VenChar

APIs and innovation

I had written a while back about Skype's API. I found out recently that someone's developed an answering machine application using the API:

SAM is a simple voice answering machine for Skype® users.

When you are away from your PC and there is no one to answer your incoming Skype calls, SAM will pick up the call, play a greeting message and the "all-time clasic beep" so that the calling party will leave a voice recorded message.

It looks a little rough around the edges right now, but I still think it's a great example of how opening up APIs, done well, can fuel user-driven innovation. Apropos of this, also see the recent Google AdWords API announcement:

Google's free AdWords API service lets developers engineer computer programs that interact directly with the AdWords server. With the applications created, advertisers and third parties can more efficiently - and creatively - manage their large AdWords accounts and campaigns.

From the Google Blog:

The AdWords API beta program is an open invitation to developers to explore new concepts (and then write great software) for managing Google AdWords advertising campaigns. Large advertisers can use it for their complex ad management needs, like tying product margins to optimized keyword bids.Third parties can use the API to build new interfaces to manage their client accounts. Best of all, an API enables the creation of all sorts of unanticipated ideas.

Skype API

Skype recently announced a partnership with Siemens to enable cordless phones to use Skype to dial out (in addition to using the PSTN):

Skype's free Internet telephony software works with Siemens phones via the Gigaset M34 USB adapter, an open interface adapter that is plugged into the USB connection point of a users' PC. It communicates with the phone’s base station to either make or receive a Skype call. The handset then enables users to gain cordless access to the extensive Skype features including, free Skype to Skype calling, buddy lists, the Skype Global Directory and conference calling.

Skype has also recently opened up an API enabling hardware devices and software applications to integrate with Skype's software. A couple of interesting applications called out:

Call-center and IVR solutions
Although Skype has so far been designed primarily with individual communication needs in mind, it can be used to provide business-class calling services through the Skype API. Businesses can provide Interactive Voice Response (IVR) solutions where the software answers the inbound Skype call and provides the user with automated choices and selections in combination with a back-end system. This could be used for ticket booking, payment, pizza ordering and many other services. The IVR system can be either fully automatic or a combination of operator/automatic usage.
For service monitoring purposes, the calls to operators can be recorded and later screened using regular audio manipulating tools on a standard PC. The information can be automatically stored and emailed.

Phone handsets
Skype provides access to its functions from software a well as hardware devices. The Skype client software can be used with any audio hardware compatible with the operating system, such as headphones and a desktop microphone, or a dedicated USB headset or even telephone-like handset. However, all of these require the user to still work with Skype software and sit behind a computer.
Users may want more freedom both in home and business environments and not to be tied to a computer. This is why Skype has joined forces with Siemens as its first Preferred Cordless Phone Provider to give users a chance to move about freely. The Siemens M34 Gigaset USB Adapter plugs into the computer’s USB port and connects to a Gigaset base station that in turn is connected to one or more cordless handsets. The handsets have access to basic Skype functions like placing and answering calls and navigating the contact list.
The Skype API gives other hardware manufacturers an opportunity to build similar solutions in their existing or upcoming products. Note that for using all these functions, a computer running Skype is still required.

Demand prediction, scan-based trading

Interesting BI example in an NYT article about Wal-Mart:

A week ahead of the storm's landfall, Linda M. Dillman, Wal-Mart's chief information officer, pressed her staff to come up with forecasts based on what had happened when Hurricane Charley struck several weeks earlier. Backed by the trillions of bytes' worth of shopper history that is stored in Wal-Mart's computer network, she felt that the company could "start predicting what's going to happen, instead of waiting for it to happen," as she put it.
The experts mined the data and found that the stores would indeed need certain products - and not just the usual flashlights. "We didn't know in the past that strawberry Pop-Tarts increase in sales, like seven times their normal sales rate, ahead of a hurricane," Ms. Dillman said in a recent interview. "And the pre-hurricane top-selling item was beer."
Thanks to those insights, trucks filled with toaster pastries and six-packs were soon speeding down Interstate 95 toward Wal-Marts in the path of Frances. Most of the products that were stocked for the storm sold quickly, the company said.

The article also mentions scan-based trading, a term with which I was unfamiliar:

Eventually, some experts say, Wal-Mart will use its technology to institute what is called scan-based trading, in which manufacturers own each product until it is sold. "Wal-Mart will never take those products onto its books," said Bruce Hudson, a retail analyst at the Meta Group, an information technology consulting firm in Stamford, Conn. "If you think of the impact of shedding $50 billion of inventory, that is huge."

Here's some more on scan-based trading:

Scan-based trading (SBT) is not so much about coordinating data as it is about shifting financial risk from seller to supplier. Not only must a vendor such as American Greetings pay for the inventory of cards that will sit on the retailers' shelves right up until the moment of sale—such vendors also must bear the burden of making sure there are no holes in the tracking of products and transactions.
The idea behind these systems is simple enough. Rather than paying for products from suppliers as they are brought into the store, the supplier retains "ownership" of products on the shelf. Sales information is sent automatically from retailer to supplier. When the supplier receives that information, an invoice for goods sold is automatically created and an order is submitted to replace the sold merchandise.
In theory, everybody is supposed to come out a winner. The retailer loses the financial risk of carrying inventory while reducing its administrative and order management costs. The supplier gets daily alerts to replenish its wares—which means more sales—and is able to gather nearly real-time data about the performance of products store by store. This data can be used by the supplier to improve forecasting, production planning and product targeting.

Warren Lieberfarb and the DVD

From a Newsweek profile of Warren Lieberfarb, the father of the DVD, this succinct vision statement:

if movie discs were the size of CDs, were priced right and offered a better picture and sound than video, people would collect movies like books. The key was to make the discs cheaply, based on a universal standard.

Super-corrected DVD players

Via Umair, this link to an interestign article profiling a Chinese company pioneering a new category - "super-corrected" DVD players that will play pirated DVDs:

China's vast market in pirated movies is well known... China is still flooded with pirate DVDs that supply about 90 per cent of total demand and rob the US film industry of millions in royalties.

Now the world's electronics industry is about to face competition from Chinese brands of video disc players that have risen on the back of the pirate market. As any foreign visitor who has stocked up on China's cheap pirate copies will relate, the discs do not always play when you put them on your machine at home.

Enter the caoqiang jiuchuo or "super-correcting" Chinese model of DVD player. Developed by the Jiangsu Shinco Electronic Group and selling for about half the cost of brands such as Philips and Sony, it is designed to cope with the poor quality of pirated video discs.

Along with half a dozen domestic brands that have followed its lead, the company's Shinco brand has grabbed about 80 per cent of the Chinese market. Its factories produce 5 million DVD players a year, and, says Zeng Ming, a management expert who has studied the company, its annual sales are about $US1 billion ($1.35 billion).

The reason is simple, Professor Zeng says. "If you buy a Sony or Panasonic DVD player, you have to buy the real or authentic disc, and most people in China can't afford them." Licensed discs cost about 20 yuan, more than double the price of a pirate disc and a significant difference for people on a typical urban weekly wage of 1000 yuan. And with China officially importing only 20 foreign films a year, the pirate market offers a much more up-to-date and uncensored viewing menu.

Jiangsu Shinco is a secretive, unlisted company that refuses to divulge its financial figures. It does not deny its customers tend to use pirated software. "Where there is a need, there is a supply," said the senior manager, who gave his name only as Mr Fan.

Jiangsu Shinco even commissioned Sony to design and produce parts to its "super-correcting" specifications. Because their own players could not sell in China, Sony went along with this "outsourcing", Professor Zeng said. "The only way Sony can make money in this market is by supplying to Shinco the key components."

Business Objects

I've been reading Michael Cusumano's The Business of Software and encountered this anecdote re: the beginnings of Business Objects. The founders, Bernard Liautaud and Denis Payre had both worked for Oracle France in sales and marketing. They were approached in the late 80s by an engineer and consultant named Jean-Michel Cambot with a concept for a decision-support tool. His software made it possible to generate SQL statements from a simple user interface, without the user having to know SQL. He had approached Oracle to productize and distribute his prototype, but they had declined. Liautaud and Payre bought the software from Cambot and founded Business Objects in 1990.

From the beginning, Business Objects went after a big “horizontal niche” rather than a “vertical” market. It attempted to “cross the chasm”… by riding on the backs of Oracle customers… The company was not trying to create a new platform to work with all database technologies, but rather was positioning itself as a “complement” to Oracle.

Interesting market entry strategy for several reasons: (1) horizontal rather than vertical strategy, (2) leverage the large installed base of a big successful company and sidestep the Early Adopters and the Chasm, (3) by creating a complementary offering, you get to work with BigCo’s salespeople, help them win more deals, make their product work better, etc., (4) since the product is complementary and improves the performance of the established product, this opens up the possibility of an acquisition down the line. Another example of this strategy would be PayPal and eBay.

Scott Adams and incremental innovation

Michael Schrage at Technology Review offers up this interesting anecdote:

Even before the Internet was a gleam in Jeff Bezos’s eye, Scott Adams—Dilbert’s creator—got his syndicate to agree to attach his e-mail address to the strip. The reason, Adams has explained, was to see what kind of reader feedback—if any—e-mail accessibility might generate. In fact, he still gets much of his best Dilbert material from reader e-mail... The simple act of tagging a comic strip with an e-mail address proved brilliantly innovative. Getting your fans to subsidize your creativity—for free!—is an enviably efficient business model.

Solar-powered wireless-enabled parking stations

Daily Wireless writes about wireless parking stations being rolled out in Montreal to replace traditional parking meters. You would pull in to a parking spot, walk over to the parking station, enter the parking spot identification code and pay with cash or credit. Meter maids would be able to query the parking station using a wireless handheld and determine which (if any) of the spots are illegally parked.

Benefits to the city:
* fewer parking stations required (each parking station replaces 12 parking meters)
* more convenient for the meter maids - they don't even have to get out of their vehicles to check the meters
* stations are solar-powered, so no access to regular power is required
* parking rates can actually be altered from a central location, allowing the city to charge a higher rate during sporting events, concerts, etc.

The parking stations are being developed by 8D Technologies in partnership with Cale Systems. The system runs Linux and uses GPRS for connectivity. Daily Wireless makes the point that when you tally up the access fees for GPRS, this begins to look like a pretty expensive solution. Yet another good application for ubiquitous WiFi coverage.

MySQL in Wired

Wired article on MySQL gaining traction - 4000 paying customers (including Yahoo, Google, Caterpillar, UPS), $10MM in sales last year, 40% penetration among database developers. Good example of a low-end disruption. Interesting quote from a Microsoft product manager for the SQL server:

Tom Rizzo, Microsoft's director of product management for SQL Server, said he saw no immediate threat from open source, at least in the database arena.

"Typically, MySQL and other open-source database companies are used in small departments," Rizzo wrote in an e-mail. Developers tend to deploy open source to save the money or hassle of going through a cumbersome IT procurement process.

Rizzo cited the key advantage of the SQL Server over MySQL or other open-source databases as the "ability to provide innovative features that address complex needs of a user."

That's how low-end disruptions work - the product starts out being less full-featured than the existing higher-end products, so that it initially only takes away market share at the low end. As a result the market leader dismisses it as a threat. Over time it proceeds to get better, more full-featured and by the time it has ramped up the technology improvement curve it's already too late to stop the juggernaut.

As an aside, MySQL pursues an interesting dual-license strategy: you can either get the code for free (in which case you have to contribute back any changes you make) or you can pay for a license (in which case you can keep your modifications proprietary).

Localization of software and emerging markets

Interesting article over at CNet (via /.arguing that localization (providing local language support) could turn out to be one of the drivers for adoption of open source software in emerging markets.

For now, such projects are largely curiosities. But analysts say they could present a significant long-term threat to Microsoft's dominance on PC desktops. Regions and language groups that don't have enough of a PC market now to justify development of proprietary commercial software will naturally turn to open-source alternatives, they say. And by the time those markets become big enough to draw the attention of Microsoft and other commercial software makers, open-source could be as entrenched as Microsoft is in developed countries now.

The article cites localization efforts underway at OpenOffice and presents the argument that since open source development is effectively decoupled from market forces and since open source is, well, open source, you could see grassroots efforts resulting in localization ahead of the growth in demand that would draw the attention of a Microsoft.

Open-source advocates believe they have the upper hand, however. By separating software development from profit motives, they can respond more quickly and completely as computing communities arise.

"It's one of those areas where proprietary software companies are fundamentally at a disadvantage because of their method of allocating resources," said Hiser. "You've got markets that are fragmentary at best, where software as we know it is not economically viable. But that doesn't matter for an open-source project. You just have to have a need and some people willing to work..."

Meanwhile, Microsoft isn't standing still either - see here for MSFT's Office localization for the Indian market.

The article also references another recent Cnet piece on Microsoft's recent decision to segment the Windows and Office product lines by creating an entry-level version to enter the Thai market.