How to make a successful software ecosystem (and why)

Michael Mace, January 8, 2009

mike@rubiconconsulting.com@ g

About Rubicon

• Help high tech organizations win markets through business and market strategyg gy– Since 1999– Practices: define, deliver, defend, optimize

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The first electronic computer

• ENIAC, 1946

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The first business software app

• Lyons LEO, 1951– Managed UK's biggest catering

companycompany• 30,000 employees, 150m meals a year• All managed on paper• Payroll inventory order management• Payroll, inventory, order management...

• Software bundled with hardware

– 5,000 square feet, 4k of memory weighing half a ton

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David Caminer, the first business app programmer

The first third-party app

• Applied Data Research's Autoflow, 1965

– An automatic flowcharting program• Also the first patented software

– RCA first then IBM– RCA first, then IBM– IBM: free clone– US government antitrust suit, 1969

M i G j– January 1, 1970: IBM unbundles Martin Goetz, project manager, Autoflow

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Rise of third party app platforms

• Minicomputers, 1970sApple• Apple

• IBM PCM i t h• Macintosh

• Windows

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Distance from hardware increases

1940s 1950s 1960s 1970s 1980s 1990s 2000s

• Computers

• Software that lets computers do multiple tasks

• Independent software

• OS platforms separated from hardware

Pl f d• Platforms separated from OS

• Cloud as a l f

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platform

The web discovers APIs

• Mashups

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Mobile discovers APIsOne-year growth in

• Intense interest due to recent successes of a

25,000

registered developers

recent successes of a certain mobile device

15 000

20,000

10,000

15,000

0

5,000

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0

Mobile discovers APIsOne-year growth in

• Intense interest due to recent successes of a

25,000

registered Palm developers

recent successes of a certain mobile device

15 000

20,000

10,000

15,000

0

5,000

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01998 1999

"That's unfair"

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Reality: Most platforms fail

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Failure depends on your goal

– Give me a marketing boost over h i i

Developer motivation

Don't carethe competition

– Get developers to add features I

Don t care

C h tdon't have time to develop

– Address user problems and sub-

Care somewhat

dd ess use p ob e s a d submarkets that neither of us could have tackled alone

Care a lot

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What motivates developers?

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How platforms fail

Almost impossible to

Apps hard to findStore financials outrageous

monetizeg

Inconsistent APIs (raises cost)Very hard to get on device

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The PC and Windows

• The RiseIBM drives belief in large user base– IBM drives belief in large user base

– Hardware architecture permits powerful apps (for the time)– Open APIsOpen APIs– Clone licensing drives additional growth; virtuous circle

• The Decline– Microsoft preys on successful software developers– Intel and Microsoft can't coordinate innovation

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The less friction, the more apps

• Easy to developPowerful APIs great documentation and support uses– Powerful APIs, great documentation and support, uses existing tools/languages, easy to debug

• Easy to sellasy to se– No artificial barriers, easy discovery, marketing,

installation, billing, reasonable financials

• Large user base– Or the belief that it'll get large

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Pluses and minuses of iPhone ecosystemecosystem

Strength WeaknessStrength Weakness

APIs Very capable App functionality limited

Development Familiar if you're a Mac d l

Nonstandard, Java and Flash i ideveloper missing

Store Built in, pretty good terms Arbitrary screening by Apple, price pressure

User base Perception of world domination, high traffic seen by websites

(Will it continue to grow?)

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If you wanted to beat them...

• Reduce the revenue cut to 20%Eliminate prior review of apps• Eliminate prior review of apps

• Enable background processingE bl thi d t l tf• Enable third party platforms– Java, Flash, etc.

M f di t ti• Move from discovery to suggestions• Enable web apps

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The ultimate ecosystem

• Advantages of an integrated platformGreat discovery billing support APIs– Great discovery, billing, support, APIs

• Advantages of web app development– Lots of Ajax-style tools instant deployment huge user– Lots of Ajax-style tools, instant deployment, huge user

base, write once run anywhere

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Remember

• If you're a developer"Which platform gives me the best long term business– Which platform gives me the best long-term business proposition?"

– Strong bias toward Ajax-style developmenty

• If you're a platform vendor– "How can I create a better ecosystem than the other

guy?"– "Am I on the right side of the trend toward web apps?"

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Discussion

• mike@rubiconconsulting.com

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Win MarketsT d Ad i hi h h fi kiTrusted Advisors to high-tech firms seeking to transform their visions into strategies, strategies into plans, and plans into results.

Practices:

Define / Design / Defend / Optimize

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