Jeff Bezos Sees All! (From illuminatiwiki)

Rob Malda (aka CmdrTaco) recently posted his skepticism over the Amazon Tablet because of its Silk web browser.  His quick (and insightful) analysis zeros in on the way that the Silk browser functions as a direct window to the Amazon Cloud.  Silk isn’t actually downloading all those webpages, it’s showing you a proxy of every webpage that exists over on the Amazon proxy servers.  So what?

It’s not done for speed, as Rob points out, any CPU on the market holds its own for speed.  It’s not to save bandwidth– there’s no 3G on the tablet, just WiFi (where packets are “free”).  Here’s the speculation: Amazon wants to control (and track) all those packets.  Essentially, Amazon is parking a set of eyeballs over your shoulder and seeing exactly which webpages you look at, how long you look at them, and what you do on them.  So what?

Because this is the Holy Grail for targeted advertising, that’s what.  If Amazon knows that you spend all your time looking at motorcycle bits or frilly dresses or garden equipment, or biker dudes wearing frilly dresses holding garden equipment, then guess what you’ll see next time you click on the Amazon store that is ever so conveniently at your fingertips now.

Amazon is going Google one better: Google knows what you like, and serves up the appropriate advertisement and search results.  Amazon is now taking you one step closer: not only can they show you what you like, they actually have some shit for sale, and all you have to do is “one click”.

A little something I put together with the help of 2112.net

We are the priests of the Temple of Syrinx
Our great computers filled these Hallowed Halls

Four and a half years ago, I posited that there would be an ever-growing demand for storage within ecommerce companies: customer data, product data, transaction data, then all the generated data that would come from combining any of those three major sectors together.  In the end, I figured that it wasn’t about the amount of information as it was about the ability to combine and synthesize some sort of conclusion or direction out of that mind-numbingly large amount of data.

Boy, I didn’t even see a sliver of what’s really out there now.  At the time, I didn’t see any of the social graph information, background automatic information (e.g. weather, geospatial, temporal data inputs) or additional strata that have swelled into existence in the last few years.  Yet, I still stand by my thesis: it’s not about the amount of information, it’s about one’s ability to draw a direction. Even with the best BI tools commercially available (and I’ve always found them little more than glorified SQL query generators), we don’t get very far.

Enter Google+.

Google already knew our surfing habits, and by most common estimates controls around 75% of the search market and a strong slice of the affiliate market, which means that it roughly controls 75% of the online marketing economy.  Google was further grabbing eyeball time with Youtube and other acquisitions, as well as in-house projects like GMail, Google News, Google Docs, and Android.  The question remains: Is Google able to synthesize all of these data points together and form a psychographic of 1 for Dave Jenkins that is so highly tuned and accurate that the conversion rate for advertisers soars through the roof?

I don’t know, but maybe.  Maybe they’ve made some progress, and maybe Google+ is a big step forward in that unification methodology: now I am willingly handing over profile information with my links, +1s, social graph connections, and naming my circles.

All of that raises a more nuanced and important question: Do I care?  The paranoid subhumans Troskyite in me screams out that “Hell YES I care!  Stop tracking me!”  But I simultaneously cannot ignore the wistful dreamlike convenience that a perfect advertising profile could bring: only show me adverts for things I care about or should care about; stop wasting my time with suggestions that I listen to the new Katy Perry song but continue to suggest the Beyonce one because it knows  I think she’s just that damn sexy; Improve the overall marketing efficiency for every online marketer, thus improving the overall efficiency of the economy by a few billion dollars.  Yes, everyone wins, especially Google.

I don’t think they’re there yet, but I do know that Google+ is a big step forward toward the Singularity of Online, and I can bet (guess? hope?) that they’ve got a Db cluster named “Syrinx” in the Googleplex somewhere, if only for the sense of irony.

“Ah, are you sure you want them to move from AOL to the Internet?”, my wiser and more thoughtful friend asked.  “Think about it,” he continued, “Do you really want those nimrods asking their nimrod questions on our forums and message boards and all that?”

From an immediate revenue concern, as a design studio owner, yes, I did want them to move over.  I made money moving them over.  On a personal level, as an early-adoptor-techno-snob, no I didn’t want them on my precious Internet.  I am sure the geeks rued the day when ARPANET was opened up to idiots like me (without a comp sci background).

Why am I telling you this?  Because last night, I experienced that blissful Virginia Empty Continent wonder for a few hours.  Google+ went live yesterday, and invitations were limited.  I was one of the chosen select, even before Ashton Kuchter got in.  From what I could tell, there were only a few thousand of us (besides Googlers).  The wonderment and excitement was tangible.  It still is.

Many of my friends have been begging me for invites.  I’ll get them out as soon as I can.  But be warned, you may not want to come over.  In fact, I recommend you don’t come over:

• There are no games like Farmville or Mafia Wars or anything else with little avatars sporting huge heads and anime eyes
• There are no corporate pages from Chrysler Motors or Budweiser or Dave & Busters or Touchstone Pictures
• Your high school friends aren’t there (yet).  G+ won’t suggest people you know, it will only tell you whom you already know (your GMail contacts).
• There aren’t any lengthy threads debating whether Dancing with the Idols was better than You’ve Got Stars last night.

You really want to stay on Facebook, I promise.  It’s nice and comfy, right?  All your friends are already there, right?  Change is painful, right?  You won’t be able to import your WoW or Zynga character profiles, so why bother, right?

No, G+ isn’t for you.  It’s full of geeks and all texty and complicated.

Yeah, this is pretty much sums it up.

My friend at Google hooked me up with an early invitation to Google+, the new social networking interface from They Who Do No Evil.  So far, I like it, if only for the possible catharsis it offers me for starting over on whom I invite/include in my circle of friends.  I don’t know enough about the nuances yet to give a full-blown analysis, and the population isn’t wide enough for me to see many of my friends yet, but here’s what I’ve got so far:

• Google+ already knows most of the people I deal with.  It has all the email addresses from my GMail account, so that makes sense.
• The first thing I was prompted to do was add all my contacts into “circles”: friends, family, etc.  I could make up my own circles, also: Mishifts, SLC Punks, Tokyo.
• Google already has my photo albums on Picasa, and taps in directly to those.  The result of this is that the photo quality seems to be quite a bit better than what we are getting on Facebook.
• Google+ wants me to create “hang outs”, which are essentially open threads/chats/webcams.  This seems to be the most direct successor to Google Buzz, and perhaps the surviving nephew of Google Wave.  I don’t see any hangouts yet, so we’ll see.
• I can “follow” people that I’ve never met, but are in the system: Robert Scoble, Randall Munroe, Matt Cutts.

That last point may be the most killer point here: Google can quickly subsume Facebook (the interface is almost identical), but then move beyond Facebook’s fatal flaw: Facebook was a response to the aliased teen anarchy of MySpace, and succeeded because of the strict requirement that you had to certifiably know everyone of your contacts.  Twitter grew up because it allowed a one-way gate of communication where I could “follow” people but they didn’t have to follow me back.  This works well for rock stars and stand up comics,  politicians, not so much.  Google+ now offers a big step forward: one common place where I can do all that facebook sharing thing with my friends, follow rock stars (like twitter), and chat/interact in real-time like I was supposed to do with Google Wave.

Prediction: Google+ may actually have drawn a winner this time, and Facebook’s $100B valuation is about to take a big kick in the nads.  Twitter, you’re going to take a hit as well.

Acquisitions are so attractive.

eBay has acquired the open source ecommerce platform Magento.  Personally, I’m a fan of Magento’s functionality and flexibility, and also a big fan of open source applications.  In general, getting acquired by a large company is a good thing, so this should all be beer and skittles, right?

Maybe.

Open source projects rarely do well when acquired by a large company, especially when that company isn’t really lined up behind open source as a culture, nor when the acquired application isn’t in the company’s wheelhouse (sometimes it’s worse when the open source code is in the wheelhouse: witness Oracle’s botching of OpenOffice or near miss with MySQL).  Both demerits are in play with this acquisition: eBay is neither an open source company (like Red Hat or Canonical or Mozilla), and eBay has it’s own ecommerce flea market, not a history of publishing software for users.

eBay is pushing toward its X.Commerce platform: a complete suite for digital marketing and commerce for (what I would assume) mid-market businesses.  This makes sense: eBay has PayPal and also recently acquired GSI, who was known for having a decent client list and a string of warehouses around the country (and internationally) to provide logistics and fulfillment.  I described this as “following Taobao” a few weeks ago.  What GSI wasn’t known for was its ecommerce platform.  I’ve heard from around the community that GSI’s platform was in the middle of a complete tear-down and rebuild, as various bits of acquired code simply weren’t playing nicely with each other.

Questions:

• Will eBay really move its main commerce branding beyond the flea market image they have (compared to Amazon)?  Can they (without sacrificing the huge cash flow that comes from that flea market)?
• Does GSI’s platform really suck that bad that Magento is seen as a replacement for it?  If not, how will the GSI platform and Magento play nicely with each other?
• Magento is open source.  If eBay is serious about keeping control of it, they’ll have to get out there publishing code often.  Otherwise, we’ll just fork it.  Culturally, can eBay pull this off?

I’ve launched a few Magento sites, and I wish them well.  I look forward to seeing what’s coming, but I also will start looking for an alternative if things go pear-shaped.

Red down arrows go out to the following:

• Email is only getting more spam-filled by the day.  Each new email service vendor that comes online is allowing every company out there more complex ways to bother me and fill my inbox.
• IRC, always the bastion of the pure GNU disciples and Anonymous, just doesn’t work for the rest of us.
• Blogs (including this one) continue their march toward niche ionization, always sacrificing common-sense discussion for the sake of the sensational political rant or a celebrity nipple slip.

Twitter, as we saw in the aftermath of the Japan Tsunami and the Arab Spring, has really come into it’s own as a quick way to get updates out.  For that, it earns a green arrow in the right direction.  At the same time, however, we learn that 50% of tweets come from a very small set (0.05%) of the twitter population.  OCDs with fast thumbs, I guess.  For that, it also gets a red arrow.

The two winners in the communications derby are still face-to-face honest interaction and Skype.  Skype is free, it’s the default chat for an ever-increasing segment of the population, the audio quality beats a land-line or cell phone every time, and the video is just icing on the cake.  If you use skype a lot, you really start to wonder how much longer the telephone (in its current state) has left.

Did Microsoft pay too much for Skype?  Maybe.  But when you look at the long ball, probably not.

As I’ve discussed previously, when a topic is “too broad” or “too common”, the comment threads or other discussion mechanisms quickly break down into partisan hackery and senseless name-calling flamewars.  Godwin’s Law is in full effect here, but is preceded with an endless stream of poor grammar, juvenile goofs, and spambots.  This is especially true where any subjective topic is in play (which covers most news topics, and anything close to the entertainment industry).

So how might Facebook’s comment regime change things?  Well, for the simple fact that these people’s comments will (should or must, IMHO) be viewed by all of their friends on Facebook.  Would you write that screed against the [republicans/democrats/two party system] if you knew that all your friends would read your poorly worded rantings?  Would you still use all those cuss words?  For most of us, I hope not.  Sure, for some of the giftedly-miscreant juveniles, the ability to post a rant against shoegazers on MTV.com and Facebook simultaneously will only encourage such poor commenting behaviour, but we already know where those places are, and they get what they deserve.

I sincerely hope that more mainstream content sites will adopt the Facebook comment plugin, but only if they absolutely enforce the rule that all comments MUST also appear on the contributor’s facebook wall.  Let the peer-shaming begin!  (After all, tomorrow is National Grammar Day; so sharpen your knives and gerund phrases.)

Facebook is rapidly approaching its Sakura-mi in Japan.  Until now it was the dark horse behind the dominant Mixi.jp, and really only used by Japanese students and employees who had spent time in the U.S. or E.U.  But now, with the movie The Social Network hitting it big in Tokyo, and Mixi dying a slow death from no new functionality and a poor user interface, the network effect that accelerates Facebook adoption is taking off.  However, it’s not all sweet rice wine and kara-age.  There are some snags.

Facebook has the following going for it in Japan:

• The movie is pretty much like a 90-minute tutorial on how Facebook works, and that it’s okay (necessary) to use your real ID and not a fake alias.  Japanese are finally getting used to that point.
• Mixi always accepted and centered on people making aliases, which seems like a protection of privacy (a big point for Japanese), but ultimately prevented people from connecting with their real-world set of friends.  Everyone had their real friends, and their Mixi avatar strange connection friends.
• Facebook has its marketing act together: it’s a viable advertising channel which means that companies are looking at it seriously (which they never really did with Mixi).
• Facebook has a workable API for others to utilize (e.g. Facebook login).  Mixi never got that far in their product roadmap.

However, Facebook may run into some bumps:

• When we all signed up for Facebook 3-4 years ago, the Facebook viruses and scams weren’t as advanced as they are now.  I see my Japanese friends signing into Facebook for the first time, but many of them are falling victim to the same scams and dupes that tricked my young nieces when she first joined up.  In short, Japanese users are still a bit naive.
• The “real identity” thing is a big lump for Japanese users to swallow.  If they use their real ID, that means that all those people from High School and old jobs and college can now really find them.  Americans went through that phase, but admit it– if you could do it over again, would you really “friend” all those random people that you happened to graduate at the same time from some school 15 years ago?
• On-gaeshi.  I’ve described this before as a benefit for short texting like twitter, but I still see it as a small hindrance for Japanese.  Friending one person in a group obligates them to friend all people in that group, and anytime they get a friend request, they feel they MUST return the favor.  It almost puts a compulsory feel to the network effect, and it creates a slight anxiety for users.
• Lack of shopping benefits: there’s no deal at Starbucks or Takashimaya or Mitsukoshi for participating in a given Facebook promotion, because those large companies are still way behind on the Social Media thing.
• Work environment: Japanese office workers are pretty much sitting shoulder to shoulder on long bench tables, with the section chief at the end of each row, and the bucho sitting behind him (furthest from the front door, of course).  There are no cubicles, no offices, no privacy.  There’s no way office workers can screw off on Facebook during work time.

I’m sure Facebook will eventually roll through the country.  I am also relatively confident in predicting that penetration will never be as high as it is here in the US.

Marge needs a smart phone first...

Groupon, the group discount site that has spread rapidly thanks to social networks, has seen explosive growth over the last few months.  the company has run extensive TV campaigns in Japan and Europe, as well as even buying some tasteless Super Bowl time last week.  Many of my friends are Groupon users, some are Groupon junkies (I can tell by their constant Facebook bragging/recruiting).  But what about the retailers that are offering these Groupon discounts?  Is it catnip to build buzz, or carrion that invites the vultures?

A common understanding in merchandising is that offering discount products brings in the discount buyers.  Unless your business is All-A-Dollar or Try-N-Save, these are not necessarily the customers you want: discount goods by their very nature have little or no margin, and discount buyers will complain, require service, and generally gum up the fulfillment chain just as much as any other customer (if not more so in some cases).  The business slang for them is ‘bottomfeeders’.  Insinuate whatever you want to from that.  (Please note that I am not calling my good friends ‘bottomfeeders’, they are wonderful people with a savvy sense of finding deals.  I am just relaying the merchandising term.)

So, when would a merchant want to deploy a Groupon strategy?  Here are some points to consider:

Groupon or other clearance discounting is a GOOD IDEA if:

1. You have a perishable or seasonable product that otherwise will be worthless in a matter of weeks (but not too perishable– a gift food company in Japan is getting sued for using Groupon to send out rancid meats and fish to hundreds of subscribers).
2. You can run the math, and assuming that Groupon clears out all product, you still cover enough margin to support fulfillment
3. Margin doesn’t matter on this one, because the word-of-mouth provides a great marketing opportunity.

Aha!  That last one is the siren song for many merchants that decide to go with Groupon.  They figure that if they give away 400 teddy bears or free cocktails or back massages or whatever, the word will spread and their marketing campaign will be off to a running start.  I have no doubt the Groupon salespeople only reinforce this belief.  I would submit that it’s based on some faulty assumptions and likely to get many small businesses in trouble.  Here’s my take on the dangers.

Groupon is NOT A GOOD IDEA for any combinantion of the following factors:

1. Your business requires the same fulfillment costs no matter who the customer is or how much they pay.  Restaurants fit in this category: a dinner for two requires the same amount of cooking, serving, and cleanup for a couple baying the full $60 as it does for the people using the $25 Groupon.  Unless your restaurant is 80% empty, this is a bad idea.  And if it is 80% empty, I would guess the problems are somewhere else…
2. The word-of-mouth factor that Groupon supposedly provides is not sustainable or exploitable.  Groupon will bring in a flash mob of a couple hundred customers, and a decent fraction of those customers will brag about the deal on Facebook.  However, unless the merchant has a way to exploit and continue that buzz, the flash mob is exactly that: a flash (and gone).
3. The flash mob is usually trying to recruit others to participate in the deal– they’re actively telling other bottomfeeders that there is a low-margin item/service for sale at your business.  This will result in bringing in more bottomfeeders as well as possibly damaging your brand.

Discounting is a hard drug to kick.  Groupon is a strong one: used carefully, it can be a kick of adrenaline; used indiscriminately, it’s a quick dose of crack.

See also: One Ring to Rule the Mall

Not my first choice for spokesman, but hey-- it's Japan.

Smartphones and tablets are changing how we input, read, and interpret information.  The finger pinching, sliding, and accelerometers are giving us a way to interact in very common sense approachable ways.  “No duh, Dave” you say– true.  This topic has been chewed over many times.  I’d like to bring up a new angle, however: The East Asian markets never liked keyboards in the first place.  Typing documents was always a chore, and it held back office efficiency for a long time.  These new devices may actually get them over the hump.

If you’ve ever tried typing a sentence in Japanese, Chinese, or to a lesser extent Korean, you know it’s a laborious process.  Because of the character-based text, people were often forced to type in phonetic equivalents, then search through homonym matched until they found the right word.  Then there’s the honorifics and other cultural baggage that Confucius laid on top of everything  that stretch simple greetings of “how are things?” into “forgive me for not writing sooner, I wish you all the best.  How is your incredible workload doing lately? You’re such a hard worker…”  For Internet activity, the URLs still are centered around the ABC latin alphabet.  Yes– other character systems are now ‘accepted’, but no one really types those.  In short, Kanji is a bitch.

Enter the smartphone.  We can now talk to our computers, and they understand us a statistical majority of the time.  We can wave them around, and they know what we’re trying to do.  We can look at QR codes, and skip that whole ‘type in this URL landing page’ mess.  For the urban markets in Japan, Korea, and China– where everyone treats their mobile phone as their primary access point– the Internet is becoming very useful again.

Some friends of mine are in the mobile app business here in Japan, and business is good.  Watch out, app market.  Things will get pretty hot pretty quickly.