Face IT - IESE Technology Blog

The next big online trend: location-based social networks?

Recently, a lot of hype has surrounded mobile focused services known as online location-based social networks (SNs) (i.e., foursquare.com, centrl.com, gowalla.com, and Google latitude). These are largely mobile internet-based apps that let you track and share location-based information with a network of contacts (or with the general user base). This information can include recommendations (i.e. for activities or restaurants), instructions on what to do at a specific location, or even photos related to a specific location. Many of these services also "mash" together data from other location-based informational sites, such as travel websites, to provide rich location-based information for users.

Lots of interesting features have emerged from the early competitors in this area. Most of the SNs allow you to update your location at any time by pressing some type of button. Many of the companies in this area have realized that automatic location updates are a huge privacy concern, and so most of them do not update a user's location without the user choosing to do so. However, once a user chooses to update their location, this update is usually done automatically (using GPS and cellular signal locating). Some of the SNs let the user choose where they are (i.e. Foursquare.com). This eliminates many of the privacy concerns, but it also allows people abuse the system (and claim to be where they are not).

Another useful feature is real-time location-based chat (such as that found on Centrl.com). This allows people to chat with people that they identify on a map (all within the SN application). This is a fast way to communicate with multiple people in targeted areas, and it allows users to use a single system, and not have to use SMS (text-messaging) or another system outside of the SN system.

Two of the early location-based SN frontrunners have also integrated "game" features into their networks (Gowalla and Foursquare). In these networks, businesses and individuals can create challenges and virtual awards that others can obtain from "checking-in" on the SN while at a certain location / establishment (or a series of locations). Some companies are even offering customers discounts once they receive these awards, or using the awards to keep track of "frequent shopper" promotions.

While these new networks have gotten significant press, and it seems that they are being adopted quickly by the "techie" crowd, the question remains if most mobile internet users are ready for another social networking system, or if these features will needed to be integrated into existing social networks to be widely accepted.

Charging Google in Spain or Net Neutrality?

“It is evident that internet search engines use our networks without paying us anything, which is good for them and a disgrace for us” …. “this can not continue, we set up the networks (….) we do everything. This will change, I am sure.” These statements were made by Telefonica’s president Mr. César Alierta this past Feb 5, 2010 in a business school in Deusto, Spain. He is not alone in this quest of sharing the wealth “search engines” (a  peculiar way not to mention Google explicitly) amass versus the meager profits of the telcos last year. The stock market is not blind to these events, and although has rewarded Telefonica with an increase in valuation of 35% in the last twelve months (one of the best among the telcos, Verizon for example has fared worst, with an increase of 10.30%) is far form the astonishing 58.73% of Google, and this including a substantial drop of 30 points from the beginning of the year.

What is the reasoning behind Alierta’s statement? Google does use network capacity mostly when crawling the entire web and transferring to its servers a cached copy of the page it visits, but it is unlikely to be the source of Mr. Alierta’s position; and search results use practically no bandwidth. YouTube, one of Google’s properties, which in the last reported data had above 1.2 billon views per day and every minute receives for storage four hours of video, is probably a far larger source of network saturation, but if it were an independent company it would have no “cake” to share with Telefonica. The heart of the matter is not Google, YouTube, or even Apple, which has been accused by the telcos to make too much money through its App Store for the iPhone; the real issue is a stealth attack to net neutrality.

Net neutrality has many definitions, but the simplest one is that all packets that move through the networks have to be treated equally. This has a number of implications the most important one being that two subscribers that purchase the same bandwidth from an operator should statistically get the same quality of service regardless of, say, they use a P2P community to share content, watch a video through a newspaper online site, or use Skype to talk to the other side of the world avoiding hefty telephone bills. Operators generally oppose net neutrality. One of the basic strategies of any seller to increase their ability to capture rents is to price discriminate; and discriminating by the type of packet transported is an opportunity difficult to pass.

Even in a presumed situation of net neutrality there are a number of hidden (or not so hidden) strategies used by operators to circumvent it. Imagenio, the IPTV service of Telefonica, is a case in point. Subscribers of Imagenio get a reserved 6Mb/sec channel for the video signal to ensure the necessary image quality. Telefonica clients of their 10Mb/sec service do not get this “guaranteed” quality of service if they try to watch the same video channel streaming from the original site outside the Imagenio palette. One could say, then, that the network discriminates in favor of the packets labeled Imagenio, for which the company charges extra. How long will this situation last is hard to tell; if a law is passed to ensure neutrality, it will most likely stop, and if packet discrimination is allowed, we will see a number of services for which operators will charge differently, most likely P2P, streaming from sites outside the home network and that therefore do not pay to the operator of the receiver, and IP telephony as Skype and alike.

It is time to start talking about net neutrality in the open, with its pros and cons, and sooner than later come to an agreement that stabilizes the playing field, rewards players that follow the established rules, and penalizes those that do not. Although this blogger is one hundred percent for neutrality, I am a lot more for clarification. There is no worst situation than that of indefinition. 

The Other Side of the Buzz

On February 9, 2010, Google launched Buzz - the newest addition to the rapidly growing family of online social networking tools.  Borrowing heavily from Friendfeed, a part of the Facebook platform, Buzz’s feature set includes the usual suspects of real time activity streaming, photo and video sharing, as well as several bonus features, such as geo-location and content recommendations.  Currently, Buzz is offered exclusively to consumers through its integration with the existing Gmail service. An enterprise version is expected to be available in mid 2010.

The launch of Buzz had generated a great deal of ...well buzz in the blogosphere and the mainstream media with most commentaries focusing on two aspects: (1) dissecting Buzz’s feature set, and (2) pondering what the launch of Buzz means for the online social networking space in general and the likes of Facebook, MySpace, and Twitter in particular. There are some very insightful analyses on both topics out there and I would definitely encourage you to check them out.

Much less attention, however, has been paid to the role that Buzz will eventually play in the enterprise space. Perhaps, the time for this discussion hasn’t come yet - after all, the enterprise version of Buzz will not be available for at least few more months. Nonetheless, given Google’s insistence on the importance of the enterprise segment for its overall business strategy, it would be helpful to consider some key implications. So, here are a few early thoughts:

•  Why is Google launching Buzz? The launch of Buzz is a step towards making the Google Apps suite, currently consisting of basic productivity and communications tools, into an integrated multi-mode enterprise collaboration platform. Deploying such platforms to foster better work practices around core business tasks and processes is gaining momentum at the more forward-looking firms. Google’s first attempt in this area, Google Wave, was perhaps overly ambitious and has lost most of its traction due to the lack of integration with established communication means, such as email, and the scarcity of proven use cases. Google is eager to right its wrongs. By disentangling the Wave and incorporating some of its more widely accepted features, such as status updates, into the established services of the Apps suite, Google may be able to offer a much more convincing package to meet firms’ productivity and collaboration needs.

• Who will Buzz be competing against? On the enterprise side, Buzz will be up against a very different set of competitors than those currently being mulled in the blogosphere. Instead of Twitter, we will have to see how Buzz stacks up against Yammer and Chatter (a recently launched social collaboration tool by Salesforce). On a more fundamental level though, if the consumer version of Buzz is widely being seen as a jibe at Facebook, Buzz for enterprise will - perhaps unsurprisingly - escalate matters with Microsoft. Sharepoint, MSFT’s flagship collaboration solution, has been recently getting a lot of grief for its rigid hierarchical structure and inability to support free-flow real-time collaboration. There is little doubt that Google will try to take advantage of this by pushing forward its Sites solution (currently a part of the Apps suite) with Buzz providing an additional social collaboration layer on top of the Sites’ portal- and wiki-like capabilities.

• Can Buzz be successful in the enterprise? Trying to answer this question months in advance of the actual solution launch seems a bit premature. Yet, a few general thoughts wouldn’t hurt. First, Buzz is unlikely to take the enterprise by storm. Instead, much like Google Apps, it will see a gradual mainstream adoption with higher diffusion rates in certain niche markets, such as SMEs, education, etc. Second, fundamentally Buzz’s success or failure will come down to the overall viability of the Google Apps suite and Google’s willingness (and ability) to tweak Buzz’s feature set. The latter will include addressing concerns currently being discussed in relation to the consumer version. Finally, in terms of the end-user adoption, Buzz seems to have an advantage that none of its direct competitors, such as Yammer, Chatter, etc., has. Because the enterprise solution will be following in the footsteps of the consumer version, Buzz’s end-user adoption may receive a significant leg up from the personal-to-business usage spillover. As the line between personal and professional becomes more blurred by the day (thanks in big part to the rise of online social media), these spillover dynamics are likely to become more important in the vendor turf battles.

Again, it is very early to say what kind of impact Buzz will end up having in the enterprise space. What is clear, though, is that business social software is gaining momentum and more vendors are turning their heads toward this space. Google is set to become the next big entrant - be sure to expect more.

Why is Google a little touchy with the iPad? Another sequel of Cloud Wars

Last October, The Economist trumpeted “The Clash of the Clouds” or the beginning of an epic battle between Microsoft, Google, and Apple. For the last two years, we have witnessed a bipartisanship in this war, which simplified to everybody against Microsoft. Google’s announcement last November of Chrome OS (see a previous post in this blog) could be interpreted as another step in this war against Microsoft’s Windows 7. So far, it looked like all the efforts, both by Google and Apple, were aimed to turn Microsoft software into a relic of the past. Not anymore. It was very clear when Steve Jobs said, “Netbooks aren’t better at anything” while introducing the new iPad as the anti-netbook device two weeks ago in San Francisco. Apple and Google are now frenemies. Both share the view of convincing consumers to feel comfortable with their applications and leaving Microsoft, but they have very different strategies to achieve it. On one hand, Google wants the consumers to move towards doing everything on their apps (Gmail, Google Docs, Maps, Calendar, Voice etc) in the cloud, using cheap netbooks, running Chrome OS.  On the other hand, Apple prefers the consumers to use iPhone OS-based apps instead in its new appealing iPad through its wall-garden AppStore.

While this simplification is taking place on the surface of the earth with the netbooks and iPads, a new complex industry has been created in the clouds mimicking the traditional three-layer architecture of computers (hardware, middleware, applications). First, we find companies like Amazon (EC2 Elastic Compute Cloud), IBM, HP, and the main Telco operators offering storage, computing and bandwidth on demand, what is called IaaS (Infrastructure as a Service). Second, a few companies like Microsoft (Azure) or Google (App Engine) are providing programming platforms to develop applications in the cloud, what is called PaaS (Platform as a Service). Last, we find a growing number of companies providing web applications from the cloud, without the need of installing a software license on your computer, or SaaS (Software as a Service), among the most popular are SalesForce, Google Apps, MSN Office Web or NetSuite. However, there some storms to overcome before cloud computing would be widely adopted not only in the consumer market but also in the corporate world.  CIOs are worried about security, privacy of data, compliance, latency, and the lack of standards.  Vint Cerf, one of the fathers of Internet, raised recently his concerns, specifically regarding data portability among cloud computing providers.

For the last six months, I have asked all CIOs I meet their position about cloud computing. The majority of CIOs see the potential of cloud computing, but most of the time they say is not the appropriate technology for their own industry, like in the Gershwin song “But not for me”. To make a forecast about cloud computing can be more complicated than a weather forecast. However, if history can serve as a guideline, one hundred years ago one the most strategic roles in corporations was the Chief of Electricity Officer. Some analysts say that cloud computing will turn IT into another utility. Who knows when and where? Meanwhile, let us keep an eye on the next battle in the clouds.

Google and China, A Bad Fit?

In a previous post on this blog, Josep wrote about how China seems to be loosening its tight control over the accessibility of internet content in that country. However, with recent developments with Google in China, the direction of these changes may be in question.

After a tough year, where Google internet services were down several times in China (sometimes for unexplained reasons), an incident recently happened which pushed Google to the limit of what they could take.

Google discovered a "highly sophisticated and targeted attack" on its systems that resulted in the theft of some of its source code. It was also revealed that this attack was part of a larger attack that targeted multiple US-based companies with internet presences in China, including Yahoo, Symantec, and Juniper Networks.

Google also found that the attackers tried to get into mail accounts of persons related to human right activities in China. The attackers were only mildly successful, but the sophistication and specific targets of the attacks were alarming. The attacks were based on a previously unidentified hole in old versions of the Internet Explorer browser. Likely, attackers infected individuals that had access to restricted parts of the Google networks by directing users to web pages with malicious code (using deceptive links in email messages).

Google had already struggled with regulations in China since releasing the Chinese version of its search engine in 2006. China has forced Google to censor their search results since they have been there. Google has been able to grab 30% of the search share in China, but search advertising has not taken off there, so they are not bringing in much revenue yet. Due to these struggles, as well as the hacking incident, Google seems to have begun to question the value of their China operations. After the incident, they announced that unless they were allowed to offer an uncensored search engine in China, they would shut down their search engine and would consider stopping all of their Chinese operations. China did not bend in response and basically said that Google would have to leave if they did not follow the rules. Further, the government denied having been part of the hacking incident.

After seeing China's strong response (as well as a drop in their share price), Google took a less tough stance. Google's CEO said, "We like what China is doing in terms of growth...we just don't like censorship. We hope that will change and we can apply some pressure to make things better for the Chinese people." Obviously, China is very important to Google in the future, but the current policies are making it hard for them to justify doing business there.

Even though Google may back down, this incident could have large implications in the near-term for foreign-based internet business in China. If companies do not feel secure operating there, they may not even enter the market, as the security risk and the cost of compliance may be too high to do business there.

The iPad, or how to unlock your Internet data from the mobile operator

If you were to design the best device possible to have the Internet in your hands, how would it look like? Now, we know how. Or at least, now we know how Apple has interpreted this challenge after more than a decade working on it. If you were to design the best business model to have the Internet in your hands, how would it look like? That's probably a very tricky question, but may this be the real question that Apple answered during the event at the Yerba Buena Center in San Francisco two days ago? 

During the past weeks, I have been following the hype about the launch of the iPad (now that we know how to call it!) with interest, and since now the dust is settling, it may be the right time for a bit of analysis and -why not?- speculation about the main areas of impact of this device. 

Since its target is, in words of Steve Jobs, "to hold whole Internet in the palm of your hands" (see video for a demonstration of features), one must firstly reflect on what this means. Is is about, as Brad Stone points out in his NYT article, "blurring the line between devices", or is it about really allowing us to get more Internet? What do I mean by this? Let me explain. 

We all like that Internet allows us to get access to all kinds of content at a very low cost. For that, we have to incur into two different types of spendings: the cost of the connection to the internet (i.e. ADSL, or a 3G dataplan, etc), and the cost of content. Telecom operators so far are delighted that Apple helped them to finally mobilize the Internet, since they have seen how adoption rates of data plans have increased dramatically since the launch of the iPhone (of course, since adoption was basically inexistent before the iPhone!). The iPad promises even more "mobile Internet", so at first sight, the iPad is good news. 

Then, let's have a look at the second part of the equation: content. Content creators  and distributors (of all formats -text, audio and video) have been suffering from the digital revolution. Most of them are still having problems to find adequate business models to be able to monetize content, especially on the distribution side. But we've seen that with a bit of creativity, bearing in mind the needs of the customers for simplicity and easiness, and tackling its need for "coolness" new viable business propositions have found their way. As my colleague Josep Valor was pointing out in his post last week, Apple succeeded in finding a way to find a profitable business proposition for a handset device in mobile telephony - while the main players are failing miserably. They had already done it before with music. Whose turn is now? 

Some claim that the iPad aims at books, and hence will mainly hurt Amazon's Kindle and other eReaders. Others claim it's mainly about games. Or video. And the news industry hopes it's about creating new ways of packaging news and information and therefore finally finding a viable business model. It may be about all of this. Apple has done its homework and presents a device that comes with an entire ecosystem of content, in which the iBooks store is a nice addition, but in which undoubtly the fact that it is compatible with most of the iPhone applications and the entire music is the main highlight. As developers are saying: this opens a new world of development opportunities. 

But there may be more. Let's go back to the access to content issue. How expensive is it today to access real multimedia content through a 3G network? Since multimedia implies huge data transfer, it currently requires a very expensive data plan. What will happen with the iPad? It has been much criticized that Apple seems to give a relatively low priority to  the need of including  3G. The first device that will come out to the market  -selling in the US at $499- will be WiFi only. One could argue that that's because of the lack of time to find agreements with the operators, with the notorious exception of AT&T. But one may also think that Apple has learned its lessons from the launch of the iPhone. 

Remember? It went out with a very similar proposition than the one that we've heard two days ago. Apple (not an operator) sells the device, the device is activated through iTunes. For the iPhone, Apple had added a revenue sharing proposition with the operator, and hence operator exclusivity was also part of the initial positioning. The first jailbreak (unlocking the iPhone) made this last part (with all its attached revenues!) fade away. What has Apple learned? That there's no point in exclusivity deals any longer. So the new iPad will be unlocked. Yes, there is a deal with AT&T, but its just a deal about a new data plan, not an exclusivity deal. The user decides what operator gets access to its iPad. No contract, pre-paid data. The user is locked into the iPad, but unlocked from the operator. This equals to an invitation to real competition on price to the operators. The AT&T deals of $14.99 for 250MB of data is a price killer. $29.99 for unlimited data. This has set a new limit to the value of data transport. This is great for the users, but must be terrible for the operators. 

It is also good news for the content distributors and owners, since with cheap(er) access to data, we will for sure consume more content! It will still imply that content distributors will have to find good ways to monetize content, but with this new proposition, Apple directly attacks the access hurdle. As they said on the iPad presentation event,  they have 75 million iPhone users. What they did not say is that they are all paying hefty data plans.  (all paying hefty data plans). How many users may they have  if the mobile Internet becomes cheap? 

So, while the discussions about the virtues or non-virtues of the device are nice, they may be missing the crucial point. 

The battle for the smart phone

Last Friday Sony-Ericsson announced its 2009 results: losses of $1.24 billion with a drop of sales of 40% from the previous year. This made me look at other phone manufacturers, like Nokia, Motorola or HTC. The latest data reported by the Finish company are for the quarter ending in September 09: 20% drop in sales form the same quarter in 08 and a quarterly operating loss of €426M. Motorola did not do too well either, with sales for this last quarter down to $5,45 billion, a drop of 27% from the same quarter the previous year; its operating income for the quarter has been positive, but the last twelve months show an accumulated operating loss of $1,98 billion. Some companies earn money in this business, like RIM (Blackberry), Apple, and HTC. Of these, RIM ($2.7billion operating profit in Fiscal 09 with sales of $11billion) is in fact more of a service provider than a hardware designer and manufacturer, and Apple with its iPhone is a mix of a designer, software developer, and most of all, an extremely smart ecosystem manager; since these companies do not report detailed accounting by product line, it is impossible to know the profitability of their hardware business. HTC is the pure hardware manufacturer of this trio, famous for it partnerships, and manufacturer of operator-branded phones since its founding in 1997. HTC has been a leading manufacturer of handsets for US and Japanese carriers and it was not until 2006 that the company sold its first HTC-branded phone. For this past 2009, the company has just released its unaudited numbers: sales of $4.5 billion (a drop of 5.03% from the previous year) with an operating income of $757 million.

These rather dismal results of the industry as a whole might be due to the current economic downturn, to more specific structural issues in the mobile handset market, or both, but there is no doubt that they should make companies think twice before deciding to invest heavily in it. And it is in this context that the January 4th announcement of the launch of the Nexus One by Google is even more interesting.

Why would anybody enter such an industry at this time? The market seems crowded of smart phones (see iPhone look-alikes) 
and one could expect reasonably desperate moves in pricing by the companies that have invested heavily in the design of these devices and need to sell them at any price above their manufacturing costs in order to recover their investment. The entrance of Google in the mobile market has to be analyzed in the context of the overall digital value system. Users, the final payer of this entire ecosystem, are increasing dramatically the time devoted to mobile surfing and will continue to do so when “surfing” will be embedded in the devices we carry with us all the time, not only our phones, but out tablets (book readers?), navigation devices, car radios, and every conceivable electronic instrument that will benefit form being connected to the cloud.

Microsoft has shown the world the importance of the operating system in the devices that thrive from a myriad of specialized developers providing different pieces of the final product that need a “connector”. Windows is the inevitable glue that allows my Dell machine to run my Adobe software. Becoming a proprietary standard in an industry is a gold mine; these are not news, and the players in the mobile space know them. In a world in which users look for usability (the current paradigm of usability being the iPhone) the mobile industry is not technically mature enough to provide great user experiences via independent providers coupled by open standards. The iPhone is a step above anyone else because Apple controls all the relevant steps of the iPhone value chain, from hardware to the OS and the application store. This imposes obvious rigidities, but ensures impeccable Apple style user experience. In this context, it is of no surprise that the integrated platforms grow (Apple and Blackberry) and the competing proprietary open multiple-player platforms lose (Symbian and Windows Mobile). What is then the role of Google? It is not a secret that the company from Mountain View wants a leading role in the information distribution industry; it plays it in PC-based information distribution, but it could lose it in the mobile space to Apple and perhaps Microsoft. In this context, Google has no choice but to try to make sure that two things do not happen when the market matured: (1) that Apple is the only game in town, and (2) that if a multiple player ecosystem develops, Microsoft owns an important piece of it and captures most of the value provided by the rest of players.

This situation has forced Google to develop Android, an operating system poised to compete head to head with Apple OS in functionality at an unbeatable price for hardware manufacturers: free. But for Android-based phones to provide an experience close to the iPhone in a short time, and before insurmountable network effects take place and the Apple device is definitively unbeatable, Google needs great hardware perfectly integrated with the capabilities of Android, something that only the companies that control both have been able to obtain: Apple and Blackberry (RIM). Therefore, Google had no choice: build its own phone. And once this decision was made, the partner of choice was HTC; its experience developing devices under other company’s specs, particularly NTT DoCoMo, made it unbeatable. And here is the Nexus One.

Keeping with the company tradition, though, Google cannot operate the same way as Apple does: it sells the Nexus only via de Internet (as it did with its shares in its IPO) and not exclusively with a carrier (as Apple did with ATT). The Nexus role in life is not to become a dominant player as the iPhone tries to be, rather, it is to be an example for other hardware manufacturers of how to integrate with Android, and to provide software and application developers a credible alternative platform to the iTunes store. The next few months will be crucial to see how the market will evolve. In a few weeks, the third player will show its cards: Microsoft will present the next version Windows Mobile (perhaps 7.0) at the Mobile World Congress in Barcelona: good luck trying to collect license fees from the money-losing handset manufacturers. It better be an astonishing piece of software.

Why Enterprise Use of Social Media Needs More IT Involvement

The time has finally come. We can now publicly speak about the findings of the research study on the enterprise use of social media that has been in the works since the beginning of 2009. Cisco, the sponsor of the study, issued a global press release on January 13th and over the last few days the story has been picked up in online media. The coverage has been quite broad (CNN Money, CIO Magazine UK, Read Write Web, and ZDNet among others have covered the story; you can also watch a short video below), which of course makes me feel good about almost a year-long effort.

After having skimmed through several online stories, however, I felt that there is a key piece missing in how journalist and bloggers present the key finding of our study. Yes, it is true that the study showed that when it comes to the enterprise use of social media outside of the corporate firewall, marketing and communications folks are calling the shots, while IT involvement is lacking. It is also true, that many companies tend to underestimate the importance of putting in place formal policies and procedures to manage their portfolios of social media initiatives and tools. But what most stories seem to have overlooked is why more governance and IT involvement is needed.

The point we are trying to make is not that IT needs to insert itself into the loop merely for the sake of not losing control over corporate users and systems. More oversight is needed because the nature of the enterprise externally-focused social media initiatives is shifting. Having originated in marketing and PR with the primary focus on communication with external stakeholder audiences, these initiatives are now spilling into core areas of the value chain and starting to affect core business processes and functions, such as product development and innovation, customer and supplier relationship management, service delivery etc. As this shift accelerates, companies will not be able to limit their involvement to creating communities on Facebook and conversing with customers on Twitter. They will have to make sure that the enabling web 2.0 tools and collaboration platforms integrate seamlessly with the rest of the enterprise architecture. And this is where IT comes in.

Integration, however, is not the only aspect where IT may be able to help. Ensuring alignment between social media initiatives and the overall business strategy, something that many of the study participants had struggled with, may well rely on mechanisms similar to those for aligning IT investments and strategy. Likewise, achieving security compliance, helping streamline implementation, communicating and supporting end users, documenting use cases and measuring impact are all areas where IT is well equipped to make a contribution. And what we’re suggesting in the study is that instead of waiting till the need becomes immediate and pressing, IT needs to be more proactive and step up to the plate now.

The Business of Shortening URLs

Google recently rolled out a service called goo.gl, which will compete with the current leading web address shortening system, bit.ly. The use of web address shortening systems has skyrocketed as the use of micro-blogging sites, such as Twitter, has also rapidly increased. Micro-blogging sites limit the number of characters that can be posted in a message (140 for Twitter), and so it is often necessary to shorten a web address in these messages. Shortening services solve this problem by creating a short unique link to their page, which then redirects readers to the actual website.

The widespread use of these shortening systems has allowed them to offer another valuable service to users, website visitor analytic data. Much of the success of bit.ly has come from the fact that they offer real-time information about who is visiting websites across the web. Further, they have opened their system, so that users can access the real-time web traffic data for their own programs. A last advantage of the system is that bit.ly keeps track of users' shortened urls, which allows users to look-up their previously shared links.

However, not everything is perfect for users of these systems. Unfortunately, readers can not see the real destination web address when clicking on a shortened link. This means that users can misdirect readers to sites that they were not intending to visit. While this has not been enough of a problem to slow growth of these services yet, as the services become more mainstream, malicious use may increase, and people may become more hesitant to click on shortened links.

Bit.ly received 2 million dollars in financing earlier this year, and there is potential for them to make money from their services. They have already announced that they will release a "pro" version that will include better analytic data. They could also possibly charge businesses for custom URL shortening. Further, there are rumors that they may be acquired by Twitter. However, in this unsettled new market, bit.ly's primary concern right now is likely maintaining their user share as one the biggest possibly competitors, Google, enters their market.

Lost your wallet or a file? Dropbox!

“You have been there. You are about to buy lunch and you realize that your wallet is in your other pants.” It is true, I have been there. Many times. In fact, not only am I often searching for my wallet or my keys, I also have problems remembering where I have the most updated version of my electronic files, documents, spreadsheets, etc.

The above quote is the opening sentence of a video from Dropbox. Dropbox, a storage provider released in September 2008, might be the solution for everyone who – like me – tends to lose track of stuff. It is hard to imagine, at this point, after having used it for three weeks, how I could have survived without it.

But let me first explain what my initial problem was. I often work at different places, using my office desktop, my home desktop, or my laptop. Sometimes I go home and want to finish what I was working on, or I receive an email from an angry student, who wants to know how I could have given a C for the final report.  I used to have my data on the network drive of the school and could access it in that way from my home desktop or laptop. However, the system I used (Netdrive) was not compatible with Windows Vista, so I had to look for a different solution. For some weeks, I have kept my data on a USB flash drive. Of course, this was asking for problems; after forgetting my flash drive several times, and once thinking I actually lost it (with no backup), I gave up on this potential solution.

A colleague advised me to try out Windows Live Sync, a file synchronization application, or Carbonite, an online backup service, but I didn’t get either to run well. Finally, things got better when I got the word that Dropbox was the answer to my problem.

 

It starts with a very nice, simple website (www.dropbox.com). This is a website layout as I would like my desk to look like: calm and orderly. Then there is an explanation video, again simple and concise. Downloading and installing literally took me 5 minutes.

What does it do? You designate a folder on your hard drive by calling it “dropbox” and the server silently creates a backup of the folder on their drives, which may take some time, depending on the folder size and your connection. Then you create dropbox folders on your other laptop, desktop, or PDA, and the service will create identical copies of the original folder. I now have all my work data in the dropbox folder, so I can access, modify, create, or delete files on any location, while it feels as if there is only one database. In fact, if you are traveling and your laptop brakes down, you can still access all your data via a web interface. Finally, the best part… this is all for free! You are wondering, where is the catch? Well, the catch is that this is so convenient that you will want to use more than the 3 GB that Dropbox offers for free, so you may end up paying $10 per month for 50 GB or $20 for 100 GB of storage.

In my opinion, this is not just a convenient idea that will come and go, replaced by something better. This is a step on a one-way road with no return. Do you remember the small data cassettes and floppy disks we used to use? Or the punch cards and punch tapes we used just some years before that? I still see colleagues walking around with CDs or DVDs, not realizing that is so passé… The idea that data storage is something you can touch will fade away within a few years. It is just as when I speak with my 10-year old son and try to explain him what the internet looked like before Google… a difficult concept to grasp for somebody who has never experienced it.

 The bigger picture in my mind is that this is just one small development towards computers and data becoming more ubiquitous in our lives. In my work as academic, in one week I may need to teach in Madrid, attend a conference in the US, or visit friends in Holland while needing to keep in touch with my students. I foresee a future in which computers become a commodity as our data, software, and personal preferences are stored on the web. Of course, this is not a new idea. But when you use a service such as Dropbox for the first time, you come to realize how fast this development is going and how irreversible it is. Enough for today. Let me save this document … in my Dropbox folder of course!

 The author of this blog, Govert Vroom, is an Assistant Professor at the Strategic Management Department of IESE Business School Barcelona. He is by no means an expert in IT or affiliated with Dropbox Inc. There are many other online storage providers, see for more information: http://en.wikipedia.org/wiki/File_hosting_service.