Ever wonder what Google plans to do next? I just spent the last two days finding out, and the results were pretty interesting.Vic Gundotra, VP of Engineering at Google, yesterday opened Google I/O, Google’s first developer conference, by saying that Google has three goals for its business:

1. Making the [Internet] cloud more accessible
2. Keeping connectivity pervasive, and
3. Making the client [browser] more powerful.

Those points may seem generic, but they add up to an important idea: the web is the pre-eminent movement of our time. And Google wants to make everyone a part of it — and in the process make more money than ever before. Read the rest of this entry »

One cannot turn the proverbial webpage these days without finding some mention of the impending next generation iPhone. Here are the “facts” about the iPhone 2.0 as we know them today:

1. It will be 3G
2. It will have GPS
3. It may or may not be slightly smaller and thinner
4. It will not be solar powered (that will have to wait for iPhone 3.0)

Despite the rampant speculation, the one question that seems to be oft ignored is - what else can we expect from Apple? Surely some consumers were persuaded not to buy an iPhone because it lacked 3G, but these people were certainly in the minority. The fanboys waited in line for hours for the EDGE version and will do the same for the next edition. But the challenge for Apple will be to bring the iPhone to the masses. Yes, adding 3G will be a boon for Apple in other countries where networks are more mature, but in the US Apple will likely have to do more. Will 3G and GPS really be enough to constitute the next coming of the iPhone?

Here is my list of five things that would allow me to justify upgrading from 1.0 to 2.0:

1. Headphone controls. My iPhone is often in a case in my pocket which makes changing tracks or answering a call a huge hassle (well, as hassling as taking it out of said pocket and case can be). Headphone controls would ease this burden.
2. Direct Downloading. If Apple TV can do it, the iPhone can do it! Apple should allow me to subscribe to podcasts (audio and video) on my iPhone. When a new podcast is available (about important things such as LOST) and I am on WiFi (or that sweet sweet 3G network) the podcast should automatically downloads. This should be done for TV show subscriptions as well.
3. More Storage. This is an easy one. As much as I love the two episodes of South Park I have on my iPhone, the people around me are annoyed when I start reciting lines from the episode. Both I and they would enjoy me watching something else every so often - perhaps downloaded right to my iPhone? (see #2)
4. The Little Things. It would be great if I could rotate my pictures on the device so I don’t have to keep turning the phone when playing a slideshow. While we’re discussing small things - how about voice commands? While I’m asking for things - how about a zoom feature for the camera - something jailbroken iPhone users have had for some time.
5. Better Partnerships. Nike+ was a great partnership for Apple, selling Nano’s and creating the need in a market (runners) specifically for iPods. That was years ago and we haven’t seen anything as innovative since. Perhaps Apple can catch fire again with Nike (with its rumored workout suite) or others to make the iPhone an integral piece to other aspects of life as well. Maybe a Visa or Mastercard partnership to allow the phone to use NFC and double as a digital wallet?

There is no doubting that the iPhone 2.0 will be a worldwide sensation but the question still remains, what ELSE does Apple have planned? If Apple offers a thinner form factor, 3G, and GPS will it be enough or a letdown?

Most importantly, what will iPhone 3.0 look like? Will it be LTE? Will it be solar powered? Will it incorporate 3D technology? Will it move from touchscreen to simply tracking eye movements? Will it incorporate nano technology to take any form the user desires thus ending the form factor controversy? The simmering controversy that is iPhone 3.0 erupts now… 

Every industry analyst reaches that point in time when he says to himself that he “really needs to get on top of _____ before it becomes unmanageable.” In an emerging market, it’s important to take an early position and set an agenda for market analysis. For example: the weather’s warm, and lemonade will be in demand. But without such a take on things, suddenly, there are companies coming in the door explaining about the new category of “summer refreshments” explaining how their lemonade is fundamentally different from its core components of water, lemon juice and sugar.

If you’ve ever owned a dog, it’s the same as that feeling of … I’m going to have to take the dog for a walk in the next hour, or the poor creature is going to explode. A sense of impending action that must be dealt with one way or the other.

I’ve been having that feeling for several months about targeted digital advertising. I first raised my concerns in February with my colleague Anette Schaefer. I mapped out the core of my systemic, industry-destructing argument and Anette then asked the obvious question – “do people really want targeted advertising? Or will they respond negatively?” We shelved the idea, because we had other things going on and really needed to build some internal consensus on what may be a strong position against accepted industry thinking.

So when mobile entertainment and advertising guru Linda Barrabee was working on her mobile advertising forecast, targeting reared its ugly head yet again. Linda had placeholders in her forecast to account for some form of revenue acceleration for mobile web display advertising…based upon improved ad performance because of targeting.

At that point, I again put forth the arguments for and against targeting. And I begged Linda to hold off until she and Anette and I could sit down and come to some level of consensus about where targeted digital advertising will go.

Because it’s not just about digital dollars. There are many other traditional types of advertising which offer some form of targeting, be it geographic, demographic, behavioral, psycho graphic or down to the individual and household.

The One, Two, Three Punch
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The comics we read reflect the times we live in. But I hadn’t quite expected that technology cult classic comic xkcd.com would hit the big time with a half-page article in the Business section (?) of today’s New York times. It may never be as big a mainstream comic as Peanuts was, but it certainly taps into the zeitgeist of today’s MacBook-toting digerati.

Personally, I particularly enjoy xkcd’s T-shirts: my Linux-guru son Robert sports a “I’m not goofing off, my code is compiling” shirt, while science aficionado David is often seen in his “Stand back; I’m going to try SCIENCE.” And yes, there’s a T-shirt with the sudo joke on it mentioned in the Times article (see right), but I don’t recommend it for non-Linux/Apple folk; you spend all your time explaining the joke to people who know that there’s no sudo command in MS-DOS. On the other hand, if you’re about to spend a week in Silicon Valley with Google and other high-tech companies as I am, go for it — it’s not an inside joke any more.

I am about to head to California, not for a long Memorial Day weekend, but for the Google Developer’s conference in San Francisco. But before we join the population celebrating our mobile freedom by oxidizing as many hydrocarbons as possible, both in vehicles and on barbecue grills, some events in the news today deserve noting for their timely Anywhere significance. Specifically:

• Microsoft is embracing a Windows “bring your own laptop to work” model. Coincidentally, Yankee Group CTO Jeffrey Breen and I had been talking about the business possibilities of this approach just a day or two ago, as he watched me running my Yankee Group Windows laptop image on my personal MacBook Pro. I remember seeing British Petroleum (in my opinion, one of the largest and smartest multi-national IT groups I ever met) roll out a similar program around 2000. I thought the idea was brilliant then, and virtualization makes it even more practical now. The concept is simple: companies don’t buy computers for employees, but simply provide them with a subsidy and a virtual desktop image that they use on whatever machine they want to buy. Expect us to write more about this trend in an upcoming Yankee Group Decision Note; in my opinion, this trend is going to become unstoppable for Anywhere Enterprises.
• From the “out of this world” desk, NASA will be streaming the Sunday landing of its Phoenix explorer robot on Mars using a variety of Web 2.0 technologies, including Second Life broadcasts. Not only will there be images posted as they arrive here on earth, but NASA will be incorporating a variety of user-generated content including blog comments, wikis, and podcasts. Further, those with Second Life avatars can dress up in virtual space suits, sit on virtual bleachers and and tour the virtual Mars landscape while watching the television broadcast, all at this Second Life virtual world location. How cool is that?
• Telstra plans bragging rights to the fastest iPhones on the planet. Anywhere consumers who live for mobile speed have known for years they have to go outside the US to get all the 3G megabits they crave. But the Australians seem to be taking this to a new height: A Telstra executive claims that the Australian carrier will have Apple iPhones available on its network that can move 42 Mbits/sec by Christmas this year. Given that iPhones on 2.5G EDGE already can load pages about as fast as a Nokia 3G phone does with that faster network, that means that Anywhere consumers down under may have the ultimate mobile Web experience in their pockets this year. That said, standing in line at the NYC Apple Store 17 days before the 3G iPhone is expected to be announced still makes no sense, and more likely reflects entrepreneurial demand for scarce first generation iPhones to unlock more than 3G lust. And in case anyone is wondering, no such line yet exists outside the Apple Store here in Boston.
• And finally, I always knew Google Maps changed the world, but I had no idea Google’s mark on the planet was this big.

See you in San Francisco.

When banking was about protecting touchable financial assets–stacks of gold coins and engraved stock certificates–the edifices built to contain them looked like fortresses, imposing and impregnable.

When the essence of banking is about transferring a few bits from one side of a digital ledger to another, banks can look like this:

This is a typical storefront in Kenya, where there are thousands of small entrepreneurs selling necessities packaged in the daily doses that many Kenyans’ limited cash can afford at one time. Yes, some of those Kenyans make up the world’s unbanked, but that’s not the point. If you’re reading this, you’ve probably already seen retail banking outlets cropping up in the supermarkets of the developed world.

The principal raison d’etre of a retail bank–holding onto my money and letting me get at it from time to time–is going away. It just is, and the reason (you were expecting this, perhaps) is nothing less than ubiquitous connectivity. With a network wherever I need it, I can store digital money anywhere, as long as there are many physical devices that can help me transfer those assets when and where I need. So why would that physical place have to be a destination dedicated to that, as opposed to one that might also let me pick up a few groceries, pay some bills, mail a package, or anything else I need to do in life?

Vodafone’s intrapreneurial mobile transactions effort, called M-PESA in a clever adaptation of the Swahili word for cash and led by the impassioned Nick Hughes, has signed up over 2 million users in Kenya through the mobile operator Safaricom. It allows its subscribers to load digital money to their mobile phones, to transfer it to other people and institutions, and to offload it back to cash. “Only some of our users are unbanked. As a payment service, we’re really competing with the cash economy,” he told me. We talked last week at ITU Telecom Africa, in a quick meeting sandwiched in-between his mission to win banks on board for the expansion of the program in other markets. He admitted they’re a tough crowd to win over.

Dominic Endicott, a partner in the wireless-focused venture capital concern Nauta Capital, said something the other day that is probably supremely obvious, but potentially earth-shaking: “The wireless world can give us more information about the behaviors of its users than at any other time in the market.”

When mobile operators can easily and instantly move our money around for us, and can mine that activity to know where, how, and when we spend it–why on earth do I need a retail bank, reluctant or otherwise?

Media, both the industry and its physical representations–LP, tape, DVD, more–have been forever transformed by the move to bits. Retail banking, and indeed physical currency as we know it today, will go away. Blame–or thank–the network.

Didn’t the Bible liken ungratefulness to the sharpness of a serpent’s tooth? I suspect that those dealing with me and my ilk understand this well - particularly in the tricky matter of giving us corporate gifts.

After all, the gift can’t be too plush to suggest bribery, yet its purpose is positive brand awareness.

So what makes a gift transcend its usual destination: The rubbish bin, or ballast in a relative’s Christmas stocking? Here’s my 10 to remember:

1. Business card-sized magnifying glass (with integrated light). Score: 10/10: A gift from the African CDMA Forum whose representatives I met at the recent ITU Telecom Africa show in Cairo. Within 24 hours’ of landing home, it proved extremely useful in scanning my son’s hair for uninvited stowaways. A dose of Nitty Gritty did the rest of the job.

2. Armor-clad submarine cabling. Score 9/10. This mounted section of a trans-atlantic submarine cable from Cable & Wireless is a cherished possession. It’s a reminder of the company’s proud past, and a useful paperweight.

3. AT&T’s company history. Score 8/10: This nicely-produced booklet might become an eBay winner. That’s because I bullied various AT&T executives to autograph it, including outgoing CEO Ed Whitacre.

Read the rest of this entry »

Information security is a strange market segment. To outsiders, “security” is a simple thing: you are either secure or you are not. Many people also feel that security is a feature you can add to a product. These perspectives are simultaneously 100% right and completely wrong. They are right because at the and of the day, security should be something that customers expect their vendors will provide. Recent accquisitions by IBM, HP and EMC, for example, exemplify the broader trend of baking security into products and services. This is a good thing.

But, the reductionist view of security is also completely wrong because it masks the variety and subtleties of today’s marketplace, and of the threat landscape. There are probably 1,000 information security vendors in the market, all selling various cures for real and imagined problems. Here at Yankee, we have identified at least 35 individual market segments in the enterprise arena alone. The sheer number of market entrants and threat vectors ensures that security will never again be something so simple as a “yes-you-have-it”/”no-you-don’t” discussion.

But sometimes information security vendors get a little too… shall we say, fancy in describing the terrifying variety of threats to customers’ business assets and peace of mind. I speak, of course, of the medicalization of information security — how endless variations on simple threats get turned into a baffling array of multi-syllabic symptoms, diseases and maladies.

Today’s latest addition to the jargon lexicon is something called “phlashing,” a technique for messing with embedded devices, like your home wireless router. It was uncovered — and named — by an HP researcher with a fondness for cutesy verbiage. He called it “phlashing” to denote the target of the attack vector, namely against embedded devices’ flash ROM firmware. The “ph” is the obligatory geeky add-on that, if you are a security researcher, you feel compelled to add because “fl” is far too simple.

Information security professionals of all types have long moaned that they don’t have visibility to the corner office, and that they don’t know how to “align security with the business.” I would humbly suggest that the wasting disease of medicalized jargon is part of the problem. Can we all agree to stop creating exclusionary terms to describe Yet Another Threat Vector (YATV)?

Here are just a few of the terms I’ve run across in my three years as a security analyst:

• Virus
• Spyware
• Trojan
• Rootkit
• Keylogger
• Bot
• Botnet
• Backdoor
• Dialer
• Drive-by
• Dropper
• Packer
• Phishing
• Pharming
• Phlashing

…and my favorite, “blended threat.” Symantec loves to use this term, but to me it just means “hemlock smoothie.”

I guarantee that nobody outside the information security market knows that any of these things mean. All they do is provide fodder for eager marketroids trying to fleece gullible sheep. Are you worried about creeping rootkititis? Such a deal we have for you!

Let’s get rid of the jargon, please. HP marketing, are you listening?

At Yankee Group, we’ve been researching and predicting the future for a while now. Sometimes we get it right, and sometimes not so much. Our biggest Big Bet is the one we’re making around Anywhere — the notion that the global connectivity revolution will introduce dramatic changes in the way we live and work.

A key part of our Big Bet is around something very tiny. Made from plastic and glass and silicon, mobile phones are getting smarter every day. Even better, the increase in flat-rate data plans means that the mobile internet usage is going to explode. This broad macro trend — increased mobile internet usage — has profound implications for security, and in particular for mobile identity. If you take your phone, keys and credit cards with you, it seems to me that you will want to take your identity along too.

With that background in mind, I’m pleased to give YG blog readers a quick preview of a report I just finished today called Sizing the Mobile Identity Opportunity that puts numbers around how big mobile identity might be. Based on a model derived from our consumer data and mobile forecasts, the numbers, which I believe are conservative, are eye-popping. Assuming our forecasted mobile usage trends continue as we expect, by 2012 US mobile subscribers could generate over 360 billion identity events per year. By “identity event,”  I mean the act of authenticating to an online service or website. Applying the Law of Large Numbers to a miniscule fee per event yields another big number in the hundreds of millions of dollars. These are dollars that mobile operators and identity management vendors could leave on the table unless they capitalize on the opportunity.

This report won’t be available for several weeks. It usually takes a little while for our Editorial services group to bang out the dings in my dented prose, and for our peer reviewers (which in this case will include several outside organizations) to weigh in. More about this soon!

The question has been posed - will digital replace Blu-ray? Yankee Group’s take in Will Blu-ray’s Victory be Short Lived? concluded the impact will be minimal on sell-through but massive on the rental market - if only a company could solve the puzzle of hardware and service integration.

With today’s launch of the Roku-Netflix set-top box we are left to wonder if  the days of aimlessly perusing the aisles of Blockbuster - hoping to spy a film that piques a modicum of interest and is in stock are behind us? Further questions also abound - such as  how will we burn the calories we walked off en route to the mailbox to pick up our DVDs if we no longer need to leave our couch? 

On a more serious note, the offering begs the question - can Netflix succeed where so so so many others have failed (see Akimbo, MovieBeam with a slate of others on the verge of qualifying for failure status)? As I have stated in the past, if anyone can make hay in this market it will be Netflix and their first offering seems to heed the market conditions wisely:

1. Free Content! Time and again hardware manufacturers have failed by because they wanted to charge for hardware and content - a failed value proposition for nearly all consumers. 
2. Hardware Price. Alternatives cost well above the $99 price point. By foregoing a hard drive and other unnecessary features the box becomes an impulse purchase decision.
3. The Power of Netflix. Netflix has a core of zealots who the company can market the box to - allowing them a built in user base that other hardware has not yet offered.

Gushing aside, there remains a few chinks in the Netflix chain or armor which the company will need to hammer out:

1. More Blockbuster Content (no pun intended). Netflix will need to expand its offerings of video content beyond much of the older archived content generally available on the service. This will make users that find securing new release DVDs challenging prime subjects for the hardware and greatley expand the total addressable market.
2. HD. The next question that will be posed is “what about hd?” I would even content that the blogosphere is already abuzz with such pressing matters. Netflix will need to determine an HD strategy in short order to make users with those supersized HD sets happy.

Overall, this seems an important first step to introduce a complementary digital download service to a wider audience. It offers Netflix an opportunity to offset some of its shipping costs and provides an advantage over rival Blockbuster. For Roku it allows them to promote their brand name and potentially open the market up for its other products. For the competitors it provides insight into how the hardware can compete - some will add a hard drive, some will offer DMA functionality, others will compete on form factor. It is important that there will be room for differentiation and competition - that is, until the service launches on the XBox 360 or the PS3 (which may not happen but would make all the sense in the world).