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With the iPhone announcement, we enter an era when all the other smartphone providers need to now sit up and define their own clear positioning and path forward. With Steve Jobs working his PR machine, and the media lapping up the show and tell, it is imperative that Palm, for instance, decides where it goes next.
So, in the same vein that I have written about Yahoo’s turnaround formula, let me sketch a hypothesis for Palm, which I also think could have a bright future ahead.
Let’s start with where Apple and the iPhone will never go: Business Applications.
And by this, I mean the non-email types of applications. I mean the heavy duty business applications. SAP. Salesforce.com. Webex. I mean CRM, PLM, ERP, MRP. I mean mission critical. This is one place where business users need to go, and an alliance between Palm and the enterprise application eco-system could well be the way to get there.
Apple is and will always be a consumer electronics company, so the enterprise segment opportunity will remain wide open. I strongly believe, this is Palm’s best bet going forward.
The other opportunity for Palm is to build devices that are “killer” application specific, but focused on the billions of “new” computer users. I spoke about this opportunity earlier here, and fantacised about Steve Jobs taking a crack at this. However, realistically, this is not an opportunity that Apple will go after. However, Palm could build a “Micro-Finance Phone” in collaboration with CitiBank, and go after the Fortune At the Bottom of the Pyramid.
Further Reading:
* iPhone’s Competitors: Synthesis
* Palm Changing Hands
* iPhone’s Competitors: Palm
* Palm: Stop Missing Obvious Opportunities
* Palm gets Rubinstein
* Palm’s Fate
* iPhone and the Future of Palm
by Frank Levinson, Guest Author
When I was sitting with some friends recently, we began talking about Apple’s introduction of the iPhone. We all felt that this product was one with much more promise than many we had seen in the last few years.
Why?
From the most straightforward view, the features in the iPhone have been available on the Dopod 838Pro has nearly all of the same hardware features, perhaps even more in that it has a second camera for video phone calls. (Where is that iSight camera on the iPhone anyway?)
What makes this device different? Read the full article »
Red Herring included the possibility of a buy-out of Yahoo! this year among its top predictions. ‘Business Week’ rated Terry Semel recently as one of the highest paid chief executives with one of the worst returns to shareholders.
And yet, I have said it for a long time, that Yahoo! is a superbly underleveraged asset that if played properly, could return gold.
Today, TechCrunch reports on one of Yahoo’s big (and rare) wins versus Google: Yahoo! Answers. It is indicative of an area in which Yahoo! remains strong: Content and Community, versus Google’s stronghold: Search.
So, the first order of business for Yahoo! is to understand that brand advertising – CPM-based banner ads – is also big business, and concede the broad CPC-based Search business to Google.
Then, focus on the 3Cs : Content, Community, and Commerce. Read the full article »
Here’s a superb post from Rich Skrenta on Google, the third wave of computing, and how Yahoo should go back to its original model of licensing Google’s technology for Search, Adwords and AdSense.
Whether or not you agree with that last conclusion, you must read the post.
And then, ponder the question on the future of Yahoo, upon which much of the Internet industry’s future rests. Is the Internet going to become a monopoly, with Google dominating sans competition? Or is it going to continue to be a duopoly (with Yahoo as the challenger), an oligopoly (with further challenges from Microsoft, Ask, etc.), and such which include certain competitive pressures?
Microsoft’s age of total dominance of the PC era had a constant nagging factor : Apple. Not only did Apple continue to provide the ideas and innovation into Microsoft, which the latter happily copied, time and again, but in the end, Apple also came up with the iPod, a leapfrog event in the industry that most effectively combined the PC’s powers with those of the internet, simplified with absolute mastery, and designed to perfection via Steve Jobs’ immaculate vision.
The difference in Google is that they not only lead the industry in terms of revenue and market share, they also are a substantial R&D force, having accumulated a great percentage of the world’s computer science talent under one umbrella.
What role then does Yahoo play? It is no R&D powerhouse. Neither is it the revenue / market share leader. In fact, mired by hairy management challenges, saddled by non-cutting-edge technology, Yahoo, yet-again, is in a turn-around situation.
Terry Semel had been the knight in shining armour, who had delivered Yahoo 5 years back. Who will do it this time?
Susan Decker?
Once again, the media is calling for big acquisitions. This time, Merrill Lynch Analyst Justin Post says that Microsoft should acquire Yahoo. On the other hand, there is also speculation about Yahoo buying AOL from Time Warner. John Battelle doesn’t like this option.
I said, a year back, that Yahoo and eBAY should merge. Since then, both have gone through hiccups, and right now, eBAY is looking up a bit, and gearing up for a good holiday season, while Yahoo is choking.
I think, the biggest problem with a Yahoo-Microsoft merger is a culture clash that will be unsurmountable. That said, HP-Compaq had also looked like an incompatible marriage, but has kind of worked.
I don’t see what Yahoo buying AOL achieves.
My vote, at this point, would be for Yahoo to try to reenergize itself organically, may be with strategic and organizational surgeries that seem to be long over-due.
Recently, Gartner fired their EDA research team, part and parcel, with veteran analysts Gary Smith and Daya Nadamuni. Here’s John Cooley’s report on the departure with comments from many industry stalwarts. This takes out the last remaining independent analyst that covered EDA as an industry.
There is a problem in EDA. Small $4 Billion market that is not growing. No financial energy. No IPOs since 2001, very few acquisitions, alarmingly few financings, closure of EDA-specific venture firms like Telos, overall lack of innovation.
As it is, very few people understand the EDA business, and it is much too complex for Wall Street to fathom. There were a few VCs who knew how to invest in EDA – Mike Schuh at Foundation, Lucio Lanza, Jim Hogan and Bruce Bourbon at Telos, Pierre Lamond at Sequoia, and a few angels, most notably, Prabhu Goel. Others who have invested in EDA, like Theresia Ranzetta of Accel who invested in Jasper, don’t really know much about EDA.
Probably one of the best small companies in EDA today is Atrenta, led by Ajoy Bose, a veteran of the industry. Atrenta recently raised a Series D round at a high valuation, but from obscure VCs, and I don’t think any of them understands EDA either. Says something, when all the top VCs sit out on a late stage deal with serious revenues!
Furthermore, if you talk to people inside the industry, many of them cannot wait to get out and do something else!
So what is going on in the industry?
For solving insanely complex sets of technical challenges, the industry doesn’t offer sufficient financial rewards anymore. There was a time when the big 3 players – Cadence, Synopsys, Mentor – used to engage in active M&A, making it worthwhile for entrepreneurs and VCs to invest. Now, Mike Fister is at the helm of Cadence, and brings with him the NIH philosophy of Intel. Mentor is struggling. Synopsys doesn’t feel the pressure to acquire like before. Thus, the innovation machine has stalled. Add on top the fact that Cadence decided to pull the plug on Telos, their Venture arm, and one of the very few EDA investors is now dead.
If you read John Cooley’s report on Gary Smith, it appears that Cadence and Synopsys got pissed off with Gary, and pulled the plug on him too. Well, anyone who has operated in an oligoply, knows, that the media for the industry is completely dependent on the 2-3 large players who dominate the market. In Mechanical Design, the media sucks up effectively to Autodesk, PTC, Dassault, and as a result, survives. There is very little startup activity, and 95% of the coverage goes to larger players. Gary Smith, however, chose to support those who innovated. Magma, the challenger. Startups. And he pays. It also appears that the financial infrastructure around the Design Automation Conference (DAC) is also precariously waiting to collapse, especially with rumours that Cadence will pull out of the conference.
All this should be alarming for the trillion dollar semiconductor industry. If EDA, as an industry, collapses, or becomes a monopoly / duopoly, the innovation in semiconductors will also stall. I had written a few pieces earlier on the Future of EDA. Here they are again:
Future of EDA |
Mentor Graphics: Target for Silverlake?
And here are two pieces on two growth areas within EDA that are still receiving some funding:
DFM Vision – Clearshape, Blaze, Aprio are working on this area.
RTL Hand-off and Predictive Prototyping – Atrenta could crack this code.
Here’s an article from Hollywood Reporter on Yahoo’s woes.
I still think Yahoo has some great assets, but it is doing a very poor job of leveraging them. Here are some levers I would focus on, to deliver Yahoo out of the muck:
(a) MyYahoo : Tying personalization with the in-house systems of advertisers could deliver tremendous value. As it stands, there is hardly any advantage offered to advertisers via MyYahoo.
(b) Segmentation : Identify the top 10 online target ad spend segments, and make sure Yahoo’s offering and value proposition in each is clear-cut and solid; then sell the hell out of those segment focused advertisers. If this needs acquisitions to fill some gaps, so be it.
(c) User Generated Content : Monetizing assets like Flickr is not that difficult, even if it’s a requirement to not offend and turn off the community. This is a must, to be accomplished ASAP. The audiences for Flickr and Del.icio.us in particular are very focused and highly valuable to certain types of advertisers. They need to be positioned & packaged right.
(d) YPN : Tremendous opportunity exists to monetize the blog networks leveraging Yahoo’s other assets. Needs to be reaped.
Notice, all these are advertising revenue based levers. Ad spend is not slowing down. Yahoo is. It is also leaving tons of money on the table on a daily basis!
Yahoo’s Q3 performance comes in at less than satisfactory. As usual, they’re chasing Google’s tail, trying to acquire Facebook, following Google’s example of the YouTube acquisition.
Yahoo did something yesterday, however, that I like a lot. They took a 20% stake in RightMedia, an Ad auction marketplace.
I would make another move, as follows: acquire a cutting edge interactive advertising agency, that knows how to work with large brands and advertisers. My bet in this category would be AKQA.
A bit of history: AKQA was formed via a roll-up of a number of interactive agencies, and financed by private equity firm Francisco Partners. They are at about $75 Million in revenue, and specializes in creative user experience designs for brands like XBOX, Coca Cola, etc.
Considered as a top notch interactive agency, AKQA would bring to Yahoo a level of customer (advertiser) perspective that they currently lack, and I believe, will not be able to build up internally. This would be the equivalent of a professional services organization for an enterprise software company.
Remember, fast growth companies like Siebel Systems were built on the shoulders of system integrators like Accenture and KPMG. We just haven’t seen the equivalent of that model in the online advertising business, and hence, a chasm remains between the more UI oriented expertise of the AKQA’s of the world, and the more algorithms and back-end functionality oriented capabilities that reside within Yahoo and Google.
It is my observation, that, this gap cannot be bridged without some concerted effort in bringing the two camps together under one umbrella. The immense possibilities of Algorithms-driven-advertising, Algorithms-driven-entertainment, Advergaming, etc. will be left unrealized, without a much closer collaboration between these two worlds.
