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Thursday, August 15, 2002

Catching the wave
Grand Central needs more customers if it's going to survive, writes Rachel Chalmers of the451 in an analysis republished by SearchWebServices. It makes a refreshing change to see some tech industry journalism that actually does some independent analysis instead of simply reporting a CEO's assertions unchallenged. But having said that, her calculation that this web services networking startup needs to sign another 70 or so customers before it breaks even is hardly a revelation. For a startup, that's pretty much par for the course.

To be sure, Grand Central has to carry a bit more baggage than most. It came out of San Francisco-based tech incubator 12 Entrepreneuring, which raised most of its cash in those heady days of June 2000 at an impossible valuation of $750m, before it had even launched a single successful venture. Grand Central is the sole survivor of that adventure, so it has a lot of weight on its shoulders. It was always intended to be a stellar performer, which entails a heavier cost burden than average. As with any startup, though, the trick is getting the timing right. CEO Craig Donato, naturally, believes it's on track: "Donato expresses the conviction that in the middle of next year there will be 'a very big period in terms of adoption'," reports Chalmers.

Something that's very much in the company's favor is a pragmatic attitude that's uncharacteristic of the climate in which Grand Central was incubated. Donato and his team don't look down on prospects that aren't using the latest web services technology. "You can't think of web services just as SOAP and XML," he told Chalmers. It's more a case of using the Web to integrate companies' business processes, and whether they use SOAP, FTP or HTML screen-scraping to do that is immaterial from Grand Central's point of view. In fact, one of its selling points is that it lets customers and their partners choose for themselves when — if at all — to migrate to XML-based web services.

Some of that pragmatism presumably has rubbed off from John Hagel, the McKinsey alumnus and e-business guru who served as chief strategy officer at 12 when Grand Central's business plan was being formulated. In a June posting to his weblog, Hagel laid out a roadmap for the adoption of web services, in which he pours scorn on the futuristic notion that "Web services are about the dynamic composition of applications from many micro-services." In the fulness of time, maybe, he concedes, but right now, business executives have much more moderate ambitions that they want to achieve using web services:

"The answer is pretty boring, at least for the technology visionary. We're going to use the technology in a very mundane way, to build low-cost and flexible connections across very large and diverse applications already installed in companies. While mundane from a technology perspective, this capability gets a business executive's juices going."

In that context, Donato's optimism is reasonable. Grand Central's survival depends on just a handful of companies deciding to deploy its technology to solve problems they have today. Taking into account the alliances the company is forging already, together with the boost to its proposition that will likely come with the publication of Hagel's upcoming book, Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow Through Web Services, the prospect of reaching the necessary critical mass is probably eminently achievable. But it is still a gamble. That's the nature of a startup, and the rewards for success are big enough to justify skating right along the edge of potential failure on the way there.
posted by Phil Wainewright 12:58 PM (GMT) | comments | link
An experiment in blogging for profit
Nick Denton, founder of, has launched Gizmodo, a blog about gadgets, which he is paying journalist Pete Rojas to maintain, and which aims to make money from affiliate referrals to Amazon's electronics store. Nick explained the thinking behind Gizmodo on his own weblog yesterday, where he also recorded links to a number of immediate blogging reactions.

The launch comes just in time to crossover with currently ongoing discussions about blogging for profit (see yesterday's posting on corporate weblogs), and has generated an interesting discussion on Blogroots. I was particularly interested in Dave Winer's comment:

"Premeditated blogging-for-profit is a dead-end imho. The CEOs of the gadget companies will run weblogs. That will make money if the gadgets are good. And the fans will write about the gadgets they love on their weblogs, not for money but to share what they learn and to be a magnet for more learning through searches. That's the way blogs work today. The CEO thing is new, not many are doing it, but it will be the most direct 'business model' for weblogs."

I was interested because I think the truth lies in between Nick and Dave. Yes, the CEOs of gadget companies will run weblogs, but the fans of gadgets won't waste their time visiting every single CEO weblog. They'll go to specialist sites — like Gizmodo — which will aggregate the CEO weblogs, and the best of the fans' weblogs, and serve as a marshaling point for people interested in gadgets. No doubt there will also be some fans who'll do the same for free, but they won't have the professionalism and resources of the commercial aggregators, and although they'll have a loyal following from people 'in the know', it'll be the commercial sites that get the lion's share of the traffic.

If that sounds none too different from a traditional publishing model, except done in real time on the Web rather than once a month in a glossy magazine, then that shouldn't be a surprise, because what is the Web except a new way of doing better or differently all the things that we already do as a society? One thing where Dave is right, though, and that's the stress on honesty and trustworthiness. If commercial sites end up as little more than publicity vehicles for the vendors, then they'll lose the respect of their readers (just like a whole swathe of media titles lost the respect of readers during the dot-com boom). Weblogs didn't invent personality, attitude and independence as attributes of good writing, but it's a medium that certainly rewards writers with those characteristics.

The point about aggregation struck me because it's like I was saying about Groove's weblog page yesterday; the real value comes when you aggregate the content and provide a single-source shortcut to the information. That's what this site, by the way, is aiming to do for the web services sector (more on that shortly), and yes, I do believe it can be a viable business proposition. I'm sure, given his background, this potential for Gizmodo to act as an aggregator is not lost on Nick either.
posted by Phil Wainewright 11:47 AM (GMT) | comments | link

Wednesday, August 14, 2002

Corporate weblogs
Does blogging have a role to play in how companies present themselves to the world? I've been surprised at how few corporate weblogs there are in the web services sector, whose participants you'd have thought would have been among the earliest adopters. Equally surprising is how tentative those who have started weblogs have been in their use of them. Though perhaps that's a testament to the power of blogging — these pioneers are wary of the unintended consequences that a corporate blog might expose them to.

I've been keen to link to vendor weblogs from the news page of this site (even more so to aggregate their RSS feeds, but none to my knowledge have yet dared even that small leap of faith). Those that I've found to date already illustrate several degrees of diffidence:

  • Collaxa, to its credit, has gone all the way, making its blog a featured element of its corporate website, and one that's proved to be a useful resource. Though for some reason they've committed the cardinal sin of changing its URL twice already in the past two months. Each time you do that, you fall back to the bottom of Google's rankings. Rule 1 when planning a blog is, give it a URL and stick to it (especially for permalinks).

  • Macromedia earned some kudos among bloggers when it had some of its key product managers set up blogs on the launch of its MX family a few months ago. But I'm wondering, is it ashamed of the results? Its website doesn't maintain a page of links to them, apart from this article. Wired may believe that Macromedia "appreciate[s] the new topography of the Web", but I'd say its appreciation falls short of full engagement.

  • The latest recruit to corporate blogging is Groove Networks, whose founder and CEO Ray Ozzie attracted immediate attention when he launched a new weblog at the end of last month. The company's website now features a page listing all the blogs kept by its key staff, as well as independent blogs that write about Groove. That's a big step further forward than Macromedia, but why stop there? Aggregation is the name of the game, if you ask me. That page would be a whole lot more valuable if it showed the most recent headlines or first paras from those blogs, and doubly so if it offered an RSS feed of the aggregated links.

  • Another new recruit is Cape Clear, which late last month replaced its previous Yahoo! Groups developer forum with an internally hosted replacement and a BlogSpot-hosted weblog. This is an example of a weblog directed at one specific interest group associated with the company, rather than one directed at all visitors, and it's an interesting idea. Of course, for a tools vendor to have a weblog directed at developers is an obvious and relatively risk-free step. Aiming a weblog at sales prospects carries greater risks if something goes wrong, while having an investor weblog might have statutory implications. Doubtless it's this type of consideration that keeps many from implementing corporate blogs of any kind.

Yet even though these few blogs are tentative first steps, I believe they represent the initial wave of a growing tide. Corporate bloggers will certainly have plenty of encouragement and ideas thrown at them by established members of the blogging community, though I'm not convinced that blogging enthusiasts are the best people to show business how to use weblogs. Still, for the record, here are three recent articles that show some of the ideas being advanced:

  • Blogs finding fans in business world cites the experiment by Phillip Windley, CIO for the state of Utah, to encourage blogging by state employees. He's been inspired by Userland COO John Robb's vision of k-logs (short for knowledge weblogs), and has installed Userland's client-and-server combination, along with a Google search appliance, in hopes of creating "a state knowledgebase." The immediacy of blogging promises to solve one of the huge obstacles faced by knowledge management, which is that people can't be bothered to share what they know. The Utah experiment is a landmark test of whether blogging can deliver on that promise.

  • Last week, Dan Bricklin's company Trellix added blogging to its hosted website platform for small businesses. Dan has written an article about how small businesses might use the blogging capabilities, kicking off with the splendid observation that: "A reverse-chronological list of postings, with a managed archive, is a general function that can be used for many things." In other words, a blog is not just for blogging. Dan's article cites a number of possible alternative uses.

  • Meg Hourihan, who co-founded Pyra Labs, the maker of Blogger, argues the case for professional blogging in her O'Reilly column this week (there are some interesting reader comments here). Meg cites several examples of corporate blogs — Google should have one devoted to its recently launched API, an insurance company could publish topical advice for policyholders, an online winestore might encourage repeat visits with a weblog aimed at enthusiasts. Where I disagree with Meg, though, is that she says these blogs should be maintained by full-time, professional bloggers. I'd say it's far better to have people writing them who know their subject and their audience. Certainly they should have the necessary skills to be a good blogger, and of course it should be written into their job description and work schedules rather than seen as an extra-curricular activity. But blogging is not something apart, which can only be done by people who've been properly apprenticed. It's just a better way of interacting via the Web, and still subject to many of the rules that govern successful corporate relations in any medium.

In summary, there's going to be growing use of weblogs in business to do a variety of things. There's no established best practice at this time, but here's the current state of play:

  • Weblogs can be used internally to aid communication and knowledge sharing by project teams and groups.

  • They can be used externally as part of corporate identity or to aid communications with specific target groups.

  • Opinion is currently divided as to whether employee blogs should be hosted by the company or elsewhere, and to what extent in either case the company should promote them.

  • Very few businesses are currently using the capabilities of RSS feeds to link, aggregate and publicize their weblogs.

  • It's probably best to get advice from an experienced blogger on setting up a corporate blog, but keeping a blog is something that can be learnt by any articulate individual.

  • Finally, don't feel constrained to a specific style of format of blog. Tune it to your needs and your readership's interests. The only constant is that it's a readily-updated, archived list of postings that lives on the Web. It's up to you what you make of it.

posted by Phil Wainewright 4:18 AM (GMT) | comments | link
Triangulate that!
Has Macromedia caught a wave or missed the boat? According to Standard & Poor's analyst Scott Kessler, writing in BusinessWeek, "some 17 months after the company bought Allaire, demand for its products is still weak and there's no recovery in sight. In effect, the company doubled down and lost."

But here's another viewpoint: "Macromedia's new family of products empowers developers to migrate their skills to take advantage of the new generation of XML Web services architectures ... its popularity looks set to increase." The second quote comes from an article announcing the web design vendor's entry this month into the ASPnews Top 30 Enablers list, which celebrates those companies that are making the biggest contributions to enabling online applications. I help to compile the list, and I was very strongly in favor of adding Macromedia.

You can hardly have two points of view that are more diametrically opposed. Have I been taken in by the slick marketing spin surrounding Macromedia's new MX architecture, or is Scott Kessler missing the point in his analysis of the web design market? You decide (but don't treat this posting as a share tip — remember, most investors think like Scott).
posted by Phil Wainewright 1:29 AM (GMT) | comments | link

Tuesday, August 13, 2002

XML is to Microsoft as PC was to IBM
Back in 1981, IBM's corporate strategists had other things on their mind when a small, skunkworks team at the company's Boca Raton campus in Florida created and launched its first PC. The budget and timescale allocated to the project were both so restricted that it was almost entirely constructed from third-party components, and the technical architecture was published openly to encourage outsiders to develop add-ons and upgrades.

By the time IBM realized just how successful the PC architecture had turned out to be, it was too late for the company to reassert proprietary control. Nowadays, people don't even talk about having an IBM-compatible system anymore. They call it the Wintel architecture, after the Windows-Intel combination that today defines the PC.

For a long time, I've believed that the advent of Web-based computing will prove the downfall of Microsoft, wresting away its current dominance just as surely as the advent of PC-based computing swept away IBM's earlier dominance. So I was especially interested to read Michael Vizard's InfoWorld column today, Getting caught in a big hailstorm:

"In its haste to limit Java's influence to being a language rather than a platform, Microsoft fully embraced XML while simultaneously pushing for a software-as-service business model known as Hailstorm ... But then a funny thing happened. People at Microsoft realized that XML was even more open than HTML browsers or Java. So by embracing XML, Microsoft was about to dismantle the proprietary Windows application architecture that drove the company's profits. After reaching this conclusion, the backpedaling began in earnest."

Sound familiar? (If not, consult the very readable story of Microsoft's success and IBM's demise as told by Robert X Cringely in Accidental Empires, but in the meantime here's the gist). When IBM saw the PC market slipping away from it, the company set to work to create a completely new, proprietary architecture called microchannel, which it launched in 1987 at the heart of the PS/2 family of next-generation PCs. The PS/2 flopped — much to the chagrin of IBM's most loyal enterprise customers, who obediently bought them by the truckload — handing market leadership on a platter to Compaq, whose engineers had every support from backroom teams at Microsoft and Intel in wringing the best possible performance out of the Wintel architecture.

Today Microsoft, suddenly faced with the prospect that its championing of XML web services is about to cannabalize its almost total dominance of the desktop software market, is hard at work developing its own version of IBM's desperate microchannel ploy. Back then, IBM delayed moving to Intel's next-generation 386 processor architecture until its microchannel architecture was ready to launch. That fateful decision let Compaq come to market with the first 386-based PC six months earlier, thus seizing the mantle of technology leadership.

Now, as Michael Vizard recounts, "Microsoft Office won't support XML until Version 11 ships, hopefully sometime in 2003. And what is even more astounding is that the XML Web services support in Office 11 is more than likely going to be crippled because ... Microsoft client software won't be able to function as a Web service in that release."

Is Microsoft really going to repeat exactly the same mistakes that it witnessed IBM making fifteen years ago? There have been several articles recently on InfoWorld that present a different point of view, suggesting that Microsoft's Office strategy is all about opening up to XML web services. But the temptation to limit the damage by wrapping it all up in some innocuous-sounding proprietary cocoon must be just as huge for Microsoft now as it was for IBM back then. It may seem unthinkable, but as I mentioned in my ASPnews column today, the unthinkable is happening an awful lot these days.
posted by Phil Wainewright 12:11 PM (GMT) | comments | link

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