Thoughts on Google Fiber, from a user

A few weeks ago,  I had Google Fiber installed at my home in Provo, Utah. Since there are still relatively few of us Google Fiber users out there, I thought I’d share some thoughts on the service from the perspective of a user. This is just a short summary of my experience. I’ve also posted a much longer, deep dive into the whole thing here.

First, the bandwidth side of things. The bandwidth is amazing, but only when you’re hard-wired into it. I get 700Mbit/s down and almost 600Mbit/s upstream pretty consistently when connected via Ethernet into the Network Box Google provides. It’s not quite the gigabit speed advertised, but it’s well over ten times the speed of any other broadband connection I’ve ever had. That makes for very fast iTunes downloads (I downloaded HD movies 3-4GB in size in 1-4 minutes and HD TV shows in well under a minute, and was able to upload a 1GB movie to Vimeo in about two and a half minutes. iTunes topped out at around 180-190Mbit/s, while Vimeo and Flickr seemed to operate at less than that (likely because of limits on processing speed at the other end).

However, all this falls apart somewhat on WiFi, which is what the vast majority of devices in the home will connect over. Right next to the Network Box (which also acts as a WiFi router) I get about a tenth of the download speed compared to being hard-wired, and about a third of the upload speed. Down in the basement, the speed drops further, and down a long hallway in my home office, the Google-provided router is completely useless. 60 feet away, the signal is so poor as to be unusable, and I’ve had to use my own router instead. That router provides 30-40Mbit/s up and down, which is OK but a far cry from gigabit speeds. And that’s a fundamental limitation of Google Fiber (and of WiFi technology) which dramatically reduces the utility on devices like tablets and smartphones, and on many other devices such as laptops which aren’t going to regularly be connected to Ethernet.

For most of what most of us use our devices for – web browsing, watching streaming video and so on – there’s going to be very little difference (at least today) in the experience on reasonably fast standard broadband and Google Fiber. And a 200Mbit/s connection would probably be about as fast as most online services could handle anyway. The other 800Mbit/s simply isn’t going to make a measurable difference.

As for the TV service, it’s totally fine for the basics, and has some clever features in the DVR and (as you might expect) search. But it’s also surprisingly un-Googley. The interface shares little design-wise with any of Google’s other services or platforms. There is no integration with other Google services such as YouTube, Google Play Music or Video and so on. And there’s no remote access to the DVR functions, which is particularly surprising in this day and age. In fact, the only way to control these functions is to be in the house, on the same network as the TV box. It seems odd for Google to be behind in the online/cloud aspects of running a modern TV service, but that’s where it is today.

The Google Fiber service doesn’t offer phone service, at least here in Provo. I suspect this is a regulatory issue, but it’s inconvenient to have to purchase voice separately, especially since landline-class VoIP services sold separately are going to be tied to the one place in the house where you can hardwire a terminal adapter. This was potentially an opportunity to do some interesting things here with Google Voice and so on, but Google seems to have decided the regulatory headaches weren’t worth it.

So what does all this mean? A couple of things. Firstly, the rush to gigabit speeds feels a bit premature, somewhat validating the more slow-and-steady approach we’ve seen from the incumbent players. Yes, we’re going to need increasing amounts of bandwidth over the next few years to support our growing demand for HD and eventually 4K video, but other than that it’s hard to see the applications that drive the need for gigabit speeds as opposed to 50Mbit/s or even 200Mbit/s. Secondly, Google Fiber still feels very much like an experiment, and one that’s disconnected from much of the rest of what Google does. That limits its effectiveness in some ways, and reduces the chances we’ll see Google do something really disruptive on a significantly larger scale. Lastly, WiFi is a big barrier to making these sorts of speeds meaningful in real life: once you get over about 30Mbit/s, most people’s WiFi routers are not going to be able to pass on the benefits to most of the devices in their homes. Future WiFi variants will help with this, but it’ll be a long time before gigabit speeds can be tapped by the devices most of us use most: smartphones and tablets.

Thoughts on Google Fiber, from a user (deep dive)

A few weeks ago,  I had Google Fiber installed at my home in Provo, Utah. Since there are still relatively few of us Google Fiber users out there, I thought I’d share some thoughts on the service from the perspective of a user. This is going to be a fairly long post, which I’m going to break up into several sections:

However, if you’d like the short version, you can go hereContinue reading

The limits to net neutrality

What is net neutrality? There are as many definitions as there are stakeholders in the net neutrality debate. But proponents generally agree on some form of the following: Internet service providers should treat all traffic equally. If you break that down further, there are actually two parts to it: no traffic should be advantaged over any other (what you might call “positive” non-neutrality), and none should be disadvantaged against any other (what you might call “negative” non-neutrality). As with almost any debate, there are many positions on this issue, on a sort of spectrum. A simplified version, with extremes at each end and an illustrative in-between position, is shown in the diagram below. Net neutrality spectrumsThere are certainly people at each extreme on both of these topics, but the debate is playing out very differently on each. Continue reading

How Facebook is like a milkshake

Innovator’s Dilemma author Clayton Christensen is fond of talking about jobs to be done as a way to think about competition. An example he’s cited frequently is some analysis a team did on behalf of a fast food chain to improve sales of milkshakes. The short version is that the team discovered that people were hiring these milkshakes to do a job, namely to fill them up a bit, yes, but also keeping them occupied during their drive to work. As such, the true competition to milkshakes wasn’t other drinks, but things like bananas, bagels and the like. Once the company understood the job milkshakes were being hired to do, they were better able to improve the product (by making it thicker, for example, so it would last longer). I mention this because so much of the analysis around Facebook seems to assume that its competition is exclusively other social, photo sharing or communication services, and this is a little off the mark.

A while back I was teaching some teenagers about managing their time so as to prioritize the most important things, and I used a well-worn object lesson to do so. This object lesson uses golf balls, marbles and sand to illustrate the principle of scheduling the most important things first. The idea is that you can only fit all the objects provided into a glass jar if you put the golf balls in first, marbles in second, and sand in third, so that the smaller items fill the gaps around the larger ones. If you put the sand in first, there’s no way you can fit in the other two items. As I taught the lesson,  the teenagers observed that much of what they do on their devices can be thought of as the sand – they whip them out whenever they have a free moment and fill up whatever free time they might have with social busywork – texting, checking Facebook and so on. This provides an insight about the job teenagers hire Facebook to do, and I suspect it’s true for many of the rest of us too: namely, to fill those moments of dead time we all have so many of – waiting for a train or bus, standing in line, getting bored in class or a meeting, allowing us to procrastinate instead of doing what we really should be doing, and so on.

As such, the qualities of Facebook are in some ways more like content – i.e. occupying our time – than they are like communication. Therefore, Facebook’s true competition does include messaging apps and the like, but it isn’t limited to them. Mobile games, YouTube and other apps are also competitors to Facebook in this sense, because they’re hired to do the same job – killing time. The challenge for Facebook is that, in order to generate more revenue from advertising, it needs people to spend more time in the app. But at the same time, it’s been working hard to improve the “quality” of the updates people see when they log into Facebook. Over the last several years, Facebook has slowly made it impossible to see all updates from your friends, because it wants only to serve up updates you are likely to interact with (i.e. spend time with), increasing engagement. However, there’s only so much of that content that your own friends will serve up, which has led Facebook to try other models, such as Pages for business, and the Following model for celebrities and other people we don’t want to connect with as friends. The fundamental flaw with these other approaches is that users have to explicitly opt in to every business or person they’d like to follow. That’s time-consuming and inefficient as a way of getting users to opt in to seeing more content, and few of us will ever bother to do this with more than a few brands or celebrities. How, then, to expand beyond content shared by my friends in a more efficient way?

I believe the Paper app is the answer to that question. It’s a totally new approach to getting you to spend more time with Facebook that starts with the classic friend-centric experience but also broadens it out considerably from there. By making topics (tech, photography, sports, business, food etc.) rather than brands the center of the experience, Facebook can serve up a much broader set of content that’s not shared by friends to its users, potentially dramatically increasing the time they spend inside Facebook’s apps and opening them up to much more advertising. As I share in my recent Techpinions post, Facebook (and Twitter) has three key levers for growth: user growth, increased user engagement, and more revenue per user. As user growth slows (which it started to do at Facebook back in 2011) the other two become all the more important, and Paper is a critical ingredient in boosting both user engagement and revenue per user.

As such, I think we’ll see the Paper experience around topics eventually make its way back into the core Facebook experience. I’ve wondered, along with others, whether Paper might become the default app for Facebook in time, and I still think that’s possible. But I think it’s more likely that Facebook is using it to test users’ response to adding content not shared by friends into the Facebook stream. If it works, it’ll spread. If it doesn’t, Facebook has tested it in a low-risk environment. This is likely to be the way Facebook continues to experiment going forward: releasing new apps that take some existing element of the Facebook experience (or a new one) and make it the core or only feature, as a way of testing what works, rather than experimenting with the core Facebook app and risking alienating users.

The challenge for new mobile operating systems

Comscore’s latest numbers for the US smartphone market came out yesterday. The key thing that stuck out to me as I crunched the numbers and looked back over historical trends is the number of people who own smartphones not running iOS or Android. The chart below shows the share of smartphones in US which are running Android and iOS (black circles) and the number of users (in millions) running something other than Android or iOS:Comscore December 13 numbersTwo things are clear from this chart. First, the share of smartphones running either Android or iOS has skyrocketed over the last few years, and has now reached passed 93%. But secondly, the actual number of users with smartphones not running one of these two operating systems has dropped, not just the share. There were around 30 million users of other OSs at the peak in 2010, but there are now just over 10 million, a number which has stayed fairly stable in the last three months. As BlackBerry has dwindled, Windows Phone has barely offset the declines in recent months, so that the total number has stayed roughly the same.

The challenge for any new operating system is to answer the fundamental question Windows Phone has struggled to answer: why does anyone need a third option? Over 90% of smartphone users seem to be happy with the two main operating systems, and of the remainder, just over 3% is on BlackBerry, which is both dwindling and at this point largely limited to people with specific needs. Just 3% is on Windows Phone, which is a platform with massive backing from both Microsoft and AT&T, even several years after launch. Given their substantially smaller resources, how can Firefox OS, Sailfish, Ubuntu for Mobile and so on ever hope to succeed in the US?

What is Microsoft uniquely good at?

In Satya Nadella’s email to employees one section in particular stood out to me:

As we look forward, we must zero in on what Microsoft can uniquely contribute to the world. The opportunity ahead will require us to reimagine a lot of what we have done in the past for a mobile and cloud-first world, and do new things.
We are the only ones who can harness the power of software and deliver it through devices and services that truly empower every individual and every organization. We are the only company with history and continued focus in building platforms and ecosystems that create broad opportunity.

Though there are few specifics in the email, but as a general principle the first part of this is pretty good: Microsoft needs to focus on what it “can uniquely contribute to the world.” All companies need to know what it is that they’re uniquely good at, shore that capability up to keep it uniquely good, and put it at the center of every product and service they offer to consumers.

Here are some examples:

  • Google – uniquely good at ingesting and analyzing data about the world and the people in it in such a way as to serve up content and advertising that is very effectively targeted at end users.
  • Apple – uniquely good at tightly integrated software, hardware and services that make computing experiences natural, intuitive and enjoyable.
  • Amazon – uniquely good at developing logistics and information technology to maximize efficiency in the delivery of physical goods and IT infrastructure.

The problem with Nadella’s summary of Microsoft’s core strength is that it’s backward-looking: it talks explicitly of history rather than capabilities, and this is a core problem Microsoft faces as Nadella takes over. I would argue that Microsoft is not uniquely good at anything at this point: its main competitive advantage at this point is scale in key areas such as operating systems and productivity software, which are based on certain advantages it enjoyed in the past. But this is a bit like Facebook saying it’s uniquely positioned because it’s the world’s largest social network, or that it’s the only company with history and continued focus in building successful social networks. The core capability isn’t the achievements of the past but what enabled the company to achieve those things. Unless they can continue to do those things, they will lose the one advantage they have, which is scale.

Microsoft has no particular advantage in software at this point, and suffers from a major disadvantage as well, which is that its two major existing software products – Windows and Office – are so widely used that it is almost impossible to evolve them without alienating some users and over-serving many others. Google, on the other hand, truly does seem capable of building “platforms and ecosystems that create broad opportunity” – just look at Android.

If Microsoft is to be successful long-term, it has to get past this historical thinking and get at the core of what it can really be uniquely good at as a company. There’s an enormous and talented team of people at Microsoft, but no-one has yet articulated accurately why they should be successful in any of the spaces that really matter today and in future.


Other recent posts on Microsoft:

Google and Microsoft go in opposite directions

Calculating Microsoft’s  Windows Phone revenue

Why you can’t split consumer and enterprise at Microsoft

Amazon’s Prime Problem

Amazon announced on its earnings call last Thursday that it plans to raise the price of its Amazon Prime service by between $20 and $40, or 25-50%, in the near future. The reason given was that the service launched back in February 2005 at $79, and the price hasn’t risen since, despite rising transportation and fuel costs. But I’m skeptical  of that reasoning and I suspect the price hike is really about all the free stuff Amazon gives away with Prime beyond free shipping. Below, I’ll explain why.

Trends in shipping costs

Much of Amazon’s business is a black box – we have no idea how many Prime subscribers it has, how many Kindles it sells, what it makes from or charges for digital vs. physical media and so on. But shipping is actually one of the few things Amazon is pretty transparent about: each quarter, it reports total shipping costs, total shipping revenues (including some of its revenues from Prime), and the difference between the two. As such, we can calculate what percentage of Amazon’s total shipping costs were covered by shipping revenues, as shown below:

Amazon shipping costs covered by shipping revenueIn its early history, Amazon made a profit on shipping – just over 20% in 1997 and 1998. But it soon realized that discounting shipping (a) removed one of the biggest competitive disadvantages it suffered against brick and mortar retails and (b) therefore was a very cost-effective form of marketing. Interestingly, over time, the net cost of shipping has come to very closely mirror actual marketing spend, even though it is not reported as such: Continue reading