic performance through time by Kim Warren, who recently received the System Dynamics Society's Jay W. Forrester Prize 2005 for his contributions to the field, especially his 2002 book Competitive Strategy Dynamics. The Critical Path is a nice 'primer' for time-strung managers, but those who consider using strategy dynamics' related techniques within their own organization are advised to read the more elaborate Competitive Strategy Dynamics as well. In these two books, Kim Warren, who was one of my lecturers at London Business School back in '97/'98, discusses the use of system dynamics in a strategic management context, which also explains why he is talking about 'strategy dynamics' instead of the more traditional 'system dynamics' or 'business dynamics'.

Warren's books are just two of the books on system dynamics in my personal business 'library'. Holding over 100 titles, at least 7 of them deal with system dynamics and systems thinking:

• Industrial Dynamics, Jay W. Forrester, 1961 (the book that got it all started!)
• The Fifth Discipline, The Art & Practice of The Learning Organization, Peter M. Senge, 1990
• Modeling for Learning Organizations, John D.W. Morecroft, John D. Sterman (editors), 1994
• Business Dynamics, Overcoming the limits to growth, The McKinsey Quarterly Anthologies, 1995
• Business Dynamics, Systems Thinking and Modeling for a Complex World, John D. Sterman, 2000
• Competitive Strategy Dynamics, Kim Warren, 2002
• The Critical Path, Building strategic performance through time, Kim Warren, 2003

As mentioned in previous posts, I am quite fond of the system dynamics/systems thinking approach and this list illustrates that I at least put my money where my mouth is, namely in books on the subject...

Funky Design

I finally got to read Funky Business (2000) and Karaoke Capitalism (2004) by Jonas Ridderstrale and Kjell Nordstrom, two Swedish economists, affiliated with the Stockholm School of Economics. Having enjoyed Funky Business a lot, I needed less than 2 days to read through Karaoke Capitalism (295 pages). And yes, it's not uncommon for me to spend my weekends like that...

One of Ridderstrale and Nordstrom's theses is that the best thing companies can do in near-perfect markets where total competition rules is to strive for so-called 'temporary monopolies'. These monopolies are based on emotions and imagination; the authors speak about E(motional) competitiveness. In this reality "[c]ompetitive strategy is the road to nowhere. We need to create sensational strategies. Sensational strategies capture the attention of the people with whom we want to do business. Sensational strategies appeal to all five senses of man. They embrace our emotions. Competitive strategy means being one step ahead. Sensational strategy is about playing a different game." (p.267).

There are supposed to be two sensational strategies, one based on ethics and the other based on aesthetics. Companies like the Body Shop and Toyota that follow the ethics route stand for something and everyone and everything at the company is guided by it. The second sensational strategy is based on aesthetics. As it becomes harder and harder to differentiate products and services and everything is more or less the same, products' and services' exterior appearance becomes the basis for competition. The incredible success of Apple's iPod and other 'eye candy' like the iMac and its Mac OS X user interface seem to support this claim. In a sense it is also related to what others have come to call the 'Experience Economy'. Besides playing to consumers' reason, companies should also address their affection, intuition and desire (RAID).

Design is obviously becoming a competitive weapon. BusinessWeek first wrote about this in its May 17, 2004 issue (The Power of Design, p.68-75), and more recently it published a Special Report on the Creative Company (August 8/15, 2005, p.51-69). Both articles come highly recommended.

Don't Be a Leacher! Contribute!

Web 2.0, the social network, the web made up of blogs, photo-sharing sites and tags, thrives on active participation. The value of this network increases not just due to more people reading other people's blogs, viewing their photo's and using their tags to search the web, but by more people actively blogging, sharing and tagging themselves. Hence, the network effect should only be contributed to those who actively contribute to such a social network.

Open source communities are essentially networks as well. Due to the contribution of many volunteers someting of value is created. Following the success of Linux, Apache and Firefox, just to name a few, the open source development model seems to be the model of the future. That is, if users and/or companies are to act as active contributors and/or participants within these communities, instead of 'leachers' who just take and use the fruits of others' labour, hoping that the latter will continue doing their 'free, open source thingy'. Such behaviour would eventually lead to programmers and other creatives being less and less willing to make their creations available to others.

A first sign that the open source development model may not always work as advertised is found in the problems that both the Firefox and OpenOffice communities experienced with respect to finding enough capable and motivated programmers to work on new releases. Obviously, a large user base does not automatically translate in a large contributor base. In an interview with BusinessWeek Online, Marc Fleury of JBoss fame actually called the viability of the commercial use of the open source development model in question altogether.

At the same time, however, a lot of commercial and non-commercial open source initiatives are underway to develop business applications ranging from data warehouses and CRM systems to complete ERP systems. Companies have a lot to gain from such open source software; save on the cost of licenses and support, avoid supplier lock-in, customize applications to own needs, etcetera. But if the majority of them remain passive users, who just enjoy the benefits without giving anything back to these communities, then the open source party may soon be over. It should be more of a 'give and take', whereby companies that use open source business applications at times try to contribute components and/or code and become involved in steering the direction in which these projects develop. Some of them may actually turn in-house development projects into open source projects, thereby leveraging the knowledge of the community and benefitting from extremely Quality Control ('many eyes make all bugs shallow'). Even if a company does not have an IT department capable of the above, it may still contribute through user testing or documenting the application.

Similar arguments hold with respect to open source initiatives in the consumer space. Here, however, the problem may be less stringent as the pool of users from which active contributors will come is much larger. But even if you don't want or can't contribute directly, you can always make (small) monetary contributions. Bram Cohen, the creator of Bittorrent, earns himself a comfortable living through voluntary donations and it is also through donations that contributors to IT Conversations get rewarded for their efforts. Whereas in the past incompatible international payment systems made it difficult (and expensive) for good-intentioned users of shareware to pay the creator his requested fee, internet-based payment systems such as PayPal now make this as easy as buying a book at Amazon. Just think of what alternatives to using an application or service would cost you or how much effort you would have to put in to establish something similar yourself. Seen in that light, such donations seem to be the least anyone can contribute to an open source community.

Weird combination: EE, CA, GT, SD?

In my first post to this blog I mentioned that I studied Electrical Engineering (EE) at Delft University of Technology, specialized in Computer Architecture (CA), hold an MBA from London Business School and am somewhat of a business junkie with a special interest in practical applications of Game Theory (GT) and System Dynamics (SD). At first sight this may seem a weird combination, but it is not as weird as you may think.

The brilliant Princeton mathematician John von Neumann is generally seen as the father of Game Theory. Beginning in 1928 with a famous article, von Neumann single-handedly invented the field of Game Theory, which led to the publication of his seminal 1944 book with Oskar Morgenstern, Theory of Games and Economic Behavior. But von Neumann is also considered the father of modern computer architecture. In 1944 von Neumann became involved in the ENIAC project as a consultant, which led to the publication of a paper on the concept of stored-program computers, offering brilliant solutions to the most important problems facing computer design at that time. In 1946, von Neumann and his colleagues at the Princeton Institute for Advanced Studies began the design of a new stored-program computer, referred to as the IAS computer or MANIAC. Although not completed until June 1952, MANIAC is the prototype of all subsequent general-purpose computers and architectures based on the IAS/MANIAC concepts, are often called von Neumann architectures. In its simplest form, the von Neumann architecture consists of three parts: a central processing unit (CPU), a memory and a connecting device that can transmit data between these two (often called a 'bus' or 'databus'). Although von Neumann, who died in 1957, will be remembered first and foremost for his contributions to pure and applied mathematics, including Game Theory, it is interesting to see that obviously the step from mathematics to computer architecture is only a small one.

Also Jay W. Forrester, the father of System Dynamics, has a background in computer architecture. From 1935 to 1939, Forrester studied Electrical Engineering at the University of Nebraska. Upon graduation he joined MIT as a research assistant, where he worked with Gordon S. Brown in developing servomechanics for controlling radar antennae and gun mounts. After receiving his MSc from MIT in 1945, Forrester became Director of the MIT Digital Computer Laboratory, where he was responsible for the design and construction of Whirlwind I, one of the first high-speed digital computers. When in 1956 Forrester became Professor of Management at the Sloan School of Management, he started the System Dynamics Group and with it, the field of System Dynamics. Apart from many papers and articles on System Dynamics, he published five books: Industrial Dynamics (1961), Principles of Systems (1968), Urban Dynamics (1969), World Dynamics (1971) and Collected Papers (1975).

But what is it that attracts me to the fields of Game Theory and System Dynamics? I believe it has to do with the way of thinking that is involved in both and that is very similar to the kind of skills one need to be a good computer architect. I was first introduced to Game Theory as part of my Microeconomics class, while reading for my MBA at London Business School. Not aware of von Neumann's role in the field, I was immediately attracted to the concepts. Far from a maths whiz, I am particularly interested in the practical application of Game Theory. Hence, I enjoy books like Joel Watson's Strategy: An Introduction to Game Theory, Ghemawat's Games Businesses Play and Brandenburger and Nalebuff's Co-opetition, which apply game-theoretic thinking to business oriented case studies. In a future post I may actually review some of these books in more detail.

My first interest in the field of System Dynamics dates back to 1994, reading 'The Fifth Discipline' by Peter Senge, one of Jay Forrester's PhD students at MIT. At London Business School I was lectured by one of Jay Forrester's other PhDs, John D.W. Morecroft, who in 1990 was awarded the Jay Wright Forrester Award of the System Dynamics Society. in 2002, Kim Warren, one of Morecroft's colleagues at LBS and my lecturer for 'Dynamics of Strategy' published the interesting book Competitive Strategy Dynamics. In hindsight, however, it was already in 1988/1989 that I first learned about system dynamics. In a course on modern control systems, our lecturer, Professor Honderd, told us about his cooperation with the Business and Economics departments of the Erasmus University in Rotterdam. At that time I did not fully understand how such technical insights in feedback loops, overshoot and undershoot related to these non-technical fields of study. Had I known about Jay Forrester and his background in servomechanics, this would of course not have been the case...

Hence, it is clear from the above that the combination of Electrical Engineering, Computer Architecture, Game Theory and System Dynamics is not so weird afterall!

Google Talk: The Power of Open?

Last Wednesday, Google released a beta version of its instant messaging (IM) and VOIP client, Google Talk. Available for Windows only, unable to communicate directly with users of other IM services such as MSN Messenger and AOL IM and less advanced than Skype, it would be easy to discharge Google Talk as an 'also-ran'. Looking closer, however, Google Talk seems to have a lot of potential, partially due to its use of open standards.

Google Talk's IM functionality is based on the Jabber/XMPP protocol, an open messaging standard. This will allow Google Talk to build critical mass fast as its users can exchange messages with users of other Jabber/XMPP based IM services such as iChat (Apple) and GAIM (Linux). And where IM clients such as GAIM already allow for the exchange of messages with the MSN and AOL networks, it is not at all unlikely that future versions of Google Talk will offer such functionality as well. This would result in a level playing field where competition is not tied to the size of its user group (value of the network). By the way, note that Skype's IM service does not allow for exchange of messages with other IM networks at all.

Also the VOIP part of Google Talk is based on open standards, namely SIP (Session Initiation Protocol). Where Skype is using its own proprietary protocol, Google Talk users in the future will be able to 'call' users on other SIP-based VOIP networks. This would certainly give it a leg up on Skype, where users can only call other Skype users (PC-to-PC). SkypeIn and SkypeOut (still in beta), however, allow these users to call out to regular PSTN users and have people call them on their Skype number from regular PSTN phones respectively. In the future Google Talk is believed to offer similar PC-to-PSTN calling as well, especially as this is where Skype is making most of its money.

By conincidence or in response to Google Talk, Skype published some APIs this week, allowing developers to integrate Skype's IM and VOIP services into their own applications. By doing so, it basically 'opens' up its proprietary platform a little, without the necessity to give full insight in its workings nor having to go through the efforts of establishing a new (open) standard.

Hence, it will be interesting to see whether the use of open standards can help Google to overcome Skype's first mover advantage. Although being very secretive about its strategic plans, Google, the highest new entrant in BusinessWeek's 2005 Global Brand Top 100 at nr. 38, seems to be after domination on the internet. To be continued....

In Search of A New Paradigm

The last year a new paradigm has come to the fore; Desktop search will change the way we work and interact with our computers. In the past it was advisable to set up a logical folder structure and use a clear file naming convention, as this was often the only way to find stuff long after it had been created and saved. The search function could help you find folders and files, but searching within documents was not supported. Enter desktop search tools. These tools can not only search folders and files, but also their contents, irrespective whether they are Word documents, PDF files or PowerPoint presentations. Furthermore, they can not only search in files saved on your hard disk but also in your e-mails, contacts, instant messages and bookmarks/ favorites. This way it is not only easy to find that one particular file or document, but all other documents that refer to it as well. Or all the music of a certain artist, or all the pictures you took during your last vacation (provided that you tagged them as such)...

One of the best desktop search tools available for the Windows platform is Copernic Desktop Search, which can be downloaded for free from www.copernic.com. Also Google, the icon in web search, offers a desktop search tool, namely Google Desktop Search.

Apple was (to my knowledge) the first to introduce desktop search (Spotlight) as an integral part of their operating system (Mac OS X (Tiger)). Microsoft will incorporate comparable functionality in Windows Vista, the successor of Windows XP, due out in 2006.

In the past, the Linux platform was often lagging behind the Windows and Macintosh platforms when it came to new functionality. This time around, however, Linux seems to be leading far ahead of Microsoft. With Beagle the Linux platform has its own, very powerful and potent desktop search tool. So, where Vista is expected to be a bit of a Mac OS X and Linux clone anyway, Spotlight and Beagle set the standard for Microsoft with respect to desktop search.

Playing Hardball: DIY markets in The Netherlands

In their article 'Hardball: Five Killer Strategies for Trouncing the Competition' in the April 2004 issue of Harvard Business Review, George Stalk, Jr. and Rob Lachenauer of the Boston Consulting Group (BCG) suggest that businesses drop the soft approach to competition and play rough instead.

The Hardball Manifesto prompts business to relearn the fundamental behaviors of winning:
- Focus relentlessly on competitive advantage
- Strive for "extreme" competitive advantage
- Avoid attacking directly
- Exploit people's will to win
- Know the caution zone

Stalk and Lachenauer suggest five strategies, that should be deployed in bursts of ruthless intensity:
- Devastate rivals' profit sanctuaries
- Plagiarize with pride
- Deceive the competition
- Unleash massive and overwhelming force
- Raise competitors' costs

This article came to mind when I read a newspaper article about the ruthless competition between DIY markets in the Netherlands. The five largest players in this market, Praxis, Gamma, Formido, Karwei and Hubo are ganging up against Hornbach, a German company that is expanding into the Dutch market. They appeal whenever Hornbach applies for a building permit, hoping to stave off increased competition or at least delay Honbach's entry into local markets. With every new location, which is on average four times as large as those of the other pleyers, Hornabach gains 1 percent marketshare. But although they have found a common enemy in Hornbach, these five players also frustrate eachothers' re-location and expansion plans, while the whole sector is involved in heavy price competition.

Hornbach fights back, however. It has six white trucks that drive past and park in front of its competitors outlets, carrying the slogan: "Nobody beats Hornbach!". Customers are welcomed to cash their discount coupons from Praxis, Gamma, Formido, Karwei and Hubo at Hornbach, in combination with a 'lowest price guarantee'.

So, it can be said that the fight is no longer just for the customer's favour, but that these DIY markets are playing hardball instead.