Now that we are turning the page on another calender year in the Anno Domini (A.D) era lets not forget where it all started. A spin-off from the established mainstream ‘company’, a small group of renegades, led by a visionary started a bootstrap operation with no VC backing. Using (what we call today) web2.0 viral marketing techniques, the Apostles spread the message to the rest of the world.

2007 years and 2.1 billion users later…An additional ~1.04 million new believers a year, EACH YEAR …. Christianity is the world’s largest religion.
That is a whopping achievement for a once bootstrapping start up from the Holly Land. This multinational organization with branches and believers the world over started with one person, one idea, one passion, one vision, whatever you believe in - that is inspiring.

So to all my Christian friends, readers and to whomever else plans to celebrate this occasion - have a HAPPY NEW YEAR and don’t forget where it all begun

      

Finally…..

Hey, I think they waited so long, now it needs to come out equipped with a camera also. No multimedia device can be without one …hope that won’t delay the plans to 2008

      

I just returned from a four day trip with the family. That is my family, myself and 2.5 suitcases full of unneeded luggage (the notorious “Dump the Closet” system which sucks in mainly woman - you don’t choose what the kids are going to wear so you just bring their closet).

Anyway, I took my 4mpx Canon and the Nokia N73 equipped with a 3.2mpx camera with me. Before this vacation it the thought of leaving the Canon at home was inconceivable. I used to own a Sony Eriscsson with a 2mpx camera, which was very cool, but not nearly a real camera. Pictures were OK but once less then optimal lighting conditions set in the quality diminished quickly.

Not so with the N73.

When you say “camera phone”, you usually don’t mean a camera but a phone with a cool add-on. With the N73 this is not the case. Equipped with 1G memory card, I took 10’s of photos, a few short videos and came back a happy camper. The Canon didn’t even leave the hotel room. You can always use Picasa or Photoshop to apply your own special touch, but its really not necessary. Look at the below…honestly…does it look like a phone took that photo?

Press photo to see larger version

The N73 and the SonyErricson k800i make an important mark in the age of convergence. A Camera Phone (CP) TURN to Camera and a Phone (CAAP). The AA nuance is not trivial. This means I will probably not upgrade my 4mpx Canon rather prefer an upgraded release of any CAAP that will be equipped with a better lens. True - camera’s are not dead but pocket cameras are dying. For us, casual snappers that fill our Picasa / Flickr web albums with loads of senseless family, friends, you name it moments….a CAAP generation will be the obvious choice.

Now where do I see the regular digital camera market going? First of all it’s about innovation. A wi-fi phone, a super slim phone (that doesn’t hurt lens quality) Anything to make it super cool and worthy of carrying it alongside my CAAP. I can imagine more JV’s in the likes of SonyErricson - A NokiaNikon etc. is not something that would surprise me. In the same way the iPod has to be equipped with a 20G-40G memory for me to consider it over my …once again phone. Here too the manufactures will have to keep on their toes and provide extra value over an above a developing CAAP category.

Whichever way you look at it…the chasm has been crossed. Long live the CAAPs….

      

It’s that time of the year again, time to start summarizing 2006 and to try and predict 2007.

As you can imagine I have a lot to say about both. I’d like to start this series, however, with predicting my personal top 10:

1. “SEO will kill the Internet Star” and GOOG will drop below 300. GOOG won’t crash and Google will still perform extremely well. Never the less, the online advertising market will become more efficient, educated, competitive and and realistic. The value of a single click will drop and it will show.

2. Facebook will be acquired for much less then a billion dollars. Social networks are here to stay, but they cannot individually be virtually worth that much forever.

3. WiFi phones won’t happen this year. Mobile WiFi is still too difficult to operate, provides too little benefits and does not enjoy operators promotion. Nokia et al will market conceptual WiFi phones but will de-facto utilize them as a learning curve / spring board to WiMax in 2008-9.

4. The rebirth of Super Blogs - Blog consolidation will begin this year under “super blog” brands. I can easily envision the TechCrunch and GigaOM 3rd party program aggregating hundreds of blogs. I believe so can Mike Arrington , Pete Cashmore and Om Malik.

5. Operators will remain the super channel for value added services - off-deck services will not surpass on-deck services, but operators will develop programs for “easy-decking” of services. Google / YouTube / Verizon is a first and good example for why.

6. Video integrated advertising will take off, and not only by YouTube. It makes sense, it’s ready, everybody needs to monetize video and if served correctly users won’t mind.

7. Skype will take a plunge, as Skype will face significant challenges in fighting off uprising competitors who offer free calls using a phone instead of a computer. Phone numbers are still stickier than user names. Check out Jajah and see if you agree.

8. Finally, an iPhone this year. That’s the good news. The bad news is that the iPhone will capture a marginal, negligible market of already captive Apple addicts.

9. Video calls will start making an impact. With support from all IM and VOIP desktop services and with 3G gaining critical mass - video calls will come of age in 2007.

10. No change in DRM. This is one prediction I’d love to be wrong about, but I still think Microsoft will push their own with Vista, Apple will do their own as well, Nokia will not take a side and users will continue to not care, rip and share.  

      

I can’t explain the EXACT reason for writing this post NOW but I’ve had it with the Beta label abuse. Beta used to have a meaning, it marked the beginning of something. It set your expectation level, gave a good young company a break. Actually, I do know…I read the completely uninteresting post in techcrunch about google’s new employee stock option plan …yada…yada…yada….what it made me realize is that “Hey….you ain’t no start up anymore…”.

I run a start up…I have a less the 20 people on board…I am scrambling for funds, when we release a version, its a beta. But google…???…sorry…GOOG, your all grown up now. Yes, you are super cool and your apps rock!…I love gmail, gtalk, calander, picasa…the lot, really BUT please do me a favour, if Gmail is beta…then my first release is preAlpha. There isn’t a letter in the Greek alphabet to describe the stage I’m at with my service if Gmail…a 2 year old (even more) or Google news are still Beta’s. Be brave Google…don’t worry, I will hold your hand…move on (and don’t give me some sh@@#$ about it being a legal reason)
Let me and the other young, new, rough entrepreneurs and our new ‘failing services’ reclaim the beta badge for real. And when we are all grown and mature I promise to move on. Honestly I will…within two years or an IPO …whichever comes first

      

Is the industry finally starting to wash off DRM?  Let’s hope so! DRM cannot EVER work for a few simple reasons:

1. It can’t really stop piracy

2. People find the linkage between track source and MP3 player annoying and unfair.

3. Apple (and Microsoft?) are abusing it to protect iPod (Zune?) sales and not to create a market for music.

The Red Herring reports that iTunes sales have peaked and are now dropping fast. the picture is not better outside iTunes, as noted by the Wall Street Journal:

“Digital track sales held steady at 137 million songs in the second and third quarters of this year, according to Nielsen SoundScan. That’s a slight drop from the 144 million sold in the first quarter”…

Eric Garland, chief executive of BigChampagne LLC, which tracks peer-to-peer traffic, says more than one billion songs are traded over those networks every month. “It took iTunes several years to reach that particular mile marker,” he notes. “The pirate market — if we considered that a market — would command better than 90% of the online marketplace.”

Nick Carr provides a thorough analysis of the decline, including the following:

“A new survey by Forrester Research provides further evidence that iTunes sales may have peaked… It found that iTunes purchases grew rapidly between April 2004 and January 2006, from 2 transactions to 17 transactions per 1,000 households. This year, however, the trend reversed, and sales actually began to slow. According to Forrester, “the number of monthly transactions declined 58%, while transaction size fell 17%, leading to a 65% overall drop in monthly iTunes revenue.”

This doesn’t stop Apple from sticking to DRM policies that prevent people from playing tracks outside their iPod or iTunes. However Apple’s motivation is not to promote music but to protect iPod sales. With MP3 players and cellphones becoming iPod comparables, Apple has been holding back the music business.

But it can’t work. As if tracks are not copied left and right with DRM. Fighting piracy should first deal with the motivation.

DRM are like government regulations. Healthy markets don’t need them, broken markets vacuum them in. Once their introduced, so is an extra motivation to bypass them. While the intention is to protect from abuse, in reality the regulator usually end up choking the market and protecting the abuser.

Perhaps the key is simply with competition stepping up. EMI/Blue Note records and Yahoo appear to be taking a little step in the right direction. The Jazz subsidiary of EMI has began experimenting with selling unprotected MP3 tracks, releasing singles from Norah Jones’ new album to the general public without digital protection. Unlike tracks sold on iTunes, these tracks can be played anywhere -computer, iPod or Cellphone - and can be copied by and distributed to friends.  

A first step en route to realization. The solution is not with DRMing the old economy but with realizing the new economy. ”New” models, such as “all you can eat” subscriptions, value add packages and advertising are simply a much better fit. 

Adds David Goldberg, Vice President and General Manager of Yahoo Music:

“For Yahoo, the deal with EMI represents another step in a long-running effort by David Goldberg, the vice president and general manager of Yahoo Music, to persuade recording companies to abandon their insistence on anti-piracy software. Mr. Goldberg publicly floated the proposal at a music industry conference in February, but initially found few takers.

His reasoning: Anti-piracy software on music isn’t helping the industry because the same music is already available without copy protection on CDs and through Internet file-sharing programs. What’s more, many consumers don’t like the limitations that copy protection imposes on how and on which devices they can listen to their music. If DRM benefits anyone, Mr. Goldberg argued, it’s technology companies like Apple, because it makes it trickier for consumers that have made hefty purchases of digital music through iTunes to switch to non-Apple music devices in the future.

“It just isn’t working,” he said. “It’s not solving piracy. It’s not helping consumers: They view it as a tax.”

And Nick Carr notes how the whole market has been choked:

“The Forrester study provides other clues that, while iTunes may help promote iPod sales, it’s been no panacea for music companies or musicians. Rather than being a central source of new music for consumers, iTunes’s business is dominated by occasional impulse purchases”

Need I say more?

      

For me, as a marketer, the words “Chaotic” and “Marketing” must not be juxtaposed. I like to quote Drew Neisser of Renegade Marketing’s mantra, which is “know thy target audience”. Therefore, the logical conclusion is that spreading your message in a chaotic manner can not be good marketing practice.

However, an article I read today in the NY Times, “Hottest Ad Space in Times Square May Be on Tourists’ Cameras“, suggests the opposite - that we are at the dawn of a Chaotic Marketing era. Let me quickly recap the essence of the article:

The sequence goes like this:1. Times square has become hot property for event marketing (A.K.A - offline marketing)

2. The zillions of tourists that roam Times Square take pictures and videos

3. Vids, pics and ‘experiences’ get blogged, posted on the “Flickrs” and “YouTubes” Etc.

4. Off line Ad/Event exposure is magnified exponentially to the online audience.

As a general “awareness trick”, this sounds like a brilliant way to get the biggest “bang for your buck” for your advertising dollars. You can also acquire “cool” status for doing unconventional stuff…but is it?? Would an advertiser dare insert a TV ad without selecting the placement? Would an advertiser let a random computer program decide that a beer commercial is to be aired in the morning, in between “Days of our Life” and “Seaseme Street”?? Or in short, can marketing be Chaotic and still be successful?. Why do brands accept chaotic placement when it comes to the Internet when this rule does not apply to other mediums? Are the basic physics of marketing being bent by the new reality of social media?

I don’t believe there is a clear answer yet. We are witnessing many marketing experiments with unclear results. So what if a 14 year old person in the UK saw a clip on YouTube of the MasterCard event - is it relevant?. Will the brand be planted in his subconscious only to come of age later? Was this the audience the marketers were expecting? The audience they pitched for during budget time? Does anybody know the identity of the the online video audience in the first place? The answer is NO - NO and NO.

So why do it…is it really that pointless? The answer is NO!

What we are witnessing is the evolution of social media. The brave few ‘freaks of nature’ that defy conventional marketing and do these “senseless act of marketing” are the ones that are helping shape our future. No less. By spending a few random dollars they are participating in the biggest human social experiment called ’social media’, where the audience is not measured by a ‘people meter’, Nielsen or any other skewed system and where the media belong to the individual. After all, how can you explain the fact they are encouraging people to take pictures of their brand despite the risk of having them posted who knows where?

They are not risking but joining. The social media revolution is happening with or without brands. These brave experiments are just attempts to join the ride. In the long run - these will not be the rules… remember…evolution…this is just a phase. Future marketers in the same space, doing similar things will know much better about the effect of their campaigns. They will know exactly who did what, when and how. A whole eco-system of technology comps and services will catch up and be ready to service them.

A case in point is a very interesting start-up called Collactive that is spear-heading the space of social media marketing. If you are a marketer you should check them out. Like them, many other companies will follow and with the help of technology order will be restored to the marketing space.

‘Cause if you ain’t superman, you ain’t breaking no laws of physics!

      

Last week I wrote about the future of Mobile Instant Messaging. Montreal based OZ is taking the next step. Following Pete Cashmore’s exclusive yesterday, OZ announced its new product - mobile social networks:

 

“OZ, the leading mobile messaging solution provider, today announced its mobile social networking product. With over 400 million social networking users around the world, this solution will enable consumers to easily access the most popular social networking sites on their mobile phones. …

Apparently, the OZ new product will support Social Networking sites such as Flickr, Bebo, MySpace, YouTube, Blogger. The product will be available to carriers during Q1 of 2007. OZ carrier customers, including Sprint-Nextel, Cingular Wireless and T-Mobile are expected to be the prime beneficiaries.

For OZ this is a great move although not one without hurdles. Mobilizing social networks is the natural next step for mobile IM and Email - two products nearing exhaustion in terms of consumer potential. This is definitely the right direction for OZ in terms of increasing value to existing and new customers.

It does present a few challenges though. For start, having a client is nice but a commercial agreement must be reached between each carrier and each social network before deployment can take place. Having the client provides an edge, but no immediate business.  I certainly hope YouTube, Flickr and Bebo won’t choke the market as AOL, MSN and Yahoo did and that they will grant content and licensing rights to 3rd party developers. This will make OZ a reseller which is what OZ is really aiming at. Still, I imagine MySpace and Flickr will at least try to deal with Cingular, Sprint and T-Mobile directly and therefore limit OZ’s value to deployment only. In addition, I assume their mobile divisions will launch mobile 3rd party programs that will allow other enablers to step in and compete.

The other significant challenge is with the client itself. It will be really challenging to package Flickr, YouTube and MySpace into one Java client and to support video, audio, commenting and so forth. I have a feeling the experience won’t be that good and that a lot of ideals will need to be compromised. The services are very media savvy and require incorporation of too different flows. Unlike IM or Email, there is less of an immediate communication benefit here and less of “rational” incentive to download, so the user experience must rock.

At the bottom line, it’s early and I believe the market is still up for grabs. OZ, however, has taken a crucial first step, not for the first time. They have done it once with Mobile IM, putting a lot of weight on the need for AIM / MSN / Yahoo multiheaded client, a gamble that has paid off big time. Let’s see who else joins the party and how.

      

I’ve been meaning to write about this for some time now when Gil Dibner forwarded me this excellent post by Michael Parekh. Michael’s philosophy is very easy to subscribe to. His view on Internet technology, if I may humbly try to purify, is that we over complicate it. The particles are more similar then different, it should be priced in a simple way and it should be controlled to the minimum.

Who wouldn’t agree with that? I do too, but I also find it a bit over simplified. I’d like to suggest another point of view to it. I think marketing is well ahead of technology and not, unlike I often hear, the other way around. 

From A marketing perspective, we are there for a long time now. We all imagine converged media on converged devices. We all see the internet as a world wide communication infrastructure, free and open for all. We all see Access as something that should not be priced according to media types but, if anything, according to quantity of usage and quality of service.

From a technology standpoint, there is a huge difference between streaming and download, between Video and Photo, between Browsing and Voice. One that impacts everything. But I’ll get to that later.

Michael looks through the case of web and mobile video. As the case is usually with other technologies, we tend to invent and create categories instead of realizing it’s just more of the same:

“Every new evolution in technology at times is treated as “the next big thing” and a category unto itself. Today’s investor and media fascination with internet video as a separate category is a case in point.

Never mind that video is just an additional data type being made increasingly more mainstream by the on-going adoption of wired and wireless broadband access…. Some of you may be old enough to remember when “Multimedia” on CD-ROMS, was considered a separate technology category unto itself.

As an example, Ted Leonsis, an entrepreneur who focused on this category, successfully sold a company he co-founded called Redgate Communications to a little-known online company called America Online (AOL) in 1993, and ended up on a road to being a billionaire.  Not unlike two young guys recently who managed to sell an “internet video” company to Google for over $1.6 billion.”

The danger with inventing categories is that players then look to reinvent the business and marketing wheels, generating half-ass-ed products and absurd business models:

“The reason I’m getting into all this, is that this tendency causes all kinds of short-term warping of business models, with adverse short-term consequences for mainstream consumer adoption. ”

If we treat video in a similar way to voice, for example, there should be no need to go through a pointless learning curve filled with unnecessary mistakes, such as the one demonstrated by YouTube and Verizon and referred to in another Michael post:

“YouTube is coming to mobile phones — or, to be more precise, a small slice of YouTube is coming to some  Verizon Wireless phones.    

While its explosively popular Web site is free, YouTube’s phone-based version will require a $15-a-month subscription to a Verizon Wireless service called VCast. And instead of choosing what to watch from a vast library of clips, VCast users will be limited to an unspecified number of videos selected and approved by the companies.”

I couldn’t have said it better myself. But Michael is overlooking an important point. From a TECHNICAL PERSPECTIVE, Video (and Mobile Video in particular) IS totally new technology. Like mobile browsing was new technology at first and exactly like Multimedia on a a CD ROM was new technology.

And this is key. Video streaming on mobile devices requires a set of new sub-technologies that are not yet fully present - reliable mobile broadband, good quality image processing, image compression, transcoding. Then come usage considerations that require a technical solution - creating the content base, taking care of content filtering, abuse reporting, DRM, performance measuring. following we have quality and integration issues - it must work well on many handsets, it must not crash the phone or the phone line….

I know I may sound like a techie right now, but these are in fact real issues. The marketing has long been figured out but the product is not there yet!

Very few companies have decent mobile video enabling platforms at this very point.  None has standard support for DRM and Content filtering. There is an inevitable process of maturing and standardizing technology. How can one provide Mobile Video as “another multimedia component” when there are no mature, off the shelf, solutions that can create a competitive market and that can be easily bench-marked and integrated?

Finally, and that’s the sad part, comes the user. Figuring out the exact use cases, flow and required position with respect to adjacent products is a long, long, process. An expensive and risky process. This trial and error process is the one that ends up reshaping the industry more than anything else. We should ask ourselves why the user comes last and not first, but market forces dictate this realit. The only real way to push the user to the front is by building open standards and by creating a competitive environment.

This is another reason for why Google will not “just go mobile”. This is why Microsoft has been trying, without much success, to “go mobile” for over 10 years. This is why mobile operators, despite all the obituaries, are still in good control over the mobile user. From a marketing perspective there is “one internet” but from a technology and service perspective there are too many technologies, standards and products.

I see eye to eye with Michael when it comes to pointing fingers at the mistakes mobile operators are doing. It is also very frustrating to see them repeating themselves. Operators try to charge too much for too little and it always backfires. 

I totally agree that the Verizon / YouTube deal creates much more noise then value to the end users. The Operators’ tendency to “nickel and dime” everything is indeed near sited and counter productive. However, it all results from the fact Operators are accountable for operating profit. Much more than VCs, Internet Companies and Content Providers.

As cynical as it sounds, in most cases it still makes sense for operators to try and charge before extending technology for free. Imagine Operators’ life without transactional charging of SMS, for example. Creating the environment took years of time and money. Without marginal transaction charging there would have been no standards, infrastructure companies, integrators, interoperability and wide range device support. There would have been no predictive text, ring tones and voting services. We all would probably have missed THE killer app.

Life is complicated. We tend to think it’s all politics but technology does take time to develop as well. While video maybe another media type, the technology is very much stand alone. Synthesizing technology, marketing and product - this is the challenging and time consuming element.

      

Israel based Clarizen announced having raised $7M from Benchmark Capital and Carmel Ventures yesterday. This announcement is significant in more than one way.

Clarizen provides web 2.0, software as a service, hosted project management tools. This is a brave attempt to dive head first into a very crowded pool. Microsoft on one side, Google as a potential competitor on the other and wide variety of very good Internet start-ups in the middle. Zoho and 37Signals, for example, have been providing comprehensive productivity suites, including project management, for some time now. Moreover, Zoho and 37Signals have already built good products, customers, corporate identities, press and blogsphere relations - or in short - a brand. I covered Zoho a couple of times and have been following their progress closely, they seem to be only accelerating. How can Clarizen effectively penetrate this market in a way that will eventually generate market leadership?

They can. While this market is seemingly crowded it has not nearly shaped yet. Most of the current users are very early, blog reading, techie adapters. Enterprise customer acquisition is still based on random opportunity chasing and on Grass roots marketing. Enterprise customers do not use web 2.0 productivity tools yet. There are no real distribution chains and other elements which make up a mature enterprise software marketplace. Zoho and 37Signals have been successful, but they haven’t really tickled Microsoft or real Enterprise customers yet. Then there are verticals - health-care, financial, legal, travel, banking, etc. - all requiring special customization and regulatory attention. This market has not only not matured, it has not really begun.

So what can make Clarizen different?

First of all Clarizen is not a bootstrapped web 2.0 company. The founders come with extensive and deep enterprise background. It already employes 34 employees and top notch developers. With this type of investment and backing they can aim at bigger targets. I don’t see Zoho developing a health-care suite and I don’t see 37Signals dropping everything in order to train a 5,000 employee construction company.

Clarizen is Israeli and that can be both an advantage and a disadvantage. I really hope they won’t use the money to open a North American branch and compete for the American Dream in 2007. While VCs may have a tendency to push in that direction, it will be a big mistake for a number of strategic reasons. The US is where competition is dominant, where the enterprise software market is extremely developed and where Israeli companies need to learn too much before they are able to compete. The simple truth is that American IT managers appreciate receiving service from Americans. This means local marketing, sales, support and training organization. Creating all those and going through the mandatory learning cycle will take a lot of time and money. Too much time and money. And it won’t create a real competitive position for Clarizen.

My advise to Clarizen? Climb the mountain slowly is your best shot at leading. The Enterprise SaaS market is not going anywhere too fast. If anything, you’re early. Grow the customer base, test different opportunities in different countries, make the service really reliable, grow your expertise, implement a real internal enterprise culture and only then focus on geography and a specific customer segment. Don’t jump overboard but build something real.

Kudos to Benchmark and Carmel for investing in Israeli Enterprise SaaS. Not the typical common sense investment. Israel is not reputable for dominating with enterprise software or services. Something about the innovative but messy Israeli mindset that collided with enterprise philosophy. But the Israeli scene has matured greatly and it is visible inside Israeli companies as well as with their products. There is no reason why Clarizen should not outperform it’s rivals anywhere in the world. Good luck!