The Paradox of Plenty and the Scarcity of Attention

 Joseph S. Nye writes in his excellent book Soft Power:

Technological advances have led to a dramatic reduction in the cost of processing and transmitting information. The result is an explosion of information, one that has produced a “paradox of plenty“. Plenty of information leads to scarcity -of attention. When people are overhelmed with the volume of information confronting them, they have difficulty discerning what to focus on. Attention rather than information becomes the scarce resource, and those who can distinguish valuable information from background clutter gain power. Editors and cue givers become more in demand, and this is a source of power for those who can tell us where to focus our attention

Herbert Alexander Simon (Nobel Memorial Prize in Economics) talked about this paradox of plenty on his article Information 101: It’s not what you know, it’s how you know it  (This paper was originally presented at the Carnegie Bosch Institute’s “International Conference High Performance Global Corporations,” April 21, 1995, in Boca Raton, Florida, called  “Knowledge and the time to attend to It”.)

Attention is key and advertising is one of the business models based on capturing attention and monetizing it. Kevin Kelly (Senior Maverick at Wired magazine. He helped launch Wired in 1993) writes in his blog, Where Attention Flows, Money Follows. This concept is further elaborated by Gerd Leonhard on his presentation The End of Control and the Future of Content (the slide set can be downloaded from slideshare).

Freemium is mentioned as well.

Admob Mobile Metrics, March 2009 report

Today AdMob has released the March 2009  Mobile Metrics Report, the monthly look at trends in the AdMob Network.  The highlight of TechCrunch is Android Catches Up To Palm In Mobile Ad Market Share. IPhone Still Blows It Away, (it is about the US market).

AdMob serves ads for more than 6,000 mobile web sites and 1,000 applications around the world. AdMob stores and analyzes the data from every ad request, impression, and click and uses this to optimize ad matching in the network. This monthly report offers a snapshot of the data to provide insight into trends in the mobile ecosystem.

The report has data also from other markets, not only US. Keep in mind that It brings the perspective of an Ad network in the metrics, see the disclaimer at the end of their presentation about the Limits of this Data. Said that, It is certainly interesting and worth a look. You can download the PDF of the report from the AdMob website.

Mobile Browsing is Becoming a Reality, Be Prepared!

If it is true that mobile browsing is becoming a reality, it is better to be prepared and create user friendly websites and content that is adapted for users coming with mobile phones.

  • Mobile sites should load fast, 3G is still not so fast when compared with your ADSL, so no heavy images to download
  • Adapt to small screens, the content should be easy to read in small screens
  • No Flash or Javascript, they are not supported widely

It is possible to detect mobile browsers with simple scripts and offer a tailored page as a response. I have slightly redesigned my webpages and used a different CSS when visitors come from a mobile device (check my home page with your mobile phone ). For this blog I use WordPress Mobile Edition plugin and it works fine.

So, no excuses, the tools are available it is up to you to offer the best user experience to the visitors coming to your website.

Read Developing mobile sites.

And do not forget to make your mobile website searchable from Google, read Adding a mobile site to Google , Creating Mobile Sitemaps and Google redirect to the mobile page.

Nokia: “Irresistible” solutions combining devices and services will be a key to future success

here it is the latest message and press release from Nokia CEO, OPK, “Irresistible” solutions combining devices and services will be a key to future success “.

from the press release, the industry is converging:

Nokia is fundamentally changing its business model to transform both the company and the industry. While we continue to compete with the traditional mobile device manufacturers, we also are dealing with new competitors entering the market from the PC and Internet industries

Solutions, the combination of services with devices, is the Nokia’s strategy to increase customer retention and add value:

“To succeed in this new environment, we need to offer consumers irresistible solutions that improve their lives. During 2008, we have taken many steps to ensure we maintain our strong leading position in the device business, while increasing our focus on solutions-centric business models. We have focused our services investments on five primary categories: maps, music, messaging, media and games. These are the areas where the biggest opportunities lie.”

the concept of smartphone scales down from high-end to middle range devices:

“We believe that mobile computing should not be limited only to expensive, high-end devices. Expanding Symbian into lower price points is the right thing to do. We see this as a tremendous opportunity to increase efficiency, to get more scale for Symbian, and gain market share.”

Within digital convergence, partnerships and alliances are fundamental:

“We cannot expect to do it all alone. We have to work together with certain competitors, new players and partners in new ways. We have to compete and co-operate. We are working more closely with many other companies, including operators and partners. We expect more such partnerships to come.”

Making Google more Social with Profiles

There were no big announcements about it (the news in TechCrunch Google Profiles Take An Important Social Step With Vanity URLs), but Google has now introduced Profiles.  This features makes Google more social, in Google Profiles users can add a personal profile, pictures and personal location. To be properly called social, there should be a friends’ list, I am sure it will come.

Google has not been very successful in creating social applications and services but it is certainly trying to get there. Other Google products in this direction are the previously announced Google OpenSocial and Google Friend Connect.

Convergence Culture where old and new media collide

Convergence Culture: Where Old and New Media Collide is an interesting book by Henry Jenkins Director, Comparative Media Studies Program, Massachusetts Institute of Technology.

Some excerpts from the book:

(page 2) By convergence, I mean the flow of content across multiple media platforms, the cooperation between  multiple media industries, and the migratory behaviour of media audiences who will go almost anywhere in search of the kinds of entertainment experiences they want.

(page 18) Convergence requires media companies to rethink old assumptions about what it means to consume media, assumptions that shape both programming and marketing decisions. If old consumers were assumed to be passive, the new consumers are active. If old consumers were predictable and stayed where you told them to stay, then new consumers are migratory, showing a declining loyalty to networks or media. If old consumers were isolated individuals, the new consumers are more socially connected. If the work of media consumers was once silent and invisible, the new consumers are now noisy and public.

(page 97) A transmedia story unfolds across multiple media platforms, with each new text making a distinctive and valuable contribution to the whole. In the  ideal form of transmedia story telling, each medium does what it does best – so that a story might be introduced in a film, expanded through television, novels, and comics; its world might be explored through game play or experienced as an amusement park attraction.

(page 270) Welcome to convergence culture, where old and new media collide, where grassroots and coporate media intersect, where the power of the media producer and power of the media consumer interact in unpredictable ways.

Software Platforms Business Models and Strategies

Google advertising business, mobile phones, video games are all example of software platforms. Software platforms are everywhere and being able to understand their business models is essential if you want to play in these domains.

Here a nice quote on the different business models from the highly recommended book Invisible Engines: How Software Platforms Drive Innovation and Transform Industries by David S. Evans, Andrei Hagiu, and Richard Schmalensee:

When you go to a video game arcade, you have to pay everytime you start a game. At home, once you have bought a game for your video game console, you can play it as often as you like. And if you play online, you can also play as often as you like, but only if you pay a montly fee. When you play music on your computer, you can either use the media playerthat came with it or download others for free and use them instead.  RealNetworks  sells its digital content by subscription; Apple charges 99 cents per song. Computer manifacturers can pay Microsoft for the right to install Windows (with larger manifacturers receiving a volume discount) or they can install Linux for free. Software developers can pay Sony a royalty for each copy of a PlayStation game they sell or they can get Apple’s help to write game for the Macintosh and pay Apple no royalties at all. Mobile phone users in the United States they are generall charged according to the number of minutes they are connected to the network, with various volume discounts available, while i-mode users in Japan pay according to the amount of data they send or receive, regardless of how long they are connected.


And in the latest issue of Harvard Business Review, April 2009, there is a very good article on business strategies on software and Internet platforms, (subscription might be required):

Vertical integration and vertical disintegration II

Excerpts and adapted from Manuel Becerra Theory of the Firm for Strategic Management.

The Transaction Cost Economics view of the firm TCE, (built by Oliver Williamson and based on Coase´s work on transaction costs)  tells us that firms would internalize those exchanges to operate more efficiently as long as the cost of doing these exchanges inside the firm is smaller than transacting through the market.

Furthermore, vertical integration may result in operational efficiencies, both administrative and technological. To be efficient, firms are likely to internalize those transations that are more frequent, highly specific, complex, and surrounded with greater uncertainty. 

Coase R.H., “The Nature of the Firm“, 1937, Economica, 386-405

The Resource Based View of the firm stresses the knowledge implications of vertical integration. The RBV sees the firm as a collections of resources. Penrose has inspired the foundations of this theory.  Penrose 1959, “The Theory of the Growth of the Firm“.

Porter highlighted several advantages of vertical integration, including how it could assure supply and /or demand for the firm, offset bargaining power and input cost distortions, elevate entry and mobility barriers, enhance the ability to differentiate, and defend against foreclousre. Porter 1980, Competitive Strategy.

Finally, the implications of vertical integration on customer relationships also need to be considered. For example, for firms integrating forwards it means having direct access to customers, and provide after sales service.

Vertical integration and vertical disintegration

When does it make sense to vertically integrate or disintegrate?

In a famous 1951 paper, Nobel Laureate George Stigler argued that “vertical disintegration is the typical development in growing industries, vertical integration in declining industries” (George Stigler, The division of labor is limited by the extent of the market, Journal of Political Economy 59, June 1951: 185-193)

From Invisible Engines: How Software Platforms Drive Innovation and Transform Industries (page 260):

Stigler noted that at the inception of new industries, vertical integration is necessary because the technologies involved are unfamiliar. It is therefore hard for firms to persuade outsiders to participate in a business with uncertain prospects and with which they have had little or no experience. If and when the industry grows and becomes viable, many of the tasks involved in the production processes are sufficiently well defined and are performed on a sufficient scale to make it possible for an integrate early entrant to turn them over to specialized firms, either as suppliers or as complementors. It is also profitable to do so provided the market of specialists is sufficiently competitive. Disintegration frees previously integrated firms to concentrate on those parts of the final product on which they have a comparative advantage.

Christensen in the The Innovator’s Solution(page 134) describes the process of modularization and disintegration as a predictable casual sequence made of:

  1. The pace of technological improvement outstrips the ability of customers to utilize it, so that a product´s functionality and reliability that were not good enough at one point overshoot what customers can utilize at a later point
  2. This forces companies to compete differently: The basis of competition changes. As customers become less and less willing to reward further improvements in functionality and reliability with premium prices, those suppliers that get better and better at conveniently giving customers exactly what they want when they need it are able to to earn attractive margins.
  3. As competitive pressures force companies to be as fast and responsive as possible, they solve this problem by evolving the architecture of their products from being proprietary and interdependent toward being modular
  4. Modularity enables the dis-integration of the industry. A population of non integrated firms can now out compete the integrated firms that had dominated the industry. Whereas integration at one point was a competitive necessity, it later becomes a competitive disadvantage.