Archive

Posts Tagged ‘Microsoft’

The impact of disruptive innovation – on PCs and on Retail

January 17, 2013 11 comments

Two recent items highlight the impact of disruptive innovations on industries. The first is a presentation from the Business Insider called the The Death of PC. The second is an article looking at Amazon and mentioning its March 2012 purchase of Kiva Systems.

Since 2009, the PC market has hardly grown. In the same period, Smartphone & Tablet sales boomed. Many tasks that used to be done on PCs are now done on these newer devices: email, web-searching, social media, and more. This has had a massive impact on the traditional PC market and its suppliers such as Intel and Microsoft. Whereas Apple’s and Samsung’s share prices have grown substantially, Dell & HP have been static or fallen. The introduction of both Smartphones and Tablets illustrate how disruptive these technologies are to the traditional PC industry – although as the The Death of PC presentation shows, things are actually more complicated. This is typical for a disruptive innovation – especially in the earlier stages.

Disruptive innovations do not always kill the products and industries they replace. What they do is change them radically. Smartphones haven’t killed the camera industry. They have, however transformed it so that DSLR and higher-end / special function cameras are now the main products sold. The cheap mass-market snapshot camera has gone – who needs one, when a Smartphone does everything that they could do, and much more. Disruptive innovations also mean that companies that fail to adapt quickly enough disappear. Kodak’s filing for Chapter 11 bankruptcy is an example of this. Kodak and photography were synonymous – but the company failed to anticipate how digital camera usage would change the way people process photographs.

In the case of the PC market, so far it’s only the home PC that’s dying. The PC in the workplace is doing fine – and that’s because the type of task it is used for is different. It’s hard to work on a spreadsheet, or a complex graphic or even a long report using a Tablet and almost impossible on a Smartphone. These aren’t tasks that the home computer was used for. So Tablets haven’t changed the work PC – only the home PC market. However expectations have changed – and this has led to newer devices and cloud computing which promises to be as disruptive for the traditional hard-disk based PC and so the PC as we knew it last century is gone or going. It’s not yet dead – just changed.

Amazon’s purchase of Kiva Systems in another example of a disruptive innovation. Amazon itself has shown how disruptive e-commerce is to traditional retailing. The high-street and even the out-of-town retail outlets struggle to compete with Amazon on price. However they can still compete on service: if you want something on the same day, then such outlets beat Amazon, even if the price is higher. Further, Amazon’s warehouse distribution system could be copied and many of the larger retailers now offer online options. Currently both use human labour to select and package products for delivery – and this represents a significant proportion of retail costs. The Kiva Systems purchase promises to change all this. Kiva Systems manufactures robots and the software used to control them. The robots are designed for use in warehouses for accessing goods. They remove the need for a human being to go to the relevant shelf and remove a product for sending to a customer – instead a machine does this. Eventually such systems are likely to completely automate the distribution process – meaning that Amazon’s labour costs will fall dramatically.

Any retailer that still depends on human labour in their warehouses or retailing is likely to find it even harder competing with Amazon’s prices. Such retailers should start thinking now on how they could compete. Options include looking at ways of improving service or focusing on narrow niches requiring in-person expertise. Waiting and hoping that some shining knight on a white charger will come and rescue them is not an option. There will be no shining knight because, however much retailers may wish it was, true life is not a fairy story.

[After writing this post, Michel Bernaiche, Program Development Director of AurowaWDC and current Chairman of the SCIP board, pointed out this news story to me – highlighting how robots are impacting not just retailing but many other business areas – from hospitals & surgery to legal research. CBS News Video on Impact of Robotics in Industry]

Microsoft’s Surface and Disruptive Innovation!

October 27, 2012 4 comments

There is an old video with Bill Gates talking about Microsoft and Windows version 3, looking at multimedia, pen computing and an early tablet computer. Circa 1991! The technology shown in the video was forward thinking. Today we take it for granted. This was a time pre-web when only businesses had computers. Few people had computers at home and few knew about email or the Internet.

The idea of tablet computers is not new. Both Microsoft and Apple had looked at the idea years ago, but at the time the technology was not sufficiently fast, sophisticated or useful enough to grasp the majority of consumers’ interests. Techies loved such devices. (At about this time, ago, I had a boss who had a Psion Organiser.  He loved it. Everybody else wondered what he saw in it).

That’s the issue with disruptive innovations.  It’s not just the disruption that counts. It’s the timing. The Microsoft tablet was like the Psion organiser, and even the more tablet like Apple Newton device.

Apple Newton

The idea was a great idea but the timing was too early, and the product was not able to capture the consumer mind.

It’s not the first company that comes out with a disruptive innovation. It’s the first company that captures the consumer’s share of mind – their imagination.

As another technological example, the Apple iPod was not the first mp3 player. There were a few before  (e.g. the MDiamond Rio and the MPMan player) – but they didn’t have the panache of the iPod – and so were quickly overtaken when the iPod entered the scene.

At the same time, entering too late – or basing your product on competitors is also not the way – as Microsoft’s Zune product showed.

The jury is still out on Microsoft’s iPad type product – the Surface. This, at least, is not a copy but something different. To a large degree, it’s fate will depend on Windows 8 (RT). I think the Surface has a place – and I can see it destroying the netbook and low-value laptop market, and so it will be disruptive. I don’t believe that it will damage the iPad or most Android tablets (and also not the Kindle type e-book reader). People buy these for the apps – and there are too few Windows based apps. I don’t see this changing with Windows 8 either. (Why should an apps developer spend time and money building a Windows based app when the vast majority of tablet computers & smart phones are Android or Apple iOS?)

So who will buy the Surface. Techies – obviously! However businesses that currently equip sales people with netbooks or low-price laptops will also go for it as it is lighter, cheaper and trendier while offering the same or greater utility than the netbooks and laptops they had previously bought.

Of course time will tell. That’s what makes something truely disruptive – it’s often only after the new technology has taken over that you can say “but it’s obvious that it would succeed“. If this wasn’t the case – we’d all be flying across the Atlantic on another seemingly disruptive technology that failed to spread even though it provided utility, speed and worked. The supersonic Concorde aircraft never really took off, even though British Airways claimed it was profitable. Only British Airways and Air France flew Concordes. No other airline purchased the aircraft and the Concorde crash in Paris in 2000 effectively sealed its fate.

Internet Explorer is for Dummies! Anatomy of a hoax.

August 7, 2011 15 comments

Good business intelligence quickly identifies information that is real and what’s false – or should. It’s important that decision making is based on accurate, factual data – as otherwise bad decisions get made. So how do you tell whether something is real or fake?

Generally, the first rule is to check the source or sources.

  • Are they reputable and reliable?
  • Is the information in the story sensible and reasonable?
  • What’s the background to the story – does it fit in with what’s already known?

The problem is that even if information passes these tests it may still not be true. There are numerous examples of news items that sound true but that turn out to be false. One example is a BBC news story from 2002 quoting German researchers who claimed that natural blondes were likely to disappear within 200 years.   A similar story appeared in February 2006 in the UK’s Sunday Times. This article quoted a WHO study from 2002. In fact, there was no WHO study that stated this – it was false. The story of blonde extinction has been traced back over 150 years and periodically is reported – always with “scientific” references to imply validity.

The “Internet Explorer users have lower IQs” hoax

Often, the decision to accept a news item depends on whether or not it sounds true. If the story sounds true, especially if supported by apparent research then people think that it probably is – and so checks aren’t made. That is why a recent news story suggesting that users of Internet Explorer have lower IQs than those of other browsers was reported so widely. Internet Explorer is often set up as the default browser on Windows computers, and many users are more familiar with Explorer than other browsers. The suggestion that less technologically adept users (i.e. less intelligent users) would not know how to download or switch to a different browser made sense.

I first read the news story in The Register – an online technical newspaper covering web, computer and scientific news. Apart from The Register, the story appeared on CNN, the BBC, the Huffington Post, Forbes and many other news outlets globally (e.g. the UK’s  Daily Telegraph  and Daily Mail). Many of these have now either pulled the story completely, just reporting the hoax, or added an addendum to their story showing that it was a hoax. A few admit to being fooled – the Register, for example, explained why they believed it: because it sounded plausible.

The hoax succeeded however, not only because the story itself sounded plausible, but also because a lot of work had been put in to make it look real. The hoaxer had built a complete web-site to accompany the news item – including other research, implying that the research company concerned was bona fide, other product details, FAQs, and even other research reports, etc. The report itself was included as a PDF download.

In fact most pages had been copies from a genuine company, Central Test headquartered in Paris and with offices in the US, UK, Germany and India – as was highlighted in an article in CBR Online.

Red Flags that indicated the hoax

To its credit the technology magazine, Wired.com spotted several red flags, suggesting that the story was a hoax, stating that “If a headline sounds too good to be true, think twice.”

Wired commented that the other journalists hadn’t really looked at the data, pointing out that “journalists get press releases from small research companies all the time“. The problem is that it’s one thing getting a press release and another printing it without doing basic journalistic checks and follow-throughs. In this case,

  • the “research company” AptiQuant had no history of past studies – other than on its own web-site;
  • the company address didn’t exist;
  • the average reported IQ for Internet Explorer users (80) was so low as to put them in the bottom 15% of the population (while that for Opera users put them in the top 5%) – scarcely credible considering Internet Explorer’s market share.

After the hoax was exposed, the author, Tarandeep Gill, pointed out several red flags that he felt should have alerted journalists and admitted it had been a hoax i.e.

1. The domain was registered on July 14th 2011.
2. The test that was mentioned in the report, “Wechsler Adult Intelligence Scale (IV) test” is a copyrighted test and cannot be administered online.
3. The phone number listed on the report and the press release is the same listed on the press releases/whois of my other websites. A google search reveals this.
4. The address listed on the report does not exist.
5. All the material on my website was not original.
6. The website is made in WordPress. Come on now!
7. I am sure, my haphazardly put together report had more than one grammatical mistakes.
8. There is a link to our website AtCheap.com in the footer.

The rationale and the aftermath

Gill is a computer programmer based in Vancouver, Canada, working on a a comparison shopping website www.AtCheap.com. Gill became irritated at having to code for earlier versions of Internet Explorer – and especially IE 6.0 which is still used by a small percentage of web users. (As of July 2011, 9% of web-users use Internet Explorer versions 6.0 and 7.0 with a further 26% using version 8.0. Only 7% of web users have upgraded to the latest version of Internet Explorer – v9.0).

The problem with IE versions 6.0-8.0 is that they are not compatible with general web-standards making life difficult for web designers who have to code accordingly, and test sites on multiple versions of the same browser – all differing slightly. (As you can’t have all 4 versions of Internet Explorer IE6.0 – IE9.0 on the same computer this means operating 4 separate computers or having 4 hard-disk partitions – one for each version).

Gill decided to create something that would encourage IE users to upgrade or switch, and felt that a report that used scientific language and that looked authentic would do the trick.  He designed the web-site, copying material from Central Test, and then put out the press release – never expecting the story to spread so fast or far. He was sure he’d be found out much more quickly.

The problem was that after one or two reputable news sources published the story everybody else piled in. Later reports assumed that the early ones had verified the news story so nobody did any checks. The Register outlined the position in their mea culpa, highlighting how the story sounded sensible.

Many news outlets are busy flagellating themselves for falling for the hoax. But this seems odd when you consider that these news outlets run stories on equally ridiculous market studies on an almost day basis. What’s more, most Reg readers would argue that we all know Internet Explorer users have lower IQs than everyone else. So where’s the harm?

The facts are that AptiQuant doesn’t exist and its survey was a hoax. But facts and surveys are very different from the truth. “It’s official: IE users are dumb as a bag of hammers,” read our headline. “100,000 test subjects can’t be wrong.” The test subjects weren’t real. But they weren’t necessarily wrong either.

You may disagree. But we have no doubt that someone could easily survey 100,000 real internet users and somehow prove that we’re exactly right. And wrong.

The real issue is that nobody checked as the story seemed credible. Competitive Intelligence analysis cannot afford to be so lax. If nobody else bothers verifying a news story that turns out to be false, you have a chance to gain competitive advantage. In contrast those failing to check the story risk losing out. The same lessons that apply to journalists apply to competitive intelligence and just because a news story looks believable, is published in a reputable source and is supported by several other sources doesn’t make it true. The AptiQuant hoax story shows this.

Meanwhile the story rumbles on with threats of lawsuits against Tarandeep Gill by both Microsoft (for insulting Internet Explorer users) and more likely by Central Test. Neither company is willing to comment although Microsoft would like users to upgrade Internet Explorer to the latest version. In May 2010 Microsoft’s Australian operation even said using IE6 was like drinking nine-year-old milk. If Gill has managed to get some users to upgrade he’ll have helped the company. He should have also helped Central Test – as the relatively unknown company has received massive positive publicity as a result of the hoax. If they do sue, it shows a lack of a sense of humour (or a venal desire for money) – and will leave a sour taste as bad as from drinking that nine-year-old milk.

Google versus Bing – a competitive intelligence case study

February 2, 2011 7 comments

Search experts regularly emphasise that to get the best search results it is important to use more than one search engine. The main reason for this is that each search engine uses a different relevancy ranking leading to different search results pages. Using Google will give a results page with the sites that Google thinks are the most relevant for the search query, while using Bing is supposed to give a results page where the top hits are based on a different relevancy ranking. This alternative may give better results for some searches and so a comprehensive search needs to use multiple search engines.

You may have noticed that I highlighted the word supposed when mentioning Bing. This is because it appears that Bing is cheating, and is using some of Google’s results in their search lists. Plagiarising Google’s results may be Bing’s way of saying that Google is better. However it leaves a bad taste as it means that one of the main reasons for using Microsoft’s search engine can be questioned, i.e. that the results are different and that all are generated independently, using different relevancy rankings.

Bing is Microsoft’s third attempt at a market-leading, Google bashing, search engine – replacing Live.com which in turn had replaced MSN Search. Bing has been successful and is truly a good alternative to Google. It is the default search engine on Facebook (i.e. when doing a search on Facebook, you get Bing results) and is also used to supply results to other search utilities – most notably Yahoo! From a marketing perspective, however, it appears that the adage “differentiate or die” hasn’t been fully understood by Bing. Companies that fail to fully differentiate their product offerings from competitors are likely to fail.

The story that Bing was copying Google’s results dates back to Summer 2010, when Google noticed an odd similarity to a highly specialist search on the two search engines. This, in itself wouldn’t be a problem. You’d expect similar results for very targeted search terms – the main difference will be the sort order. However in this case, the same top results were being generated when spelling mistakes were used as the search term. Google started to look more closely – and found that this wasn’t just a one-off. However to prove that Bing was stealing Google’s results needed more than just observation. To test the hypothesis, Google set up 100 dummy and nonsense queries that led to web-sites that had no relationship at all to the query. They then gave their testers laptops with a new Windows install – running Microsoft’s Internet Explorer 8 and with the Bing Toolbar installed. The install process included the “Suggested Sites” feature of Internet Explorer and the toolbar’s default options.

Within a few weeks, Bing started returning the fake results for the same Google searches. For example, a search for hiybbprqag gave the seating plan for a Los Angeles theatre, while delhipublicschool40 chdjob returned a Ohio Credit Union as the top result. This proved that the source for the results was not Bing’s own search algorithm but that the result had been taken from Google.

What was happening was that the searches and search results on Google were being passed back to Microsoft – via some feature of Internet Explorer 8, Windows or the Bing Toolbar.

As Google states in their Blog article on the discovery (which is illustrated with screenshots of the findings):

At Google we strongly believe in innovation and are proud of our search quality. We’ve invested thousands of person-years into developing our search algorithms because we want our users to get the right answer every time they search, and that’s not easy. We look forward to competing with genuinely new search algorithms out there—algorithms built on core innovation, and not on recycled search results from a competitor. So to all the users out there looking for the most authentic, relevant search results, we encourage you to come directly to Google. And to those who have asked what we want out of all this, the answer is simple: we’d like for this practice to stop.

Interestingly, Bing doesn’t even try to deny the claim – perhaps because they realise that they were caught red-handed. Instead they have tried to justify using the data on customer computers as a way of improving search experiences – even when the searching was being done via a competitor.  In fact, Harry Shum, a Bing VP, believes that this is actually good practice, stating in Bing’s response to a blog post by Danny Sullivan that exposed the practice:

“We have been very clear. We use the customer data to help improve the search experience…. We all learn from our collective customers, and we all should.”

It is well known that companies collect data on customer usage of their own web-sites – that is one purpose of cookies generated when visiting a site. It is less well known that some companies also collect data on what users do on other sites (which is why Yauba boasts about its privacy credentials). I’m sure that the majority of users of the Bing toolbar and other Internet Explorer and Windows features that seem to pass back data to Microsoft would be less happy if they knew how much data was collected and where from. Microsoft has been collecting such data for several years, but ethically the practice is highly questionable, even though Microsoft users may have originally agreed to the company collecting data to “help improve the online experience“.

What the story also shows is how much care and pride Google take in their results – and how they have an effective competitive intelligence (and counter-intelligence) programme, actively comparing their results with competitors. Microsoft even recognised this by falsely accusing Google of spying via their sting operation that exposed Microsoft’s practices – with Shum commenting (my italics):

What we saw in today’s story was a spy-novelesque stunt to generate extreme outliers in tail query ranking. It was a creative tactic by a competitor, and we’ll take it as a back-handed compliment. But it doesn’t accurately portray how we use opt-in customer data as one of many inputs to help improve our user experience.

To me, this sounds like sour-grapes. How can copying a competitor’s results improve the user experience? If it doesn’t accurately portray how customer data IS used, maybe now would be the time for Microsoft to reassure customers regarding their data privacy. And rather than view the comment that Google’s exposure of Bing’s practices was a back-handed compliment, I’d see it as slap in the face with the front of the hand. However what else could Microsoft & Bing say, other than Mea Culpa.

Update – Wednesday 2 February 2011:

The war of words between Google and Bing continues. Bing has now denied copying Google’s results, and moreover accused Google of click-fraud:

Google engaged in a “honeypot” attack to trick Bing. In simple terms, Google’s “experiment” was rigged to manipulate Bing search results through a type of attack also known as “click fraud.” That’s right, the same type of attack employed by spammers on the web to trick consumers and produce bogus search results.  What does all this cloak and dagger click fraud prove? Nothing anyone in the industry doesn’t already know. As we have said before and again in this post, we use click stream optionally provided by consumers in an anonymous fashion as one of 1,000 signals to try and determine whether a site might make sense to be in our index.

Bing seems to have ignored the fact that Google’s experiment resulted from their observation that certain genuine searches seemed to be copied by Bing – including misspellings, and also some mistakes in their algorithm that resulted in odd results. The accusation of click fraud is bizarre as the searches Google used to test for click fraud were completely artificial. There is no way that a normal searcher would have made such searches, and so the fact that the results bore no resemblance to the actual search terms is completely different to the spam practice where a dummy site appears for certain searches.

Bing can accuse Google of cloak and dagger behaviour. However sometimes, counter-intelligence requires such behaviour to catch miscreants red-handed. It’s a practice carried out by law enforcement globally where a crime is suspected but where there is insufficient evidence to catch the culprit. As an Internet example, one technique used to catch paedophiles is for a police officer to pretend to be a vulnerable child on an Internet chat-room. Is this fraud – when the paedophile subsequently arranges to meet up – and is caught? In some senses it is. However saying such practices are wrong gives carte-blanche to criminals to continue their illegal practices. Bing appears to be putting themselves in the same camp – by saying that using “honeypot” attacks is wrong.

They also have not recognised the points I’ve stressed about the ethical use of data. There is a big difference between using anonymous data tracking user  behaviour on your own search engine and tracking that of a competitor. Using your competitor’s data to improve your own product, when the intelligence was gained by technology that effectively hacks into usage made by your competitor’s customers is espionage. The company guilty of spying is Bing – not Google. Google just used competitive intelligence to identify the problem, and a creative approach to counter-intelligence to prove it.