Microsoft

In early 2000, Microsoft was at the top of its game. Windows 95 and it's successor Windows 98 had achieved worldwide dominance. Apple was still a year away from releasing OS X and the iPod, marking the beginning of the company's renaissance. Internet Explorer had wrested leading market share from Netscape, repositioning Microsoft as a leading internet company and dooming the dot-com darling to an ignominious marriage with AOL. The Xbox was poised to take significant market share in the video game market, unprecedented for a non-Japanese console. And, of course, Outlook and the productivity suite were near-monopolies in businesses worldwide, without significant challengers.

Sure, there were chinks in the armor. Linux (aligned with MySQL, Apache, and various open-source programming languages) was clearly taking significant share on the server side from NT, SQL Server, and Internet Server. But Microsoft had such enormous advantages through its monopoly in desktop OS that it seemed unstoppable.

Now, eight years later, it all seems to have gone very, very wrong. Microsoft has never seemed so vulnerable. Apple is taking share on the desktop with better user interface and a superior media suite (iTunes/iPod, iLife), giving customers what they actually want. Ubuntu is clunky but credible, challenging at the low end. Google, Yahoo, Facebook, and Myspace, in aggregate, have built more market value than Microsoft with pure internet plays, in just a few short years. Xbox 360 is incinerating billions of dollars of capital; the Zune is DOA. And Vista is a massive dud -- never has a major Microsoft OS release been met with less enthusiasm. They've completely lost the web serving and file serving markets to the open-source stacks.

The surest sign of Microsoft's vulnerability is the recent challenges they've faced on productivity apps. Zimbra for email and the iCal standard for PIM, cutting into Outlook. OS X "Leopard", slated for release later this month, promises even better calendar and email integration. Apple's iWork suite, Google apps, etc. -- not great, yet, but getting there. We see a lot of pitches from internet and media companies, and I'd say a good 25% of them show presentations on Macs with Keynote. Completely unimaginable 8 years ago.

The management's view on all this seems hard to read. Balmer continues to snark it up, calling Google a "one-trick pony" and Facebook "a fad" -- it's not that he doesn't have a point, but you'd hope for a little more clarity of strategy and a little less schoolyard dissing.

So, as Lenin would say, "What is to be done?" I've heard glib chatter that Microsoft would have been better off had it been broken up by the antitrust courts into smaller companies. I am not so sure I buy that. But clearly something needs to give. The current strategy is just not maximizing the considerable assets.

Galaxy-Chelsea

I went to the match with my family on Saturday. I'll have more to say about the atmosphere and Beckham-mania later, but first, the match.
It was very entertaining. Chelsea, clearly still in pre-season form, played most of their great players (Robben was a notable exception). In the course of the afternoon, Drogba, Lampard, Kalou, Terry, Joe Cole, Sean Wright-Phillips, Essien, Makalele, Shevchenko and Carvahlo saw action, as well as newcomers like Malouda, Ben Haim, and Sidwell. That's some A+ talent. Some of the most expensive footballers in the world. Getting to see these guys in the cozy confines of the Home Depot Center was a thrill in itself.

The Galaxy - dismissed in the English press as little more than a "pub team" after getting spanked 3-0 by Tigres earlier in the week - were inspired. They are not a great team; only Landon Donavan, Abel Xavier and maybe Carlos Pavon could really be considered world class, and none of them could dream of starting for Chelsea. But the supporting cast produced a scrappy performance and managed to keep the explosive Chelsea largely in check.

The first half felt quite even. Both keepers made great saves - Joe Cannon had to fend off hard shots from Wright-Phillips, Malouda and Drogba; Cech was nearly beaten by Kyle Martino's diving header, and had to tip a dangerous Xavier header inches over the crossbar. The Galaxy defense was a mess, but they were lucky and, frankly, Chelsea wasn't all that crisp. Could have been 0-3 Chelsea at the half, but could just as easily have been 1-0 Galaxy.

The Galaxy's luck ran out at the start of the second half, and the poor defending gave Chelsea the chance they needed as Terry scored off a lose ball, just in off the upright. That proved to be the winner. The crowd thought it was 0-2 just 5 minutes later when Shevchenko created some magic on the left side, but was flagged for offside. In the 70th minute, Donavan had a great chance - probably the Galaxy's best of the game - but put his header high over the bar.

The crowd was excellent - lots of Chelsea supporters and lots of old and new Galaxy fans wearing the just-released white and blue colors, which are a huge improvement over the tacky gold and green. The fans were pretty knowledgeable, too. It's a great stadium for LA - lots of social spaces, very intimate. I ran into a bunch of people I know, and had a chance to talk to them, which never happens at a Dodgers game. With a reported 27,000 in attendance, including a bunch of celebs, it was noisy and crowded, but not out of control. More like a Lakers game than an NFL game.

Ok, Beckham. The hype is out of control. I'm sick of Posh, and all the Coming to America bullshit, etc. But his debut in the 78th minute of the match was pure theater. He kicked an errant ball back onto the pitch; the crowd roared. He laced up his boots; the crowd roared. He stretched; the crowd roared. He disappeared into the tunnel (apparently to retape his ankle, and to pee); the crowd groaned. Finally, he stripped off his warm-up jacket and jogged to the sideline, resplendent in his white Galaxy home kit. The crowd went wild. A huge cheer, and flashbulbs, went up every time he touched the ball.

So, what to make of it. I guess I come away largely optimistic about the whole Beckham experiment. Commerce drives sports in America, and great product drives commerce. It's hard to argue with the marketing campaign so far, given the number of shirts I saw on the backs of fans, and the fact that Adidas is claiming the new #23 Galaxy jersey is currently the world's best selling kit. The stadium was packed with enthusiastic fans. It was a very tough ticket.

The product was pretty darn good, too. Let's not forget, amid the Galaxy's woes this season, that Donavan is a great play-maker, that Xavier has defended at the highest levels of the sport, and that Pavon is an athletic New World striker. They've got some work to do on defense, but with Beckham in central midfield, they'll have some sick wing play and counter-attacking. You could feel them feeding off the crowd and playing at a higher level. And they'll have huge crowds on the road, too, cheering for Beckham and, by association, for them. Oh, and TV coverage on ESPN doesn't hurt.

One last thing: this is great for English football, a fact which the yobs in the British press are too thick to appreciate. All these new Beckham fans are going to be England fans, when he returns to do his duty in the Euro 2008 qualifiers. The increase in exposure, fan base, and even merchandise sales for England in America is a huge growth opportunity. I predict American fans will be traveling to Austria and Switzerland in '08, to cheer on the LA boy.

Gold Cup Semi: USA-Canada

USA 2-1 Canada. USA heads to the final despite playing a weak and sloppy game, again. And, frankly, they probably shouldn't have won -- give that an end-of-injury-time equalizer by Canada was called offside, when it clearly was not. However, given that the match was in the 5th minute of a supposedly 4 minute extra time, it's hard to get too worked up about it, unless of course you are Canadian.

Ironically, the USA had it's best start of the tournament. They just flew at Canada in the first 10 minutes, threatening to score on a couple of early chances. Tons of energy. I was surprised to see Eddie Johnson and Michael Bradley starting; I think they both have had appalling tournaments. But given Twellman's three howler misses in the last match, I can at least understand Coach Bradley's thinking on Johnson. Starting his son again, that's looking a little weird.

As it turns out, my fears were justified. Bradley had a shockingly bad game. He looked like a pathetic college player out there. And Johnson was equally terrible. Twellman may have missed his chances, but at least he created chances. Johnson was listless and lacked any creativity. I would be surprised if he had a single shot on goal.

The opener from Hejduk - his first goal in 7 years with the national team - was a good one. Nice set up from Donavan. Nice finish. The penalty that turned out to be the winner was also clear as day. Dempsey released Beasley with an astonishing through ball and while the Canadian keeper, Onstad, complained bitterly that Beasley dove, the replay showed the keeper tripping him up well off the ball. Landon finished the spot kick brilliantly.

Then, the wheels started coming off for the USA in the second half. The Canadians just had much more energy and looked dangerous on a couple of occasions. The USA had trouble keeping possession and looked incredibly tentative on the ball. There were a few chances, but mostly they were flubbed by Johnson playing with his back to goal. In one especially laughable moment, Donavan fell on his ass in the box with a clear shot on goal and the keeper beaten. Ooof.

Hume came on for the Canadians in the 64th minute and made a huge impact, scoring once and looking dangerous a couple of other times. Then, true to form, Bradley (fils, not pere) took a ridiculous swipe at a Canadian player who had beaten him like a redheaded stepchild, and was shown the red card. Idiot. At least we won't have to see his sorry ass on the field for the final.

Hard to feel good about this one. If Mexico wasn't equally shambolic, I'd say we were going to get pounded in the final 3-0. But since Mexico is just as bad, it should be a good match. That is, if Mexico makes it past Guadalupe.

GS Internet Conference 2007

I attended the Goldman Sachs Internet Conference in Las Vegas this week. Anthony Noto, the lead research analyst at Goldman, puts together a great conference. He's whip-smart, gets great people to attend and present, and balances it all very nicely.

Over the two days, I saw presentations from Microsoft, Getty Images, Linden Lab, eBay, Tencent, LinkedIn, Viacom, Disney, Amazon, Glu Mobile, IAC, DemandMedia and Shanda. A very diverse and interesting group of public and private companies. The themes I noticed were obviously influenced by the presentations I chose to attend (media heavy, to say the least).

Some of the big themes:

• Advertising. Display vs. search. How to crack mobile advertising/location? Diverging CPMs for premium vs. junk inventory. In-game ads. The DoubleClick and aQuantive deals where on everybody's mind. 
  
• Fragmentation. Big sites losing traffic to more targeted small sites (sites with over 15 million monthly uniques were down 7.5% year-over-year). Usage is flat. Overall visits are down. The proverbial long tail is getting longer. Web 2.0 tools and Google Ad Sense are making it more frictionless for start-ups to get started up. DemandMedia's whole strategy is essentially an arb on internet ad platforms (particularly domains), monetizing fragmentation and pools of enthusiasm in verticals.
  
• Access Platforms. As I discussed in my last post, the access platforms are getting stronger and stronger. Email, search, shopping, news, weather and maps are aggregating a larger and larger portion of overall traffic and therefore ads. Value of video search as explanation of Google/YouTube premium -- can't index video same way as HTML.
  
• Games & Entertainment. Between Microsoft, Linden, Tencent, Viacom, Disney, DemandMedia, Shanda and Glu, gaming and entertainment was everywhere. High customer engagement is a very sought-after commodity, and games produce high engagement. Also, lure of in-game advertising.
  
• Virtual Worlds & Avatar Chat. Everybody had a play. Viacom (Laguna Beach), Disney (Pirates, Fairies, ToonTown), even IAC (Zwingy). And of course, Shanda and Linden. And Tencent's QQ avatar chat.
  

Why Silicon Valley Doesn't Get Mobile

Since I've started at my new job, I have looked at a number of mobile products and services. While I've had some amusing meetings where entrepreneurs show me their hot new "mobile marketing" concept that's essentially crude, circa-2003 SMS/WAP Push, the more interesting conversations relate to the current and future role of the mobile operators, or carriers, in the mobile content and commerce equation.

I can't tell you how many times I've been asked: how long will it be before the carriers are inevitably relegated to "dumb pipe" status and the mobile internet opens up like the wired internet? How long until we can safely route around the carrier? My answer - "a long time, or never, unless we see a disruptive technology replace cellular" - always confuses people. How could it not happen in the next 12-18 months?

This is, unfortunately, a major blind spot of the web-centric -- a blind spot that has worked to my advantage in the past. For example, at JAMDAT we supported BREW even though it was "closed" and built a great business; meanwhile the "open" Java Community Process for J2ME failed to produce a competitive offering in a timely manner. Sure, J2ME ended up being an important and widely adopted technology, but avoiding BREW because it was not "open" was a stupid business decision that my competitors came to regret.

Shawn Conahan, the CEO of InterCasting, summarized it pretty well:

... I talked to a VC who said he would not invest in any company that includes “working with wireless carriers” in its pitch. Worse in my opinion would be investing in any company that includes “going around the wireless carriers” in its pitch. While the former is a difficult path, the latter practically ensures failure.

Shawn's point is completely lost on many venture capitalists in the Valley, who don't understand the need to create symbiotic businesses in mobile. They are so intent on creating disruption, they miss the forest for the trees.

It's not going to win me any popularity contests here, but I would argue that the mobile business may be more a model for the future of the internet than vice versa. Look at MySpace/Photobucket, or Windows Live, or Facebook, and you'll see access platforms asserting their supremacy in the value chain ... just like the big, bad mobile carriers.

FA Cup Final

Tomorrow morning (7am pacific, PPV), Chelsea and Man United play the FA Cup final. Just a few weeks ago, it looked like we were headed for a trio of classic Chelsea/Man U. matches -- the second-to-last match of the Premiership season, which could have been a decider; the FA Cup final; and, most importantly, the Champions League final in Athens.

Instead, we'll have an injury-weakened Chelsea (no Carvalho, Shevchenko, or Ballack), seeking their only chance at a trophy (unless you count the Carling Cup), against a full-strength Man United looking to complete the English double.

The Premiership "decider" turned out to be a meaningless 0-0 bore, with Manchester United already in possession of the league title. Both teams are out of the Champions League despite making it to the final four. Liverpool took Chelsea out in one semi-final, AC Milan took Man U. out in the other, setting up a rematch of last year's final.

So it's down to the FA Cup. Chelsea's defense, anchored by Carvalho and Essien, is normally amazing -- they allowed only 24 goals in 38 league matches, the lowest number of any team. But without Carvalho they will be really vulnerable to Man U.'s deep attack (Rooney, Ronaldo, Saha, Scholes and Solskjaer have a combined 52 goals).

If Didier Drogba comes to play, Chelsea has a shot. He's one of the most amazing strikers I have ever seen. Incredibly strong and athletic. His 20-goal highlight reel for the 2006/7 Premiership season is off the hook -- he can score insane, impossible goals. They'll have the London crowd at Wembley. I'm predicting they go down 2-1, but I'll still be watching.

UPDATE: Chelsea 1, Manchester United 0 (Drogba 116'). Well, I was happily wrong about the result. Got the Chelsea goal-scorer, though. A great volleyed one-two with Lampard, and Drogba was through for a balletic tap-in, his 33rd goal of the season across all competitions. Just as the match seemed inevitably headed for the dreaded penalty shoot-out, Chelsea pulls a rabbit out of the hat to win it.

Paso Robles

Over the Christmas break, our whole family (10 of us) drove up to the central coast for a vacation. We spent a few nights in Paso Robles and a few nights in Santa Barbara.

Paso Robles and the Edna Valley, to the south of San Luis Obispo, have really become extraordinary wine regions. I actually prefer it to the more hyped Los Olivos/Santa Inez regions outside Santa Barbara.

We tasted at 17 wineries during the trip. The Rhone-style wines from this region are really getting good: the weird and wonderful Linne Calodo wines; the ersatz Chateauneuf du Papes at Tablas Creek; the single-vineyard Syrahs from Adelaida; and the huge, chocolatey Syrahs from Alban. Also picked up some unique Roussannes, Marsannes, and Viogners, as well as the obligatory Santa Barbara/Santa Maria Pinot Noirs.

This part of the central coast feels to me like Napa or Sonoma 25 years ago, before the wine tourism. At many of the Paso Robles and Edna Valley wineries, the owner/wine-maker was there, in rubber boots, making wine. Totally unpretentious.

Santa Clara Presentation

My speech on the JAMDAT story from the Santa Clara University entrepreneurship series is up on the web. This presentation was influenced by the style of Lawrence Lessig, well-summarized at Presentation Zen. It's perhaps a bit wordier than the classic Lessig style, but it's still pretty iconic and sparse. The audience seemed to really enjoy it.

Goodbye, Sleater-Kinney

During the summer of 2006, while I was on a hiatus from blogging, the amazing band Sleater-Kinney announced the sad news that they were no longer going to record or tour as a group.

From my perspective, there have been three truly great "alternative" guitar bands in the last 25 years: Husker Du, Sonic Youth, and Sleater-Kinney. These bands produced a diverse catalog of music over many recordings and many years, but always with a signature sound -- complex and musical, but unmistakably punk in inspiration.

Like Thurston Moore's guitar feedback, Corin and Carrie's screechy vocals put a lot of people off. Their queer politics put others off. They never really got mainstream recognition - although some indy radio stations did put "Entertain," from S-K's final album, The Wood, in rotation.

To me, the unbridled punk lyricism of their guitar playing was magical. Check out "Not What You Want" on Dig Me Out, or "Light Rail Coyote" on One Beat, or "Far Away" - one of the best post-9/11 songs ever - or the classic rock-inspired tunes on The Wood. You'll see what I mean.

Comics

My 10 year old daughter, who is an avid reader, started getting into comics. The gateway comic for kids her age is Archie, which she devoured. Then she started reading the comics page of the LA Times. Then she started drawing her own comics.

Being the geek dad, I got her a copy of Scott McCloud's classic Understanding Comics: The Invisible Art. If you haven't read this book, and you work in a creative field, you are in for a treat. She didn't get everything, but she understood and internalized a lot of it.

Around the same time, I came across this story about important recent comics and graphic novels. And there was the success of 300, based on the Frank Miller comic. So I ordered a bunch of the ones that looked interesting.

One thing that has struck me is how much modern American comics owe to Heavy Metal. My brother and I used to read Heavy Metal in high school -- they had some great artists working during the late 70's. You can really see the influence of guys like Moebius in the art styles, and there's a lot of the nihilism of RanXerox in the Spider Jerusalem character in Transmetropolitan.

Beyond & Back

I'm back after a long hiatus from blogging, necessitated by my job change. I've got some catching up to do -- a backlog of posts about pop culture and business.