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1
Pattern Recognition
•How many of you use Linux?
•How many of you use Google?
•What’s being missed here?
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What We Really Do At O'Reilly
•Find interesting technologies and peopleinnovating from the edge
•Amplify their effectiveness by spreadingthe information needed for others tofollow them.
•Our goal: “Changing the world byspreading the knowledge of innovators.”
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Watch the Alpha Geeks!
Rob Flickenger and his potato chip can antenna
• New technologies first exploited by hackers,then entrepreneurs, then platform players
• Two examples– Wireless community networks
predict universal Wi-Fi– Screen scraping predicts web services
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(Control by API)
Desktop ApplicationStack
Proprietary Software
Hardware Lock InBy a Single-Source Supplier
System Assembled fromStandardized
Commodity Components
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ProprietarySoftware As a Service
Subsystem-Level Lock In
Integration of CommodityComponents
Internet ApplicationStack
Apache
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"The Law of Conservationof Attractive Profits"
"When attractive profits disappear at onestage in the value chain because a productbecomes modular and commoditized, theopportunity to earn attractive profits withproprietary products will usually emerge atan adjacent stage."
-- Clayton ChristensenAuthor of The Innovator's Solution
In Harvard Business Review, February 2004
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1. Users Add Value
The key to competitive advantage in internetapplications is the extent to which users addtheir own data to that which you provide.
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Remember What I Said Earlier?
Hackers are “lead users”who tell us where thefuture is going.
Companies apply theirinsights in new contextsto build next-generationproducts.
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Listening to Linux and Open Source
• Architect your software in such a way that it canbe used easily as a component of a largersystem. (Architect for participation!)
• Grant a license that does not hinder such acombination.
• Let developers “scratch their own itch” bymodifying or extending the software.
• Release early and release often.• Set up mechanisms for users to submit bugs
and patches. Promote your most active usersinto roles of greater responsibility.
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Listening to eBay
• Business Week: ”Upwards of 430,000people in the U.S. alone -- more than areemployed worldwide by General Electric Co.and Procter & Gamble combined -- earn afull- or part-time living on eBay”
The users ARE the application!
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Listening to Google• Google leverages millions of independent linkers
via PageRank algorithm, AdSense
• Business model monetizes “the long tail” ofinternet advertising
Source: Wired Magazine
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MapQuest - The Counter-Example
• Another killer app of Web 1.0• Didn’t add user content• First Yahoo!, then MSN, then Googleintroduced competing properties using thesame underlying data
• No increasing returns or network effects
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1. Users Add Value
The key to competitive advantage in internetapplications is the extent to which users addtheir own data to that which you provide.
Therefore: Don’t restrict your “architecture ofparticipation” to software development.Involve your users both implicitly andexplicitly in adding value to your application.
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2. Network Effects by Default
Only a small percentage of users will go tothe trouble of adding value to yourapplication.
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Listening to Napster• Building on top of open source, Yahoo! pays
people to build their directory
• Learning from open source, DMOZ/OpenDirectory and Wikipedia use volunteers
• Implementing one of the deep trends behindopen source, P2P file sharing users build songswapping network as a byproduct of their ownself-interest
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2. Network Effects by Default
Only a small percentage of users will go tothe trouble of adding value to yourapplication.
Therefore: Set inclusive defaults foraggregating user data as a side-effect oftheir use of the application.
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3. The Perpetual Beta
When devices and programs are connectedto the internet, applications are no longersoftware artifacts, they are ongoing services.
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3. The Perpetual Beta
When devices and programs are connectedto the internet, applications are no longersoftware artifacts, they are ongoing services.
Therefore: Do not package up new featuresinto monolithic releases, but instead addthem on a regular basis as part of thenormal user experience. Engage your usersas real-time testers, and instrument theservice so that you know how people usethe new features.
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4. Software Above the Level of aSingle Device
The PC is no longer the only access devicefor internet applications, and applicationsthat are limited to a single device are lessvaluable than those that are connected.
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Listening to ITunes
iTunes
• Software above thelevel of a single device• Database back end• Web services-enabled (CDDB)• Rich client front ends• Mobile device support• Rendezvous-enabled
• Not yet collaborative• No "architecture ofparticipation"
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4. Software Above the Level of aSingle Device
The PC is no longer the only access devicefor internet applications, and applicationsthat are limited to a single device are lessvaluable than those that are connected.
Therefore: Design your application from theget-go to integrate services across handhelddevices, PCs, and internet servers.
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5. Data is the Next “Intel Inside”
Applications are increasingly data-driven.
Therefore: Owning a unique, hard-to-recreate source of data may lead to an Intel-style single-source competitive advantage.
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Own the Namespace
Some data is a commodity and impossible forany one party to own, but access to the datacan be controlled through legal means.
Therefore: If you can’t own the data, own the namespace or registry for the data.
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6. A Platform Beats an ApplicationEvery Time
•Lotus 1-2-3•WordPerfect•Netscape Navigator
•Excel•Word•Internet Explorer
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Small Pieces Loosely Joined
• An architecture of participation means thatyour users help to extend your platform
• Low barriers to experimentation mean that thesystem is "hacker friendly" for maximuminnovation
• Interoperability means that one component orservice can be swapped out if a better onecomes along
• "Lock-in" comes because others depend onthe benefit from your services, not becauseyou're completely in control
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6. A Platform Beats an ApplicationEvery Time
Web 2.0 applications are built of a network ofcooperating data services.
Therefore: Offer web services interfaces andcontent syndication, and re-use the dataservices of others.
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“I’m an inventor.I became interested inlong term trends becausean invention has to makesense in the world inwhich it is finished, notthe world in which it isstarted.”
-Ray Kurzweil